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Mar 27

Board Members’ Responsibility

Posted by: Steve Marr

Tagged in: Untagged 

From time to time I have been contacted for advice about how to intervene in issues with a nonprofit organization when concerns about finances or the organization’s leader have been called into question.
My perspective about responsibility of a board, church elder, council, or other organizational structure involves three critical tasks:
They hire and hold the leader accountable.
They oversee the general ministry plan.
They ensure financial integrity.


Board responsibilities may increase depending on the organization.   My advice to any organization is to clearly indicate the responsibilities of a board member by outlining what is expected so each person would be able to decide if they should accept the responsibility.
A recent situation highlighted why oversight is critical. “Ken” was the leader of an organization.  According to the bylaws Ken, as the leader, appointed the governing board without approval of general membership. In my view this was a flawed process from the beginning.
I was asked to provide a perspective into cleaning up what turned out to be a serious mess.  For example, Ken had withdrawn $10o,000 over time from the organizational checking account through an ATM card with no receipts. These withdrawals were not treated as personal income as IRS regulations would require.
There were other troubling issues.  There was no budget, no accountability, no statement of doctrine, or no ministry plan. Basically, Ken could do whatever he felt like doing.  While these cash withdrawals were going on for years, the board never raised one question into why this had occurred.  Additionally, there were substantial expenses that appeared to be personal that were charged to the organization.  This appeared to be improper.
In this situation the board members took zero personal responsibility. They simply dumped everything back on Ken.  In my view, the board was equally culpable for the serious ethical breach of financial integrity.  If the board did not realize the situation was inappropriate, they should have known.  As a result of this sad case, the matter has been referred to the Internal Revenue Service and the prosecutor’s office for further review.
A friend asked if I would consider a roll on the board of an organization for which he was the CEO.  My response was that since  “Tom”  and I are good friends and I would need to put the interest of the organization before my friendship; I wasn’t sure I wanted to put myself in that position. I told him that I would rather be his friend first and share my counsel any time he needed to bounce ideas around. That exchange demonstrates my view of board responsibility:  the interest of the organization must come before friendship or a personal comfort level.  Board members have a responsibility to ensure that the organization runs in a godly way. If issues arise, they must promptly investigate.
In a parable the Lord said, “So he called him in and asked him, 'What is this I hear about you? Give an account of your management, because you cannot be manager any longer.'” (Luke e 16:2, NIV)
In looking back at the situation with Ken, I believe that if the board had done their job properly over the last eight years; issues that started fairly small may have been addressed early. Then, with proper guidance, the whole situation would not have blown up into a major controversy. If Ken failed to follow the board’s basic guidance at the beginning, he could’ve been released years ago.  Now, because the situation reached such major levels, many people are hurt and the lost money involved is substantial.
While I’m not an attorney or CPA, it’s pretty clear to me that these ethical lapses have likely morphed into situations with serious legal consequences. Now that the wheels of justice are beginning to grind on their own, this will not end well for anyone involved. It is a lesson for each of us. When we are entrusted with a board responsibility, we need to pay attention and hold people accountable without nitpicking or micromanaging.
In the past, I have resigned from two board positions for different reasons.  The first was because I did not believe the finances were being recorded and reported accurately. Despite several efforts on my part to bring accountability, the CEO and board refused to follow what I felt was a good process; so I felt compelled to resign. The second instance involved a situation where the mission, vision and organizational plan were different from something I wanted to support. I understood that simple disagreements are always a part of the organizational process.  However, in this instance, rather than become contentious; I felt it was better to resign, wish them well, and focus my efforts elsewhere.
Whether a board responsibility finds you working with an organization with a minimal budget or a multi-hundred million dollar budget, fulfill your position as a serious responsibility.  Exercise it carefully, prayerfully and with diligence. Read through First Timothy for a good model. Make sure your “yes” is to the responsibility and the organization that gives you an opportunity to serve.

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