Board of Directors: Roles and Responsibilities Overview

Written by Max | Edited by Rory Hart
Sections of this topic
    Executive addressing his employee while writing on a white board

    Overview of Roles and Responsibilities of Board
    of Directors

    © Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. Also,
    see Carter’s Board Blog (for for-profits and nonprofits).

    The vast majority of content in this topic applies to for-profits and nonprofits. This book also covers this topic.

    Developing, Operating and Restoring Your Nonprofit Board - Book Cover

    There are a variety of views about the roles and responsibilities of a board of directors and most of these views share common themes. This document attempts to portray those themes by depicting various views. Simply put, a board of directors is a group of people legally charged with the responsibility to govern a corporation.

    In a for-profit corporation, the board of directors is responsible to the stockholders — a more progressive perspective is that the board is responsible to the stakeholders, that is, to everyone who is interested and/or can be affected by the corporation. In a nonprofit corporation, the board reports to stakeholders, particularly the local communities which the nonprofit serves.

    (Be sure to also review information in the sections Sample Job Descriptions and Board and Staff Roles.)

    • Major Duties of the Board of Directors
    • Seven Areas of Responsibility
    • Additional Perspectives on Board Roles and Responsibilities

    Also, consider
    Related Library Topics

    Learn More in the Library’s Blogs Related to Board Roles and Responsibilities

    In addition to the articles on this current page, see the following blogs which have posts related to Board Roles and Responsibilities. Scan down the blog’s page to see various posts. Also, see the section “Recent Blog Posts” in the sidebar of the blog or click on “Next” near the bottom of a post in the blog.

    Major Duties of the Board of Directors

    Brenda Hanlon, in In Boards We Trust, suggests the following duties (as slightly modified by Carter McNamara to be “nonprofit/for-profit neutral”).

    1. Provide continuity for the organization by setting up a corporation or legal existence, and represent the organization’s point of view through interpretation of its products and services, and advocacy for them

    2. Select and appoint a chief executive to whom responsibility for the administration of the organization is delegated, including:

    – to review and evaluate his/her performance regularly on the basis of a specific job description, including executive relations with the board, leadership in the organization, product/service/program planning and implementation, and in management of the organization and its personnel

    – to offer administrative guidance and determine whether to retain or dismiss the executive

    3. Govern the organization by broad policies and objectives, formulated and agreed upon by the chief executive and employees, including assigning priorities and ensuring the organization’s capacity to carry out products/services/programs by continually reviewing its work

    4. Acquire sufficient resources for the organization’s operations and to finance the products/services/programs adequately

    5. Account to the stockholders (in the case of a for-profit) or public (in the case of a nonprofit) for the products and services of the organization and expenditures of its funds, including:

    – to provide for fiscal accountability, approve the budget, and formulate policies related to contracts from public or private resources

    – to accept responsibility for all conditions and policies attached to new, innovative, or experimental products/services/programs.

    Major Responsibilities of the Board of Directors

    BoardSource, in their booklet “Ten Basic Responsibilities of Nonprofit Boards”, itemizes the following 10 responsibilities for nonprofit boards. (However, these responsibilities are also relevant to for-profit boards.)

    1. Determine the Organization’s Mission and Purpose

    2. Select the Executive

    3. Support the Executive and Review His or Her Performance

    4. Ensure Effective Organizational Planning

    5. Ensure Adequate Resources

    6. Manage Resources Effectively

    7. Determine and Monitor the Organization’s Products, Services, and Programs

    8. Enhance the Organization’s Public Image

    9. Serve as a Court of Appeal

    10. Assess Its Own Performance

    For more information about each of these responsibilities in nonprofits, see
    Becoming a More Effective Nonprofit Board

    Additional Perspectives on Board Roles and Responsibilities

    For the Category of Boards of Directors:

    To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

    Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

    Max