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Q&A #115 – Are nonprofit Board members required to be U.S. residents?
There is no requirement under the federal tax laws governing United States 501(c)(3) and other tax-exempt organizations that Board members be U.S. residents or U.S. citizens. Similarly, I am not aware of any state nonprofit corporation statute that imposes such a requirement. However, since the organization will be based in the U.S., it would be prudent to have at least some Board members and officers who maintain a permanent residence in the U.S. to deal with operational and compliance matters.
The Importance of Your First Year of Board Service
Serving on a nonprofit organization’s Board can be a rewarding and often life-changing experience. The first year of Board service will set the stage for the remainder of your time on the Board and directly affect opportunities for engagement, impact, visibility, quality of experience, and advancement. Our 4-part New Board Member Planning and Preparation Series aims to help new Board members set basic goals and develop realistic expectations for success during this critical early stage of their Board tenure.
Q&A #114 – What happens if a nonprofit fails to hold regular Board meetings?
Failure to hold regular Board meetings as required in the organization’s Bylaws is a problem but usually does not trigger immediate consequences by itself. However, this is often a sign of deeper neglect or compliance failures inside the organization and will not reflect well on the Board members in the event of an internal dispute, lawsuit, government investigation, or financial statement audit.
Q&A #113 – What happens when a nonprofit Board vote is tied?
Unless an organization’s Articles of Incorporation or Bylaws provide otherwise, a tie or deadlocked vote simply means that the proposed motion failed to reach the required level of approval to pass. Some organizations provide a mechanism in their Bylaws to resolve matters that are deadlocked (such as designating one or more persons to break the tie), but this is unusual. Thus, the result of a tie is generally no different than if a majority voted against the motion.
With Your First Year of Board Service Complete, What’s Next?
As your first year of nonprofit Board service winds down, it is time to pause and reflect on the past year and start setting goals for year two. Your first year of Board service is all about learning and observing. Learning about the organization’s strategic plans and culture while observing engagement of fellow Board members. For the second year, your emphasis should shift to purposeful commitment based on what you learned in year one.
Q&A #112 – Can a chairperson unilaterally suspend a nonprofit organization’s Bylaws?
As discussed in Q&A #49, a nonprofit organization’s Bylaws generally cannot be “suspended,” but rather must follow the formal process for “amendment” set forth in the Bylaws themselves, the organization’s Articles of Incorporation, and the applicable state nonprofit corporation statute. It is possible, but extremely unlikely, that state law and your organization’s governing documents would permit the Bylaws to be amended unilaterally by the chairperson.
Planning for Your First Year of Board Service
With your first nonprofit organization Board meeting completed there is a tendency to relax, as the natural concerns and hesitancies that come with taking on a new role with new experiences start to dissipate. Avoid taking your foot off the gas. Now is the time to turn your thoughts to the year ahead and how you can make the most of your first year of Board service.
Q&A #111 – How should nonprofits fill out the Form W-9?
The Form W-9 does not provide an option that clearly describes the tax classification applicable to most nonprofit organizations. I recommend checking the box for “Other” and writing in “tax-exempt nonprofit corporation” or something similar, except in the relatively rare cases in which an organization is structured as a trust or does not have a federal income tax exemption.
Preparing for Your First Board Meeting as a New Board Member
You only get one first Board meeting as a new Board member of a nonprofit organization. Thoughtful front-end preparation for your first Board meeting is essential to help you to make a lasting impression that you are serious about your commitment and appreciative of the honor.
Q&A #110 – Are small nonprofits required to provide paid interns with health insurance?
As discussed in Q&A #108, paid interns usually must be treated as employees. Whether a particular employee is required to be offered coverage under an organization’s group health insurance plan is determined first and foremost by the eligibility rules set forth in the plan document and summary plan description (SPD). For small-staffed organizations that do not meet the definition of an “applicable large employer” under the Affordable Care Act, the main consideration will be how the terms of the plan are drafted.
Three Steps to Get Your New Board Member Service Off to a Good Start
You’ve just been appointed to the Board of a nonprofit organization you believe in and trust. Now what? The time between receiving this good news and beginning your Board service is important for laying the groundwork to be an impactful Board member. I have always found that putting in a little extra effort before your Board service starts will help both you and the organization get the most out of the relationship.
VIDEO: Establishing a Cash Management Target Policy | 5-Minute Lessons 4 Nonprofits
SE4N's A. Michael Gellman provides a short lesson on cash management target policies for operating and intermediate cash funds.
Q&A #109 – Can Board members insist that meeting minutes reflect their dissent?
The right of Board members to insist that their dissenting positions be reflected in the Board meeting minutes is ultimately determined by the organization’s Bylaws and the applicable state nonprofit corporation statute. Your state’s nonprofit corporation statute may provide Board members with a right to have their dissenting vote reflected in the meeting minutes, but there is generally no requirement that meeting minutes articulate the reasons for the dissent.
Q&A #108 – Can interns be paid as independent contractors?
While nonprofit organizations are usually afforded more latitude than for-profits to have unpaid volunteer interns, the decision to pay interns a stipend in lieu of employee wages raises difficult issues. Most paid interns would not fit the criteria for independent contractor treatment under the applicable laws. This means that paid interns must generally be treated as W-2 employees subject to minimum wage laws, payroll tax and withholding laws, and other requirements applicable to employees.
![Audit Planning Calendars Can Make Audits Less Stressful and More Efficient [SUBSCRIBERS-ONLY]](https://images.squarespace-cdn.com/content/v1/5e6ccadfb4659c1d51df14d5/1708791377742-HS2EGEXSLWLWC8DBVTV5/board-218535_1920.jpg)
Audit Planning Calendars Can Make Audits Less Stressful and More Efficient [SUBSCRIBERS-ONLY]
Financial statement audits have natural “built-in tensions” between nonprofit organizations and their independent auditors. These tensions are advantageous from a checks and balances point of view but can lead to communication challenges if not properly managed. Agreeing on a detailed planning calendar at the front end of the audit will make for a less stressful and more efficient audit process.