Nonprofit Insurance Program

What is the Board of Directors Responsible for?

By Alexa Connelly
September 16, 2013

A nonprofit organization is tax free entity and does not pay out profits to shareholders or owners. All revenue is re-entered into the organization and goes to pay its day to day operating costs. All nonprofit organizations are regulated by the IRS (Internal Revenue Service). To qualify for nonprofit status the organization must have elected a board of directors. The directors are commonly made up of volunteers with relevant skills useful to the organization.

Mission Statement           

Board of directors need to provide a mission statement. A mission statement is a short formal statement, which describes the purpose and aims of a nonprofit organization. The statement should highlight the goals and aim it hopes to achieve. The statement will serve to guide the day to day actions of the management and staff. The responsibility for drafting a mission statement is with the board of director’s nonprofit.

Executive Management

The board of director’s nonprofit oversees the corporation from afar and all daily tasks are the responsibility of the executive director. However, members of the board of directors are responsible recruiting and hiring of suitable candidates for the above position. Also the board of director’s serves as executive director’s manager. Their task is to guide, support, and provide performance appraisals.


By far the biggest responsibility of the board of directors of a nonprofit is fundraising. Most of the revenue for a nonprofit comes from fundraising, donations and financial appeals.


A nonprofit organization must follow many guidelines to maintain its tax-exempt status and provide statements to the IRS. The board of directors directs the senior management team. This also includes executive director and the controller in complying with current regulations and audits.

Asset Management

The board of directors nonprofit must direct all of its assets. A board member may review all the income which has come from rented property. He or she may also assist a financial adviser to identify qualifying investments for the group. The board works with senior management to develop an annual budget. Every transaction by the group must be highlighted during the financial year and this document must be made available to the Internal Revenue Service.

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