Ten Documents to Review BEFORE you join a Nonprofit Board

In spring of 2012, we created a portion of a training program for “emerging preservation leaders” on behalf of the Preservation Alliance for Greater Philadelphia. This workshop was meant to provide insights about the local preservation movement, and the pivotal role that board members play to advance the preservation agenda in the region.

The emerging leaders being trained were eager to learn about the role and duties of board members because the ostensible purpose of the program was to groom these young people to assume leadership positions in their local civic or community development organizations, at historic sites, and with traditional preservation organizations.

During our training session, we suggested that every prospective board member should review the following documents before committing to board service. Board service comes with specific fiduciary duties, and collecting and reading these documents prior to agreeing to serve, will help anyone be a more informed and engaged board member.

Not every organization will have all of these documents listed below, particularly new or all volunteer organizations.  However, we recommend asking for all of these documents, and seeing what is submitted for your review.  This list is valuable for any board assignment not just service with a historic preservation organization.  We also offer some suggestions of what to look for in each document.

Please tell us what you would add to this list.

  1. Complete organizational bylaws with all amendments.  Any prospective board member needs to know about the basic rules that govern the organization and bylaws are the basic playbook.  Is it a membership organization, or does a nominating committee of the Board chose its members?  Are there Board attendance requirements?  Have there been amendments to the bylaws, when were they made and what issues did they address?
  2. Current Board approved organizational budget.  Look at the line items for salaries/benefits and the budget as a whole.  Most start up organizations will pay a high portion of their budget on salaries and this is to be expected.  Spend most of the time looking at the revenue sources.  Determine if there is an endowment and if so, how large.  Determine if this budget is highly dependent on a few revenue sources, or if there is a diverse revenue stream, preferably coming from individual donations. Check the line item for Board gifts relative to the whole budget. If there is no line item for Board gifts, ask how much the Board has contributed in the last year.
  3. Most recent financial statement.  How is the organization doing in its fundraising to date?  Are there specific line items that are over or under budget? Who prepares the financial statement? How often are they prepared and shared with the Board?
  4. Minutes of the most recent three or four Board meetings.  This will show you the general business of the organization, which board members attend meetings often, and any controversial issues that have popped up.
  5. Most recent IRS 990 informational tax return form.  All tax exempt 501(c) (3) organizations, no matter the size, must file one of the three types of IRS 990 informational tax returns, based on budget size. Small organizations (under $50,000 in revenue) file a simple electronic post card.  Those with budgets to $250,000 file an IRS 990EZ, which is still extensive.  While the IRS 990 informational tax return is a long and tedious form to read through, the governance questions asked by the IRS are useful.  Check to see if there are familial relationships between board members, if loans are made to staff or board members, if there is a conflict of interest policy, what are the three top mission driven projects of the organization (all of these appear in the IRS 990 long form, not the post card or EZ form).
  6. Annual reports filed with PA Attorney General or most recent annual report published by the organization. These valuable retrospective documents provide financial data about the last year. An annual report is a useful history of the organization that shows off its most important projects. Each PA charity that raises more than $25,000 must file annually with the state. Most states have similar filing requirements.
  7. Current board list (with affiliations ), staff list (with titles) and organizational chart (if there is one).  It helps to know who else serves on the Board, and if you have any familiarity with board or staff members through other organizations in town. Try to understand why your particular skills or talents fit within the overall scope of the existing Board members. If there is more than a handful of staff, an organizational chart may help understand reporting relationships.
  8. Executive Director’s job description, a brief biography and salary.  Note if the job description seems of recent vintage, if the chief staff member has longevity with the organization, and if the salary seems appropriate based on the overall budget.
  9. Strategic plan (if there is one)—A critical document for all organizations. This document shows the ambitions of the organization. Based on all you have read thus far about the organization and its projects, have they been making steady progress towards fulfilling their strategic goals? Start up organizations may not have a strategic plan yet. Ask when they plan to prepare one.
  10. Description of board member responsibilities and the Board commitment form.  Make sure you understand the attendance requirements for board and committee service, and that you can fulfill them given your other commitments to work and family.  Is the organization clear about its financial expectations of new board members?  What kind of annual cash contribution is expected, as well as attendance at the organization's fundraising events? If the organization you are considering joining, does not make financial expectations clear, ask, ask, ask.

If, after review of the organization's materials, and if you feel you are unwilling to “invest” in the organization, both financially and emotionally, politely decline the offer to be nominated and move on.