Board of Directors

The board of directors is the governing body that holds ultimate fiduciary responsibility for a nonprofit organization. Board members (also called directors or trustees) are typically unpaid volunteers who serve defined terms and are tasked with setting the organization's strategic direction, hiring and evaluating the CEO/executive director, approving the annual budget, ensuring financial accountability, and safeguarding the organization's mission. IRS Form 990 Part VI asks detailed questions about governance practices, including whether the organization has independent voting members, whether it has a written conflict of interest policy, and whether the board reviews the Form 990 before filing. The IRS considers strong governance a factor in maintaining tax-exempt status and has issued governance best practices for nonprofits. Best practices recommend that a majority of board members be independent (no financial relationship with the organization beyond their board service), that the board include an audit or finance committee, and that the board conduct regular self-assessments. Nonprofit governance failures — such as the scandals at the United Way of America and the Wounded Warrior Project — often stem from weak board oversight. NonprofitTruth's data from Form 990 includes information about the number of board members and governance policies, which donors can use to assess organizational accountability alongside financial metrics.