Board of Directors Commentary

Essential Standard: Your agency has a Board of Directors with a minimum of five individuals and a majority of independent board members

Governance is an essential aspect of running any nonprofit organization, and while it may seem to be a separate issue from best practices for serving survivors, it can have major ramifications for survivors. Good governance protects agencies from the pitfalls that can lead to leadership turnover, financial ruin, public scandals, and more serious concerns that often cause a program closure. A part of trauma-informed care is having consistency in care, and strong oversight for management and finances ensures that your organization can maintain healthy, consistent care with the funds to adequately staff your program and pursue your agency’s mission.

This table specifies both required and recommended attributes that are evaluated during the accreditation process. Those attributes labeled as required must be present for accreditation. Attributes labeled as recommended could be reviewed, but are not necessarily required, during the accreditation process. Each requirement and recommendation is further explained in the sections below.

Required

Board of Directors has a minimum of five individuals
Majority of your board members are independent

Board Make-Up

A minimum of five board members

Board size is determined by the board’s function, specifically by how many members are needed to accomplish the board’s goals and needs within a manageable group. While a standard number of members isn’t specified, it is recognized that less than five members would inhibit the board from incorporating the desired qualities, capacity, and diversity of experiences. Consequently, NTSA requires that your agency’s Board of Directors should have at least five members, in order to avoid a very small group controlling the entire organization and to provide enough capacity to meet the board’s functions and act as a deliberative body.

Majority of your board members are independent

The majority of your organization’s board members should be independent, meaning persons who:

Are not employees/ staff members of the organization
May not individually dictate operations of the organization
Are not related by blood or marriage to staff members or board members
Do not report to, or are not subordinate to, employees or staff members of the organization
Do not receive a significant amount for consulting, speaking, or any other remuneration from the organization
Do not have relationships with firms that have significant financial dealings/stake with organization, officers, directors, employees
Are not paid legal counsel, related by blood or marriage to paid legal counsel, or are employed by firm that is paid legal counsel for organization
Are not the auditors, related by blood or marriage to the auditors, or are employed by the auditing firm of the organization

Maintaining a majority of independent board members helps to ensure the board will properly serve their function and will take official action without any partiality, undue influence, or conflict of interest.

Diversity/ Inclusivity

It is critical to have a board of directors that reflects the diversity of the service providers and clients within your organization and within the anti-trafficking field. Including diversity and inclusivity on your board means respecting and representing different identities, including gender, race, religion, sexual orientation, ethnicity, age, and/or socioeconomic status among members. To ensure diversity and inclusivity, your organization can establish written practices and policies that detail how to recruit and engage diverse board members and facilitate inclusivity and equal access to leadership opportunities.

Survivor Representation

Within this field, we should recognize that no one is better able to understand survivors’ needs and views than survivors themselves. Having survivor representation on the board of your organization is a significant step towards ensuring your agency is survivor-centered, prioritizing the voice and needs of survivors.

Board Practices

Taking minutes for each meeting

It is considered best practice to maintain minutes at all board meetings and any committees that act on behalf of the board. The DC Nonprofit Corporation Code mandates that nonprofits keep minutes of its board meetings within its permanent records. The minutes of all board meetings should be brief and reflect only what is necessary, including the following:

The name of the organization
The date, time, and place of the meeting
All members present and absent
Who called the meeting to order and who kept the minutes
All motions made and the results of all voting
When the meeting ended

Meeting notes should then be presented and approved by the board in the following meeting.

Approving ED or CEO’s compensation

It is recommended that the board approves the compensation of the Executive Director or CEO of the organization and takes detailed minutes when discussing and approving the compensation. The Internal Revenue Code states that the compensation of the senior executive of the organization should not exceed the compensation of an executive in a comparable organization. Thus, the board should research similar organizations within a comparable geographic location to identify a “reasonable and not excessive” compensation for leading the organization. This process for approval of compensation should be detailed within your organization’s IRS Form 990, Section VI, Part B, line 15. Documentation of the discussion of compensation should include:

The terms of the compensation and the date it was approved
The members of the board present when compensation was discussed and approved (recommended to include the full board)
The data used by the board to determine appropriate compensation
Any actions taken by a board member who had a conflict of interest (i.e. senior executive recused themselves from the meeting about their compensation)

Reviewing the organization’s 990

It is considered best practice to have your board review a copy of the IRS Form 990, before it is filed for your organization. While board review is not a requirement, the IRS states that there may be a correlation between board review of the form and “the accuracy and effectiveness of the form in conveying the organization’s mission, activities, accomplishments, compensation and business relationships and transactions.” Board review can demonstrate good governance as the board is more informed and active in the organization’s operations. On your IRS Form 990 in Part VI, Section B, Line 11, your agency will be asked to describe the process used, if any, to review the Form 990 form.

Monitor financial status and approve annual budget

Your board of directors should have a role in financial dealings and decisions and should monitor the overall financial status of the organization. The board should ensure that the assets of your organization are being used in alignment with donors’ intent and the overall mission of your organization. This monitoring and oversight can take the form of financial policies, such as how cash is handled, how employee’s travel expenses are reimbursed, and the procedure for a conflict of interest. These policies and practices should seek to create transparency, clarity, and assurance regarding finances and budgetary constraints/considerations within your organization. Additionally, if your organization is interested in conducting an annual independent audit, your board should assess the benefits and costs of the audit and decide when is the best time to pursue one.

While staff is responsible for creating your organization’s annual budget, your board should approve it to certify that the budget both encompasses the strategic direction of the organization and works towards the long-term health of the organization.