Nonprofit Accounting Basics

Board of Directors

Board Accountability

“The Buck Stops Here” phrase emphasizes the importance of accountability and holds true for a charitable non-profit organization board.

Board Composition, Independence, and Officers

Board Composition

A nonprofit board should be comprised of individuals who have the necessary skills, expertise, and diversity to effectively oversee the organization’s ope

Board Member Compensation

There is no federal law that prohibits nonprofits from compensating their board members but some states may forbid compensation for board service.

Ensuring Adequate Resources

The board must ensure adequate resources to allow the organization to carry on its mandate. Financial resources feed into the health and stability of the organization.

Fiduciary Responsibility - Board Governance for Charitable Non-Profit Organizations

Fiduciary obligations require charitable non-profit organizations to adhere to the highest ethical and legal standards. In every decision made and action taken, a charitable non-profit must:


Incorporating your nonprofit organization establishes it as a legal entity designed primarily to provide limited personal liability protection for those overseeing the organization.


Indemnification is the organization’s direct expression of willingness to protect its board members (and its senior staff) from the financial burdens of liability.


Nonprofit organizations, like any other entities, face a range of risks and challenges in their day-to-day operations.

Legal Duties-Board Governance for Nonprofit Organizations

Non-profit board members play a critical role in ensuring the success and integrity of their organizations.

Mission and Strategy-Board Governance for Charitable Nonprofit Organizations

The board governance plays a crucial role in shaping and guiding the mission and strategy of a non-profit organization.


Satisfactory protection against liability (and loss) starts with rigorous risk management.

Risk Management Plan

The board bears the responsibility for the safety of the organization.

Role in All Volunteer Organizations

Most nonprofits start as all-volunteer organizations (AVO), without a paid staff. The organization operates with the support of its board and maybe additional volunteers.

Volunteer Protection Act

The Volunteer Protection Act of 1997 provides personal immunity to individuals who act on behalf of an organization in a volunteer capacity.

What Board committees are recommended for a newly formed nonprofit?

Question: I will be forming a new nonprofit organization soon and I am in the process of recruiting the initial Board of Directors and drafting governing documents.

Your First Board

Every nonprofit corporation needs a board.

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