To Serve on the Board
Important questions to ask before you take your seat on the board.
I have had the privilege to sit on a board for several not-for-profit trade associations. The time can be productive and rewarding or a waste of time. More often than not, it ends up being on a sliding scale between both extremes, and you can have a major impact on what direction it takes. If you find yourself being asked to serve on a trade association board, you should first ask yourself: “Why me?”
There are several reasons an organization may want you to be on the board of directors. You may have some expertise the board is lacking in; you may be able to reach out to others to help accomplish goals with greater outreach to other groups, or; you may even be needed to help with fund-raising.
All associations need resources to make things happen and a major resource is funding. That can be done through adding more members, fund-raising efforts or expanded efforts on goods and services. Some trade associations have auto-funding mechanisms, a kind of built-in tax and funds are not an issue. However, most seem to rely on membership dues or convention revenues.
Regardless of how the money comes in, all associations need some form of a revenue stream to fund projects. Being aware and honest about it can help you decide how you can serve. You may also be recruited because you are young with fresh ideas. I believe that having new ideas and the energy of new people bring should be welcomed. Young people are the future and they have the most vested or what we call “skin in the game” when planning for the future. The more effective boards tend to be those that think several years in advance. The decision to serve on a board should not be taken lightly.
To Serve or Not to Serve
Once you understand why they want you to serve, you should research the group’s reputation. The reputation of the group—and in particular the board you sit on—will likely be attached to you and could follow you for several years. This can be a good or bad thing. Groups that promote honesty, transparency and work to improve an industry are worthwhile, and having that reputation attached to you is certainly a good thing.
Conversely, if the board is self-serving or is potentially engaged in questionable activities, you should be wary. Directors may be unaware that serving on a board is a great responsibility with legal ramifications. The Federal Trade Commission routinely shuts down up to ten associations a year for violations to the Sherman Anti-Trust Act. Fines can be heavy and board members can face penalties beyond what association insurance policies cover. Make sure the group has a D&O policy in place that adheres to the ethics and a conflict of interest policy.
Here are some questions you should want answered:
- How and where do the meetings take place? Are they local? Can one call in? How often do they meet?
- How much time will there be expected to devote to board business?
- Is there a cost associated with attending meetings? Are board members reimbursed for travel expenses?
- Who is currently on the board and how did they get there? Are there people who can understand a financial statement?
- Who is the CEO or executive director? Can you work with this person? Boards set the tone to the direction but accomplishments generally fall on the director and how well he/she can delegate tasks to the staff.
- How long will you serve? Are there term limits?
- The number of directors to make a quorum: some boards require simple majority and other may require a 2/3 vote.
- Liability: Outstanding debt or pending legal issues? Walking onto a board that has legal issues can land a new member in hot water they had no idea was headed their way. Review the IRS 990s—trade associations are required to submit them—they can be informative and help paint a picture.
When you secure a seat on the board, look for committees to serve on. You will only get out what you put in. Consider your talents, strengths and weaknesses. Pick committees that will be fulfilling to you and help your group. If you are the imaginative and forward-thinking type, the financial committee might be boring to you. You want to be helpful and be on projects that inspire you. Go in with your eyes wide open and ask questions. Ask others you trust in the industry what they think of you serving on the board, how they see you helping improve your industry.
It is critical to understand that you are there for the industry, not just the company you work for or yourself. It is a position of power that comes with a great deal of responsibility.