The size of boards can vary and composition, but they must all have a clear set of responsibilities for the board to ensure that members are held accountable. Board responsibilities typically include strategic leadership, managing the financial stability of the board, serving as ambassadors, and ensuring good governance.
Depending on the company, some boards might have additional responsibilities like community partnerships and fundraising. But the primary function of a board is controlling and overseeing the nonprofit’s activities. That’s why the majority of nonprofit board members serve as volunteers and do not receive any compensation for their time.
While a board of directors does not manage day-to-day operations, it does make important strategic decisions like mergers and acquisitions, as well as the top-level financial decisions. It also ensures that the business operates in a lawful manner and is in the best interests of shareholders and other stakeholders.
In addition, to the legal responsibilities, a board should have a comprehensive conflict of interest policy as well as a good understanding of the organizational documents (like articles, bylaws, and applications for exemption).
Finally, a good board will communicate with stakeholders to listen to their concerns, advocate for changes in corporate behavior, and help build the company’s reputation in the community. In the end, it is the actions of the board that determine the company’s ethical standards. These are in addition to any written ethical declarations and demonstrate what the company really believes. It is more crucial than ever, in light of the recent controversy surrounding the use of bribery.