Power of Good

V The top five things many nonprofit board members don't know PowerofGood.com | Spring 2015 STORY BY SHANNON AMMONS 11 volunTeer leAders Are A musT in the nonprofit sector. We rely on these community leaders to help guide our organizations as well as provide oversight that encourages public support. However, using the title "volunteer" can sometimes create confusion when we are talking about volunteer board members. As a member of the board of directors of a nonprofit organization, the term "volunteer" simply refers to your pay scale. The governance and fiduciary oversight of a nonprofit has legal and ethical responsibilities that each board member bears. Here are my top five things most nonprofit board members don't know. 1) The Duty of Care, the Duty of Loyalty and the Duty of Obedience are the guiding principals for a nonprofit board member. Under well-established principles of nonprofit corporate law, a board member must meet certain standards of conduct and attention in carrying out his or her responsibilities to the organization. Several states have statutes adopting some variation of these duties that would be used in court to determine whether a board member acted improperly. 2) The nonprofit's annual informational return (Internal Revenue Service Form 990) must be reviewed and a copy provided to each board member before filing with the IRS. The IRS asks if this has been done on page 6 of the form. 3) The Sarbanes-Oxley anti-fraud law has implications for nonprofits. Although the it was enacted as a reaction to corporate accounting scandals and generally applies to publicly trade companies, there are two sections that have legal ramifications in the nonprofit sector. All nonprofits must have a Whistleblower Policy and a Document Retention and Destruction Policy. The IRS inquires about these policies on the organization's annual informational return (Form 990). 4) Alabama law requires that organizations and institutions that solicit contributions in or from Alabama register with the state Attorney General's Office. This is required as a section of the Consumer Protection Division of the Attorney General's Office. 5) In Alabama, nonprofit board members are not allowed to vote by email. The Code of Alabama requires that participants must be able to hear each other for it to be considered an official meeting: Section 10A-3-2.13 Place and notice of directors' meetings; committee meetings. ... May participate in a meeting of the board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at that same time. I encourage everyone to serve as a board member in the nonprofit sector and do your part to make a difference in the world. It is an important job that can truly change lives, and that life might just be your own. If you would like more information about the nonprofit sector in Alabama, please feel free to contact my office any time. I can be reached at Shannon@alabamanonprofits.org. Shannon Ammons serves as the CEO at the Alabama Association of Nonprofits.

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