A nonprofit board committee makes important decisions that affect the day-to-day operations of a nonprofit organization. Large organizations see more benefits in having committees handle their financial transactions. A small organization is not likely to afford the expenses of having extra members on their team. Once it is determined that this type of committee is needed, the next steps are to set up an effective nonprofit board.
Decide the Type of Committee
There are different types of committees to choose from. A standing committee is permanent and has members that hold regular meetings. An ad hoc committee is set up temporarily to complete short-term projects.
In addition, different committees are created for various departments. A finance committee handles budgeting and financial planning tasks. An audit committee oversees an organization’s financial reports and its auditing processes. Its members select auditors and review the results of audits that are done within or outside of the company.
Determine the Needs of the Organization
To choose the right type of committee, the first step is to know the specific needs of the organization. A fundraising committee is more beneficial for an organization that has trouble raising funds. However, it’s also needed when a lot of funds are raised and need to be managed effectively. A governance committee is more valuable for a healthcare organization that must follow strict healthcare laws. However, it’s not recommended for an environmental conservation group that is not required to follow strict regulations.
Determine the Rules of the State
Each state has laws about running legitimate nonprofit boards. These rules prevent organizations from exploiting donors and engaging in fraudulent business practices. To set up an active nonprofit board, the next step is to know the limitations. There are penalties for overpaying individual employees, overspending on lobbying, and creating bylaws that bypass state, local or federal laws.
Every nonprofit organization has different goals and needs to consider before creating a board of directors or committees. Different types of committees exist, and not everyone is required in order to function well. Also, consulting an attorney may be necessary to understand specific nonprofit laws. First, every organizational leader needs to do his or her research into the benefits of having not-for-profit board committees.