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Beyond the Bylaws: A Clarification of Nonprofit Board Responsibilities
Columnist Eugene Fram suggests that nonprofit directors may not be fully addressing some duties specified in their organization's bylaws as well as others that are more tied to culture that he refers to as “latent” duties. One example is legal requirements. A nonprofit board is required to take part in the development or review of the IRS Form 990 prior to submitting it each year. Fram, a professor at the Rochester Institute of Technology's Saunders College of Business, writes, "I personally find it difficult to understand how so few nonprofit directors and managers are aware of the IRS Intermediate Sanctions Act, related to excess benefits transactions. If directors or managers provide an excess benefit to themselves, an employee or even a volunteer, they can incur serious personal tax penalties." Excess benefits are defined as items like salaries that are above market norms or selling something to a member at a lower-than-market price.

Relationships between board and staff members are another area of potential concern. In many nonprofit organizations, the staff is only one or two levels below the board. Consequently, nonprofit staff members become well attuned to both the actions of the board and the frequent rotations of board personnel. Because board members rotate frequently, staff can often feel vulnerable to new directors eager to make changes. To build trust, nonprofit directors should seek greater contact with staff at various events and at other appropriate occasions.

Fram concludes, "I suggest nonprofit boards periodically review duties specified by the bylaws as well as current law to make certain they are in compliance. Gaps can arise because the bylaw duties are ignored or delegated. In addition, boards need to be alert to latent duties, not readily overt, such as generating appropriate staff relationships."
Huffington Post (07/27/14) Fram, Eugene
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SEPTEMBER 2014 EDITION
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