Overview of Roles and Responsibilities of Board
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.
- Major Duties of the Board of Directors
- Seven Areas of Responsibility
- Additional Perspectives on Board Roles and Responsibilities
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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
- Roles and Responsibilities of Nonprofit Boards
- The Changing Role of Boards and Management as Companies Grow
- What is Wrong With the Market for Corporate Governance Experts?
For the Category of Boards of Directors:
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