The Right Direction: Understand the Roles, Responsibilities and Liabilities of Board Participation
Accepting the invitation to join a board of directors for a non-profit organization can be a great honor, but the role also carries many responsibilities.
Before you agree to accept a board seat, be sure that you understand the roles, risks and responsibilities involved.
1.) What are the expectations of your role on the board? Members may be recruited based on their business acumen and how that can help to further the organization’s mission. Whether it be a background in finance, public relations, legal, human resources, etc., be prepared to share your knowledge.
Many successful non-profit organizations also require their members to assist with fund raising activities or to make personal financial contributions. Find out whether this type of participation will be required of you as a board member and be sure that you feel comfortable with the role you will be undertaking.
2.) Does the organization maintain adequate insurance? In addition to General Liability/Property/Auto insurance for the organization, board members should be sure they are adequately covered for decision making on behalf of the organization.
Any board of directors should carry adequate limits for Directors & Officers Liability coverage. In the event that a suit is brought against the board for alleged wrongful acts, board members’ personal assets can be at risk.
It is important to understand the ABC’s of D&O insurance:
- Side A: Provides personal financial protection to individual directors and officers when the organization cannot indemnify them
- Side B: Reimburses the organization for its loss when the organization can indemnify the directors and officers
- Side C: Provides protection for the organization
It is important to pay particular attention to the Side A coverage and limits, as this is in place to protect the personal assets of board members. Consult with your insurance agent for a policy review and deeper understanding of this coverage.
3.) What is the time commitment? Before joining a board, make sure you understand and evaluate the necessary time that it will take to fulfill your duties. Also be sure that you can accept the time that your commitment will take away from your day-to-day responsibilities.
4.) What is the mission of the organization? Your term on a board can feel much more fulfilling if you have a connection to the work that they are doing. Be sure to do some research on the organization or ask questions to make sure you feel comfortable and connected to the organization.
5.) Will the organization provide any training for you as a new board member? This may be especially important if you have never held a board seat in the past. It is important to learn about the organization’s history, mission, by-laws, activities and policies.
Before you accept a seat, discuss an orientation program with the Executive Director to be sure you are getting started on the right foot. It may even be appropriate to request a temporary mentor (a current or former board member) to guide you as you begin your service on the board.
When it’s the right fit for you and the organization, serving on a board of directors for a non-profit is often very rewarding. It can give you a sense of pride, provide insight into the workings of non-profits, and even look good on a resume.
But before you accept an offer to sit on a board of directors, be sure that you’ve taken time to do your research by talking to key people and reviewing any relevant documents or online resources.
About the Author
Mary Fessler is a Client Manager with Oswald Companies and works in the Professional/Health and Human Services division of the Property & Casualty department. Her responsibilities include placement of specialty risk coverages, client contract reviews, coverage negotiations with carriers and performing policy audits. She has a special focus on technology and professional services companies. She has more than 15 years of experience in the insurance industry.
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