Board members will likely have different interpretations as to what is expected from them in their roles. In many cases, not all Board members know the full extent of what is expected of them and what their responsibilities are to the organization. To avoid such confusion and to ensure awareness and understanding of their responsibilities as a Board member, a Board member contract should be implemented to address these concerns. The purpose of a Board member contract is to officially outline and codify the expectation and responsibilities of each Board member.
As with any arrangement that involves a commitment of time (and sometimes money), having an agreement in place is best practice to ensure both the Board member and the organization have a clear understanding of what is expected. The contract will describe the Board member’s responsibilities as well as describe the responsibilities of the organization’s management so that the Board member can fulfill his/her fiduciary responsibility. Prior to a Board member being voted on at the annual meeting, presenting him/her with a sample contract will help ensure that the relationship between the Board member and the organization will start off on the right path.
There are several sample agreements available on the Internet that can be modified to be in- line with the organization’s bylaws and to best fit the organization’s needs from its Board members. The following is a sample of what can be included in the agreement:
- Attend a certain number or percentage of Board meetings;
- Give-or-get financial contribution;
- Volunteer at the organization’s fundraising events; and
- Volunteer to be on one of the Board committees (if position allows).
The agreement can also state what the Board member will expect from the organization. The following is a sample of the organization’s responsibilities:
- Provide timely financial information;
- Provide timely responses to inquiries to management; and
- Provide necessary information to allow the Board member to make wise decisions in governing the organization
For a new organization, the implementation of a Board member agreement will be an easier feat than for a large Board of Directors of an established organization, as all Board members might not be willing to sign the agreement. However, if the decision to require Board members to sign an agreement was made, it can help eliminate those members who are not fully vested in their roles as Board members, which will then give the opportunity for a new Board member to join that is willing to make the commitment that is needed for the organization. For those organizations that do not have Board agreements, the Nonprofit Revitalization Act states that the Board of Directors cannot remove a Board member without cause. Removing a Board member without cause, even if allowed per the organization’s bylaws, is not compliant with current New York State law. However, having a Board agreement in place can help provide support that an ineffective Board member is not fulfilling his/her obligations under the agreement, making it easier to remove that individual from the Board.
Board member contracts are not mandatory, although having them in place is best practice and can help ensure Board members are aware of their responsibilities, what is expected of them, and what they expect from the organization to enable them to more effectively lead.