NOVEMBER 2016 • Volume 12 • Issue 11 THE #1 MYTH THAT KEEPS THE BOARD 7 FROM FUNDRAISING By Sonia J. T. Saleh Founder, Uplifting Nonprofits and the Nonprofit Café Imagine you are on a first date and the person turns to you and asks, “Will you marry me?” You will probably say no. Now imagine you are on a different first date. It proves interesting, so you go on a few more. You talk and get to know the person’s interests and desires and they learn about yours. You don’t always talk about yourself; you find out about them. You bring that person to meet your friends and family so they can know them better. Now when the question is popped there is a higher chance that you will say yes and you will be excited about it. I am regularly asked by clients how to get the Board to fundraise. I am regularly told by the Board that they will do anything but ask for money. We expect a Board to fundraise. In fact, many organizations believe the most important function of the Board is to raise money. A board member can offer a variety of skills: their knowledge, expertise, time, support, leadership, governance of the organization, and fiscal oversight. Still, fundraising is an important part of the role. There are so many ways we expect a Board to fundraise: ask for a giveget policy, whereby if you serve on the Board you must give X dollars and bring in another X dollars. Ask the Board to help get grants; ask them to buy tickets to events or even to hold fundraisers; ask them to introduce you to people. All of these are important and desirable, yet the Board has a difficult time doing them. Since all we do is ask, the Board also thinks that they too must ask. They are left with the impression that asking for money is the ONLY step in fundraising when actually, it’s the last step. You don’t walk up to your colleague at work or your friends and family and say, “Hey, I belong to Save the World; can you give us a $1,000?” It’s rarely that simple. It’s like dating. When you first meet someone you don’t ask “Will you be my partner?” First you get to know them and their interests. You might find out that you both like musicals, so it’s a jumping off point for further discussion and activities. Or maybe you find out they don’t want to have children and you do, so you know they will not be the partner for you. You thank them, tell them how enjoyable it’s been, and move on. Fundraising is similar to dating. There are several steps leading to the “ask,” and several more to be taken afterwards. The myth is that the Board is expected only to ask people for money. Being a board member is a journey of many steps in cultivating, nurturing, and developing relationships with specific people. Once the Board is engaged in these steps and participates in them, their fundraising results will be greatly improved. Uplifting Nonprofits and the Nonprofit Café specialize in board and donor relations for the nonprofit sector. LEGAL CONSIDERATIONS IN JOINING A NFP BOARD By Ken Cerini Managing Partner Cerini & Associates So you’ve been asked by a nonprofit organization to join its Board of Directors. There are numerous things you need to consider before accepting the position. Being a Board member is a big commitment, so you need to fully understand what your role will be and what will be expected of you by the organization. Two of the many considerations are: How the Board operates, and What are the risks associated with joining the Board and what does the organization do to mitigate these. Before agreeing to join a nonprofit Board, you should do your due diligence to fully understand how that Board operates. At a minimum, you should comprehend the following: Does the full Board make all the decisions or are there smaller groups within the Board (committees) that make the decisions and then inform the other Board members after the fact? The organization’s legal documents, (e.g. bylaws, certificate of incorporation, etc.). The key issues facing the organization now and in the near future. How the Board conducts its business, including its operating rules and policies. These are only a few of the many aspects of the organization and its governance that you should be looking into before making the big decision to join that Board. You don’t want to assume the legal obligations of a Board member if you are in the dark about what is really happening within the organization. Being a Board member comes with certain risks. Each Board member, in accepting a position on the Board, agrees to certain duties. These include the duty of care, the duty of loyalty, and the duty of obedience. The actions of the Board members should always reflect adherence to applicable laws and regulations as well as faithfulness towards the organization. Ultimately, Board members can be held personally responsible if the organization doesn’t comply with the applicable laws and regulations. Therefore, it is imperative that before you agree to join the Board of a nonprofit organization, you gain comfort that the organization provides adequate protection for its Board members. The American Bar Association’s Guidebook for Directors of Nonprofit Corporations states: “In recent years, litigation against directors of many varieties of nonprofits has increased in frequency….All directors need to understand the action that may be taken to protect them against liability related to their service on a nonprofit corporation’s Board.” In particular, two areas that should be closely examined are indemnification and insurance. Indemnification is a term describing what the nonprofit might repay a director for expenses arising from a lawsuit against the director. This indemnification is controlled by the laws of the state in which the corporation operates as well as by the bylaws of the organization. You should clearly understand what the rules are for the organization you are potentially becoming a Board member of before committing to the organization. In addition, you should inquire as to whether the organization has directors and officers (D&O) insurance. The coverage under the D&O policy can depend on the laws of the state involved and the terms of the individual policy offered and may not necessarily cover every instance of noncompliance. Prospective Board members should understand what the terms of their policy are and should ideally be provided with a memorandum by the organization that outlines the D&O coverage being offered prior to accepting their spot on the Board of Directors. Joining a nonprofit Board is both satisfying and rewarding and a great way to give back to the community. However, you need to make sure that you have done your due diligence to cover yourself from a legal perspective before making the commitment to serve.
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