Expert Advice on Not-for-Profit Board Service
The AICPA Not-for-Profit Section recently hosted a Facebook chat providing advice for those looking to join a board of directors. The event was an opportunity for the public to engage in a conversation with experts working with not-for-profits and serving on boards.
Two members of the AICPA Not-for-Profit Advisory Council were online to answer participants’ questions during the chat. Carolyn Mollen, CPA, is the Chief Financial Officer at Independent Sector, a leadership network for nonprofits, foundations and corporations. Brian Yacker, JD, CPA, is the Managing Partner of YH Advisors, a CPA firm focused solely on addressing the tax, legal, audit and accounting needs of all different types of charitable and other tax-exempt organizations.
Since the chat was such a success, we wanted to share a few of the top questions on AICPA Insights.
Question: What are the challenges faced by nonprofits today?
Carolyn: Too many to list! In all seriousness, non-profits face many of the same challenges as the private sector, including information security issues, changing technology, talent recruitment and retention, and general economic pressures. However, not-for-profits also must deal with challenges unique to the sector, such as a changing funding landscape and how to find effective ways to measure impact and evaluate performance.
Question: Is it standard for not-for-profits to expect board members to act as fundraisers? If so, would it be better to turn down a position as a fundraiser if you aren’t confident in your fundraising abilities?”
Carolyn: In my experience, asking board members to assist with fundraising is very common in organizations that rely on donations as a revenue source. The board has a fiduciary responsibility to ensure that the organization has adequate resources to serve its mission, and fundraising is often a key component to this. Before joining a board, it is always a good idea to ask about fundraising requirements and make sure that it is something you can commit to comfortably. From an organization’s perspective, I’d recommend evaluating fundraising requirements carefully to ensure that you are able to recruit the right balance of skills and backgrounds, however. While having a well-connected board focused on fundraising can be a great thing in terms of bringing in revenue, it can lead to problems if the board lacks diversity and skills in other areas.
Question: What has been the most rewarding aspect of being a not-for-profit board member for each of you?
Brian: For me, being able to play my part in the furthering of an organization’s charitable mission is most rewarding aspect to me.
Carolyn: Board service has been a way for me to connect with organizations and causes that I feel close to and feel like I'm able to add value. I've been drawn in particular to theater organizations because in my past life, I was a theater major and thought for a long time that would be my career. Board service has allowed me to take my professional skills and apply them to causes I care about.
Question: What is a conflict of interest and how do I know if I have one?
Brian: A conflict of interest exists when the personal or professional interests of a person affects his or her ability to be objective. In the board context, a conflict of interest arises when a board member (or anyone considered to be related to the board member) undertakes a transaction with the organization, even if the transaction involves the board member providing a discount for their services. Conflict transactions need to be highly scrutinized by the board before they are undertaken. Some conflicts may need to be reported on an organization’s IRS Form 990, the annual information return filed by most tax-exempt organizations, so it is important to have a conflict of interest policy. The AICPA Not-for-Profit Section has addressed the most common conflict-of-interest issues and crafted sample language for inclusion in a policy document you can download here.
The AICPA’s Not-for-Profit Section is a community that supports not-for-profit professionals and business advisors. For more information visit aicpa.org/NFP.
Sandi Matthews, CPA, Technical Manager, Not-for-Profit Content Development, American Institute of CPAs.
Board of Directors image courtesy of Shutterstock