Compliance may seem tedious, but for faith-based nonprofits, it is an opportunity to live out the Gospel through faithfulness in small things. In this lesson, we’ll explore the spirituality of compliance — how following legal and tax obligations can serve as a witness to Christ, prevent scandal, and become an offering of love to God. From Scripture to St. Thérèse’s “little way,” discover how even the most mundane tasks can serve your mission and sanctify your work.

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.

If you have never served as a director on the board of a faith-based nonprofit, the prospect of serving might be a bit daunting. These are hard, technical questions! Where should you even start? Start here. This toolkit will provide you with a basic checklist of what to know, what to ask, and how to begin your journey of faithful service as a board member.

At the most basic level, the duty of care simply means exercising reasonable care and judgment when making a decision on behalf of the organization. What does “reasonable” mean? Generally, the standard for the duty of care is to ask “what would a reasonably prudent person do in this situation?” Directors are expected to exercise the care that a reasonably prudent person would exercise.

If you work with a faith-based nonprofit, serve on a board of directors, or are thinking of joining a board, you have likely heard that directors have fiduciary duties. These duties (typically the duties of care, loyalty, and obedience) bind directors to uphold certain standards of conduct in their service to the nonprofit organization. This resource will introduce you to the duty of loyalty.

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.

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.

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.

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.

When acting as a director or officer, there are some situations when one can be subject to personal liability for one’s actions. If uninsured, one lawsuit can have a huge impact on a nonprofit organization. Luckily, Directors and Officers insurance (“D&O insurance”) allows for a way to mitigate the damage in scenarios like this.

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.