Nonprofit boards are not only the principals guiding the organization’s management, policies, and financial strength, but the heart and soul of the nonprofit, as well. Nonprofit board members have an obligation to make sure everything possible is being done to further the organization’s mission by offering comprehensive, ethical, and legal leadership. Nonprofit boards are also responsible for ensuring the financial stability of the nonprofit organization by providing sound financial management strategies, which cover everything from loans to nonprofits to nonprofit lines of credit.
At Financing Solutions, we get many calls from Executive Directors who have let their nonprofit board know about cash flow fluctuations due to delayed reimbursements. A Nonprofit Line of Credit can significantly help your organization…and your peace of mind.
Types of Nonprofit Boards
According to BoardEffect, a support organization for boards of directors, there are five basic nonprofit board models.
Advisory Board Governance Model
. This model is created to help the founder of a nonprofit organization by serving as their primary advisor. Board members are knowledgeable in the nonprofit’s field and offer their professional experience and advice when needed for no monetary compensation.
Patron Governance Model
. Like the Advisory Board Model, the Patron Governance Model board members offer their expertise but primarily in the fundraising area. The key role of these nonprofit board members is to donate their own monies to the organization and use their connections to obtain outside contributions.
Cooperative Governance Model
Nonprofit boards without a CEO use the Cooperative Model, where the board makes consensual decisions. This democratic model has no hierarchy—no one board member has more decision-making power than any other board member. Each board person must be equally committed to the nonprofit organization.
Management Team Model
This model is the most popular type for nonprofit boards. In this model, the nonprofit’s board members carry out the duties typically performed by employees experienced in the HR, fundraising, accounting, management, and program planning fields.
Policy Board Model
This final model divides matters of organizational purpose (the “ends”) from all other organizational matters (the “means”) and places the most importance on the ends. In essence, the nonprofit board is relieved of any micromanaging responsibilities to focus on the big picture.
Roles of a Nonprofit Board
The responsibilities of a nonprofit board are both practical and idealistic in scope. On the practical end, the board members should be well-versed in their organization’s legal limitations and overall requirements. It is the duty of each member to understand all the facts regarding board issues and make informed decisions on behalf of the nonprofit. The interests of the nonprofit organization come before any personal interests, and board members should always focus on furthering the organization’s vision and mission.
The four primary positions on nonprofit boards are:
The board chair (also called the board president) directs the board, committee members, and the overall nonprofit organization. The chair also helps with board recruitment and manages the executive director of the organization.
Also called vice presidents, vice-chairs fill in for the board chair when needed and perform special assignments as directed by the board chair.
The secretary for nonprofit boards must attend all board meetings and maintain detailed and accurate board minutes. Secretaries are also responsible for ensuring the board is in compliance with the organization’s bylaws.
The treasurer creates any financial reports and has budgetary responsibilities.
The role of the executive director of nonprofit boards focuses on overseeing the daily operations of the organization, including managing the staff, volunteers, and the marketing and fundraising teams. So, while the board chair focuses on higher-level organization planning, the executive director is more hands-on. It’s essential for the board chair and the executive director to have a good relationship as they work closely together to carry out the goals of the organization. Executive directors typically help the board chairs organize board meeting agendas and attend the meetings to stay informed about the board’s business. Likewise, the executive director should keep the board up-to-date about the activities of the staff and volunteers.
It is also the board chair’s responsibility to perform an executive director evaluation. Although the executive director’s specific responsibilities may vary by organization, the director should be evaluated on how effectively they carry out the organization’s programs and initiatives. One best practice of highly effective nonprofit boards is also to have board members do self-evaluations to keep all individuals on track to fulfill the organization’s mission.
Finally, according to BoardSource (previously the National Center for Nonprofit Boards), the officers and members on nonprofit boards are not just entrusted with the organization’s most important decisions, they must also stay connected to the community their organization serves. Without a personal connection, the nonprofit board can lose sight of the vision, values, and beliefs they pledged to empower through the organization.
Recruiting New Board Members
When putting together nonprofit boards, it’s essential to consider the precise needs of your organization. Of course, you want expertise and experience, but you also need passionate and committed board members. Recruit members who understand the community you wish to serve. Perhaps add members who are directly affected by what the organization offers. Even after you put together a board, keep your eyes open for new board members who could fill any missing components of your board.
How you structure your nonprofit organization could also affect your recruiting efforts. Some recruits may not want to share in the burden of nonprofit board liabilities in the event the organization gets in legal trouble. Many nonprofits incorporate for that very reason so that the corporation’s liabilities stay with the corporation and board members’ personal assets are not affected.
Performing comprehensive nonprofit board training can save your organization future headaches, especially where board members’ responsibilities are concerned. Give recruits a history of the organization and explain thoroughly the nonprofit’s mission and services provided. Next, outline any specific expectations and policies. All board members are expected to be involved in fundraising efforts in some capacity, whether it’s hands-on fundraising or developing fundraising campaigns. All the good your nonprofit can accomplish will be stalled if your organization doesn’t have the funds to operate.
Planning for the Unexpected
Every nonprofit board needs an affordable cash backup plan to help keep the organization running in case cash flow declines. Often, cash flow at a nonprofit takes a temporary dip due to delayed reimbursements or seasonal slowdowns.
A nonprofit line of credit is a fixed amount of money available to a nonprofit organization when and if needed. In many cases, nonprofits mainly use their line of credit to deal with essential expenses that must be paid on time, such as payroll, rent, etc.
Financing Solutions is a leading provider of business loans for nonprofits in the form of a 501c3/not-for-profit line of credit. The application process is simple, and our approval rates are high. Here’s what you need:
- Your nonprofit must have at least $200,000 in yearly revenue to qualify.
- Someone on the nonprofit board, or an officer, must have a 650 or greater credit score. not
That’s it! There are no personal guarantees needed, and no collateral is required.
In addition, the nonprofit line of credit has no setup fees and costs nothing when it’s not being used, which makes it an excellent backup plan for nonprofits. There are no restrictions as to what the line can be used for. As a nonprofit, you’ll likely experience various cash flow and working capital needs, and a nonprofit line of credit is an excellent financing option. Plus, unlike a long-term loan, there are no penalties for early repayment. You can pay back the money as soon as your government/corporate grants and donations come in.
You just need to fill out the 2-minute online application, and we will send a no-obligation offer for you to consider. Your Relationship Manager from Financing Solutions will go over the quote with you. If you decide you want to move forward, we will need four months of bank statements, your most recent IRS Form 990, and a few other simple documents.
Financing Solutions is the right choice for your nonprofit! In summary:
- We have an excellent reputation: A+ Rated by the BBB with 5-star-rated reviews
- No collateral or personal guarantees are required
- It’s free to set up the small business credit line, and there’s no cost when the credit line is not being used
- The credit line is easy to set up with a no-obligation 2-minute online application
- We offer an online customer web portal to request funds, track payments, schedule payoff
- The credit line can be paid off in days, weeks, or months. Whenever you like.
- There’s no obligation to use the small business line of credit
- When funds are drawn, the small business credit line is inexpensive
- The business line of credit stays in place for 12 months and is easy to renew
Contact Financing Solutions Today!