Being the director of a corporation is serious business. Merely possessing a pure heart and acting with good intentions do not relieve a director from obeying the fiduciary obligations of acting in good faith, with due care, and with loyalty.
In this three part Nonprofit Maven series, produced in partnership with the United Way of Chittenden County, Common Good Vermont talks to sector leaders who shed light on the responsibilities of Vermont nonprofit board members and the keys to sound financial practice, stewardship and sustainability.
Episode 1: The Fiduciary Responsibilities of Nonprofit Boards
Dr. Churchill Hindes, the highly regarded executive director of the Visiting Nurses Association of Chittenden and Grand Isle Counties is long-time nonprofit advocate. He details the fiduciary responsibility of Vermont nonprofit boards, the key indicators of a nonprofit’s financial health and the kind of reports board members should look for and be able to read.
Dr. Hindes sees nonprofits as business enterprise + mission fulfillment, encouraging strong financial reporting that provides structural information about the finances and operations. He advises prospective board members to look for external audits (with a clear opinion), formal budget, strategic plan—all measures of how seriously an organization takes itself.
Speaking to recent cases of embezzlement in municipal organizations, Hindes emphasizes the importance of clear financial procedures, systems of accountability (internal controls), the involvement of an active Treasurer and Finance Committee.
Episode 2: Nonprofit Board Legal Requirements
Eileen Elliott, former Vermont Commissioner of Social Welfare, is in private practice with the law firm of Dunkiel, Saunders, Elliott, Raubvogel & Hand. She serves on the United Way of Chittenden County’s Community Impact Committee and has extensive experience in the nonprofit sector. Eileen spoke to Common Good Vermont about the fiduciary and other responsibilities of nonprofit directors and officers. She outlines the “Duty of Loyalty, Duty of Care and Duty of Good Faith”. Putting the nonprofits interests above their own, informing themselves and making deliberate decisions that are in the best interest of the organization. Essentially, the Board member is responsible to implement and monitor reporting and information systems to check for failures and to comply with laws and regulations.
Episode 3: Reading NPO Financial Statements
Christine Moriarty of Money Peace details the primary documents necessary to monitor nonprofit health: Balance Sheet, Income Statement (a/k/a Profit & Loss) and Cash Flow.
- Vermont Nonprofit Act: Title 11B – Vermont Statutes Annotated
- Good Faith, Due Care, Loyalty: Fiduciary Duties
- Fiscal Responsibility and Oversight: Empowering Your Board to Lead
- Blue Avocado: Nonprofit Bookkeeping Test?
- Reading Financial Statements (PDF): www.ncced.org/documents/FINANCIALStatementsJUNE2006.pdf
NPO 101:
- Common Good Vermont: NPO 101: Boards & Governance
- Common Good Vermont: NPO 101: Financial Management
