Volunteering for a nonprofit group is a great way for professionals to contribute skills to a community. People who want to take more of a leadership role may also want to contribute their time as a nonprofit board member. But according to Amy Beth Dambeck, an employment lawyer for Constangy Brooks, Smith & Prophete, a Lenox Drive-based firm, serving on a nonprofit board means living up to legal responsibilities.
Dambeck will present the legal portion of a course designed to train professionals in becoming effective nonprofit board members. BoardConnect is a program run by the nonprofit group VolunteerConnect. VolunteerConnect’s experts — of which Dambeck is one — instruct participants on governance, legal and fiduciary responsibilities, advocacy, and fundraising. Afterwards, there is a meet-and-greet nonprofit fair where the professionals can meet with nonprofit groups that need board members.
The next BoardConnect sessions begin on Tuesday, April 14. For more information, visit www.volunteerconnectnj.org, call Amy Klein at 609-921-8893, or E-mail firstname.lastname@example.org.
Dambeck is not only a lecturer for BoardConnect, she is also a board member for VolunteerConnect. She has been involved in nonprofit groups ever since her days in middle school in Monmouth County, where her mother was a nurse and her father was in sales. As a student at the University of Richmond, Dambeck ran a student-directed volunteer program that provided mentoring for children starting in elementary school and following them through their acceptance to college. She dropped off volunteering while she earned her law degree at Seton Hall University, graduating in 2001, but returned to community service as soon as she had time.
“I had time again to be more involved, and I looked for opportunities to do so,” she says. “I had less time to volunteer, but more time to serve on a board, and I felt that with my legal background and interest in volunteer work, I would make a better board member than a volunteer.”
Dambeck says being a member of a nonprofit board comes with an overarching obligation to exercise proper oversight over the organization. This obligation can be broken down into three basic duties.
The Duty of Care. A board member must regularly attend meetings. While there he or she must actively participate in decision-making, ask questions at meetings, and make sure to exercise independent judgment.
This is the easiest of all a board member’s legal duties, but Dambeck says it’s the one that is most often neglected. “The key to satisfy it is regular attendance,” she says. “You have to come prepared to discuss issues. You need to have a truly functioning board, and not just showing up and discussing what’s going on without any guiding organization. It’s just being meaningfully engaged. Sometimes it’s easy to miss several meetings, or show up having raced out the door and not reading agenda items.”
The Duty of Loyalty. “When you’re a board member, you put the interests of your organization before personal interests. You must avoid conflicts of interest,” Dambeck says. For example, if the organization needs to lease space, and a board member has a business that could profit from that lease, they have to disclose the conflict to the rest of the board.
The Duty of Obedience. Board members must comply with all laws and regulations that govern their nonprofit. That includes financial reporting and laws about how they manage volunteers and employees. It also includes the conditions of any grants the group has taken.
Beyond these specific requirements, Dambeck says, board members have an obligation to be faithful not only to the organization but to its mission. A group may be providing a service in one area and see a need for a service in a related area, and may want to begin providing service there as well. But Dambeck says any such “mission creep” must be made clear to the group’s donors first.
“You have to go through proper channels if there is a shift in mission and make sure the donors are aware that you’re doing that,” she says.
Falling short in any of these responsibilities can lead to lawsuits. Donors can sue for alleged misuse of assets, a government could bring action against board members for misuse of funds or a violation of a law, or creditors could hold the group accountable for mishandled funds. Employees could sue for wrongful termination. The group could even be sued for copyright infringement. “That’s not what you expect to see, and it’s not that common, but it’s possible,” she says.
Board members are protected from such liability claims as long as they are exercising “reasonable care” as a board member, Dambeck says.
In many respects, being on the board of a nonprofit is similar to being on the board of directors of a business. But there are key differences.
“While there are many similarities, the focus of the board members in the non-profit arena more firmly lies with the organization’s mission and non-financial metrics of mission performance are very important,” Dambeck says. “In the for-profit arena, profits and financial results are typically of the utmost importance, and the obligations of the board members are generally limited to the interests of a single company, for whom the board answers to its shareholders.”
Aside from helping prospective board members understand the legal aspects of service, BoardConnect trains them in the due diligence they should do before signing up. Dambeck says board members must make sure that the mission of the organization is important to them, that they are a good fit for the board, and that they are comfortable about fulfilling the legal and fiduciary responsibilities they would have.
Dambeck recommends that before joining a board, a potential member should ask to see the organization’s mission statement; to see the most recent audited financial statement; to see the organization’s long-range program/strategic plan; to see a copy of the by-laws and description of board members’ responsibilities; and to see a copy of organization’s conflict of interest policy. The board member should ask if they can go on a program site visit, and if the organization carries directors and officers insurance, general liability and any other forms of insurance.
Despite all the potential hazards, Dumbeck finds her own board service, both on VolunteerConnect, and the Boys and Girls Club of Monmouth & Middlesex Counties, to be very rewarding. She says VolunteerConnect allows her to meet many members of the community, and the Boys and Girls Club aligns with her personal interest in education and mentoring of at-risk youth.
Being on a board is an opportunity to help a group through fundraising, strategic planning, or grassroots efforts, she says. No matter the role, Dumbeck says, you will find your work more successful if you are working for a cause you believe in.
“I think you have to find a mission that you’re really invested in and care about,” she says. “