Operating Effectively 202: Resources for Board Members

What You'll Learn

This skills course focuses on legal compliance issues related to members of the board of directors of a faith-based nonprofit. Directors will come away with the basic tools they need to understand legal compliance and better contribute to the success of the organizations they serve. The materials cover topics such as an overview of the spirituality of compliance to an introduction to a director’s duties, the importance of bylaws, conflicts of interest, and voting requirements.

Lesson 1

Toward a Spirituality of Compliance

Compliance can often seem tedious, but for a faith-based organization, compliance is an opportunity to offer up inconveniences and serve faithfully in all matters, great and small. An apostolate’s legal and tax compliance demonstrates its love of neighbor. While an apostolate’s noncompliance could harm the organization’s ability to operate or attract donors, the more spiritually significant concern is that such noncompliance could actually rise to the level of scandal, which could distract from – or even prevent – the witness of the apostolate and its staff or volunteers through whatever good work they do. Faithful completion of the most mundane tasks, even legal compliance, is the stuff of saints!

Lesson 2

What Directors Need to Know About the Duty of Obedience

Compared to the more common fiduciary duties of care and loyalty, the duty of obedience to mission is often forgotten. Unlike directors in the for-profit sector who seek to maximize profit for shareholders, non-profit directors must consider their organizational purposes and mission statements when making decisions. Non-profits share more in common with trusts than corporations in this regard. It can be easy to lose sight of mission or purpose when looking out for the bottom line. This can be a costly mistake.

Lesson 3


Take stock of your nonprofit’s strengths and weaknesses with this easy-to-use checklist. Broad topics such as “how well does your organization live out its religious identity” and “how strong are our corporate governance practices” are broken down into actionable “yes” or “no” questions that help you assess your vulnerabilities and strengths. For each section, the assessment provides links to Napa Legal resources that will help your organization address your weaknesses and identify opportunities for growth.

Lesson 4

Bylaws: Context & Clarifications

Developing bylaws can be one of the more overwhelming tasks a nonprofit leader faces, whether it’s writing them for the first time or making necessary amendments. Napa Legal’s resources will help make this complicated process painless. You will find answers to key questions such as what strategic considerations apply to each section, what language should be used, and how the standards in your bylaws become legally binding for your organization.

Lesson 5

Voting Requirements: Why They Matter

At first glance, the voting requirements in a nonprofit’s bylaws may not seem an exciting topic. Most nonprofits have not seriously considered their bylaws, perhaps because they have inherited old bylaws, copied the bylaws of another company, or even originated their bylaws from a quick internet search! If any of these scenarios applies to your organization, your organizations’ bylaws may include director voting requirements not tailor-made to your preferences or the specific needs of your organization. Taking just a few minutes to read and think through some key provisions within your bylaws may save you from major issues down the road.

Lesson 6

Checklist for Onboarding Directors

Faith-based nonprofits should provide their directors with an onboarding package containing key documents related to the organization and its operations. This onboarding package will help directors understand the organization so that they can provide accurate and helpful guidance. Directors at faith-based nonprofits should request an onboarding package if one is not provided. Both nonprofit executives and directors can use the example lists below to work with their teams to obtain appropriate onboarding material. Below is an example list of documents and information that should be included in a director orientation packet. This is not an exhaustive list; rather, it is a starting point that nonprofits can customize based on their own unique needs.

Lesson 7

Conflicts of Interest: Avoiding Common Mistakes

The directors of faith-based nonprofits have a duty of loyalty that requires them to put the organizations’ faith and mission ahead of personal interests, both in fact and in appearance. If the organization plans to enter a conflicted transaction, in which the organization will directly or indirectly compensate a person (such as a director or officer or a company owned by a director) who exercises authority or influence over the organization, special due diligence and approval is necessary. If the board does not conduct the required diligence, state and federal penalties may apply. These penalties include financial penalties, legal actions, and even the voidance of the transaction itself. Not all conflicted transactions are prohibited or improper, but all conflicted transactions must be carefully reviewed.

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