A board is simply a group of people who are legally appointed with the responsibility to govern an organization.

In a for-profit organization, the board members are responsible for the interests of the stockholders.
In a not-for-profit organization, the board members are responsible to the stakeholders, the local community or those served by the organization.

The board is responsible for planning the long-term future of a corporation, and working side by side with management.

Together, the board and the management strive to align long-term goals and the company’s vision with attainable short-term objectives.

The individuals who are selected to be on the board of directors of a corporation have overall responsibility for the activities of the corporation.

A corporate board is not responsible for the day-to-day decision-making; the daily decisions are made by the corporation's executives and managers.

The corporate officers are the people who head departments, and these executives are responsible for running the business.

Think of it this way:

The board of directors operates like an airline pilot at the 30,000 feet level, overseeing everything, seeing the big picture, and changing course when necessary.
The executives operate at the 1000 foot level, while the employees are on the ground.

 How Charity Boards Work

What Can You Gain?

Most directors would agree that serving on a board is a very rewarding experience. Benefits may include personal, financial, or professional advantages.

However, because the average board seat requires approximately 200 hours of work per year, it must be carefully weighed against the extra responsibility you will have to take on in addition to your current workload and social obligations.

Professional Gain

Boards are generally comprised of individuals from very diverse and accomplished backgrounds.

They may have encountered various experiences that may provide insight for the company’s future.

 From gaining exposure to executives from other industries, or even within the same company or charity, you may be exposed to others’ expertise in their respective fields.

Finally, if the non-profit company that you are serving has a strong management team, board membership will benefit your reputation even in the business world.

What are the duties and responsibilities required of a board member?

A board member responsibilities are to:

  • Provide continuity and a vision

for the organization or non-profit and correctly represent the corporation and the products and services that it offers.

  • Make decisions in the best interests of the Beneficiaries of the charity, including employees, clients, and the community.

The board acts on behalf of the Beneficiaries and society to make overall policy decisions and provide oversight.

  • fiduciary duty

The board has a fiduciary duty with respect to the Beneficiaries, that is, the board has financial and other responsibilities to keep the corporation running efficiently.

  • Review the performance of the CEO

  should the CEO not be performing at the level he/she is expected to, the board is also responsible for selecting and appointing a new CEO.

  • Report to the public

the performance of the organization/corporation. Reporting topics would include:

 fiscal accountability, budgeting, and any policies that may have been enacted.

The board is then responsible for any decisions it may make on behalf of its beneficiaries.

  • Manage resources efficiently

Manage resources efficiently and effectively. There must be sufficient resources to keep the operation running.

  • preparation prior to board meetings

a board member is expected to complete all due diligence and preparation prior to board meetings, attend all board meetings, and actively participate at each meeting.

You should follow the basic formula that requires three hours of preparation for every one hour of actual board meeting time. Preparation may include reviewing financial documents, annual reports, performing industry and competitor research, and reviewing relevant newspapers and industry journals. The preparation for a board meeting is not something to be taken lightly.

  • Mission and Vision

Board members are responsible for setting the mission of the company. The board can change the mission, but only after careful deliberation. All large corporations have mission statements, and creating a mission statement should be one of the first things the board of a small business should tackle.

  • Annual Meeting

At the annual meeting of the corporation, the board announces the annual dividend, oversees the election of corporate board members, elects or appoints officers and key executives, and amends the bylaws, if necessary.

 Qualifications  of board members

Qualifications  of board members

The most important question is:

Do you have what it takes to be a board member? There are several underlying factors that are common across individuals who are often asked to serve on several boards throughout their lifetime.

  • The ability to get along well with others

A qualified board member should not only be able to build a good relationship with the CEO, but also be able to maintain a working, amicable relationship with the other members of the board. You should be able to voice a knowledgeable opinion to the rest of the group in a diplomatic manner.

  • Financial expertise

A good board member should have basic financial knowledge including how to read a balance sheet, a profit & loss statement, cash flow documents, and general audit documents. Before attending the board meeting, you should have reviewed all pertinent information, including financial statements.

  • Personal experience

Depending on the current state or need of a company, different traits would be desired of a board member. For example, if a company is about to go public, a director with past experience with an IPO would be able to offer valuable insight. If a company is in the state of distress, a director with a strong track record with turn-around companies may be an asset to the board.

  • Access to a variety of resources

This may include government connections, professional relationships, past or present colleagues, your attorney, accountant, consultant, etc. These individuals may all recommend you or act as personal references.

  • Fiduciary responsibility

corporate board members have a fiduciary responsibility to care for the finances and legal requirements of the corporation. They must act in good faith and with a reasonable degree of care, and they must not have any conflicts of interest. That is, the interests of the company must take precedence over personal interests of individual board members.

These are the typical prerequisites needed in order to be considered for a seat.

 Persian Version of this article