A non-profit association is a voluntary association of persons that is created to achieve statutory goals. Take a look at the main characteristics of an effective nonprofit board member.
The Board Bodies of Nonprofit Organizations
In some activities, the problem of the effective nonprofit board membership of cash receipts and the seasonality of sales is most acute. Therefore, when developing a strategic plan for the development of a company, managers, and shareholders are forced to consider various methods to reduce the risk of reduced cash flows. One way to mitigate these risks is to diversify assets. In the course of a board project, a company or group of companies may acquire assets whose cash flows will be counter-cyclical relative to those already available.
Board members must fulfill their legal obligations to manage and represent the nonprofit organization (NPO). A non-profit association can engage in economic activities and earn income that can be used to achieve the goals of the NPO. In the classical business model, the main stakeholders (interested persons) are the shareholders. They have always been at the head of the food chain. But the world has changed, and the emphasis has shifted. Now it may be the users or the state that becomes an active participant in the business that is vital to the company. The task of the board of directors of the new time is to determine who is the key stakeholder and act in their interests.
Characteristics of an Effective Nonprofit Board Member
As long as an effective nonprofit board member receives direct or indirect government support, they are expected to demonstrate a high degree of accountability to their stakeholder community. Such a community includes members of the organization, beneficiaries, donors, authorities, and other stakeholders or clients. Even affiliates must be accountable to the wider community to the extent that they are directly or indirectly dependent on its support.
Among the main characteristics of the effective nonprofit board member:
- determination of priority areas of activity of a non-profit organization, principles for the formation and use of its property;
- changing the charter of a non-profit organization;
- determination of the procedure for admission to the composition of the founders (participants, members) of a non-profit organization and exclusion from the composition of its founders (participants, members), except in cases where such a procedure is determined by federal laws;
- formation of bodies of a non-profit organization and early termination of their powers.
Common Features of the Effective Nonprofit Board Organizations
Despite the variety of terminology, from an organizational and economic point of view, all effective nonprofit board organizations are characterized by a number of common features:
- have an institutionalized structure;
- separated from the state;
- do not distribute profits among their founders or managers;
- voluntary (the law does not require mandatory membership, participation in them; their activities to a certain extent depend on voluntary donations or volunteer work).
In such a nonprofit environment, the future of companies will increasingly depend on the decisions made by boards of directors, on their ability to catch trends, notice changes in the external environment in a timely manner, assess risks and see opportunities. The tasks of the modern board of directors are formulated much more broadly than in previous years. However, the form of asset purchase entails a significant disadvantage, namely high tax payments. Asset transactions are taxed, while a share transaction can be arranged so that it is tax-free.