Are you ready to grow your nonprofit board of directors but struggle to define “how many members are too many” or “how few is too few”?
To start, it’s crucial to recognize that no simple “magic number” constitutes the perfect-sized board for every organization.
According to sector research, the average nonprofit board has 15 or 16 members. But that doesn’t mean that “average” board is effective! To determine the right board size for your organization, you’ll want to review overall sector trends, brush up on nonprofit governance best practices, and conduct an organizational assessment that answers the questions below.
To home in even more quickly on your unique board leadership needs, nonprofit strategic planning can get your board and staff aligned for long-term growth and sustainability.
501c3 Board of Directors Minimum Requirements
A common question we hear from leaders launching a new nonprofit is: Do you need a board of directors for your nonprofit? Yes, in order to satisfy state and IRS regulations for tax-exempt status, all 501c3 nonprofit organizations will need a board of directors.
Five Questions to Consider When Defining the Size of Your Nonprofit’s Board
1) Legal Compliance
How many board members are legally required to retain nonprofit tax-exempt status?
The Internal Revenue Service (IRS) requires that all nonprofits registered at the federal level maintain a minimum of three members on the board of directors.At the state level, requirements range from 1 to 5 board members.
All organizations registered at the state and national level must ensure compliance with both state and federal regulations. For example, suppose your state only requires one board member. In that case, the minimum number of acceptable members is still three to maintain tax-exempt status with the IRS.
To confirm each state’s minimum number of board members and other governance compliance requirements, this breakdown of nonprofit governance by state is a helpful resource.
2) Roles and Responsibilities
What do you need board members to do for your organization?
Leadership models can look quite different depending on an organization’s scope of work. Regardless of whether an organization identifies its board of directors as a “working board” or “governing board,” members should be active.
Nonprofit board members assume legal and ethical responsibilities when they accept a seat on the governing board of directors.That’s why it’s important to create clear written job descriptions and expectations for your board of directors.
Organizations that are entirely or predominantly volunteer-run often need board members to assist with daily operations and direct services. Boards that identify as “working boards” assume a dual responsibility of governance and management which can require more intense time commitments outside of regular board meetings.
When an organization has staff managing daily operations, the board typically assumes an oversite role and is referred to as a “governing board.” While many board duties focus on “planning and oversite,” the job description should also clearly define how the board expects members to engage as planners, action-takers, and partners in accountability.
Once an organization prioritizes board functions, it is easier to determine how many leaders are needed to fulfill the roles and responsibilities of the board.Learn more: Working Boards vs Governing Boards
3) Diversity of Leadership
What professional skills and personal experiences on the board will help fulfill your mission?
Most organizations claim to want a diverse board but often fail to define what constitutes diversity.
When growing a diverse board, it is helpful to consider the following:
- Do we want/need board members who reflect the demographics of the community we serve? (If so, who should be at the governance table?)
- Do we want/need board members who bring different professional skill sets to the table? (If so, which skill sets will best advance our mission?)
- Do we want/need board members who have a successful track record in nonprofit leadership, or are we willing to invest in new leaders?
- What traits do we seek in our board members?
A healthy board dynamic should involve leaders who can share their unique perspectives, respectfully dialogue with those with differing opinions, and commit to achieving consensus for the well-being of the organization.
Lack of diversity on a board can result in a limited understanding of the community served, fewer creative ideas, fewer new resources, and failure to consider all angles of significant decisions.
4) Action and Implementation
How many board members do you need to achieve your goals?
Before you can answer this question, you’ll need to be sure your organizational vision, goals, and strategies are crystal clear. The best way to do this is through a 3-5-year strategic plan.
An effective strategic plan should provide a clear roadmap for your organization’s future, with measurable goals and outcomes. Your plan should also identify major gaps and unmet needs, detail strategies to fill them, and clarify the different roles your board and staff should play.
When done well, a strategic planning process can quickly get your board and staff aligned and working toward shared goals.
Once you have your goals in hand, you’ll need to answer two key questions:
- What activities is the board of directors responsible for spearheading and supporting?
- Are there enough board members to fill all standing and special committees without burning out existing board members?
On average, nonprofits maintain four standing committees. According to theBoardSource Index of Nonprofit Board Practices 2021 Report, the most common committees include:
- Audit and finance (82%)
- Development and fundraising (76%)
- Governance and nominating (71%)
- Executive committee (61%)
- Planning and strategy (28%)
If the “to-do” list is long, but the board roster is short, it might be time to expand the board to meet the needs of your growing organization.
5) Sustainability
How many board members do you need to ensure your organization is sustainable?
Consider evaluating the officer positions on your board of directors. Ideally, a board should have a chair or president, vice-chair or vice-president, secretary, and treasurer. Those officer positions constitute the board’s “executive committee.”
When assessing the sustainability of your board, you’ll want to ask:
- Does the board have a deep enough bench to mentor qualified successors for each officer position?
Nonprofit trends reveal that 73% of U.S-based nonprofits have three-year terms. 46% of those organizations impose a 2-year term limit.(BoardSource Index of Nonprofit Board Practices 2021 Report)
- Should a current board member become unexpectedly unavailable, do you have enough leaders to carry the load and carry on without staying in “crisis mode”?
- Do board turnover rates place your organization at risk of becoming “non-compliant” with the minimum number of board members required?
- Are there enough board members willing and able to step into interim roles should key leaders, such as the founder or executive director, become unavailable?
Why A Bigger Board Is Not Always Better
While larger organizations tend toward larger boards, most experts agree that a bigger board is not always better.
In fact, alandmarkstudy in the ’70s found that a “Goldilocks” sized team, one that is not too small and not too big, is4.6 people…which in the real world rounds up to 5. More recently, researchers at Bain found thatafter the7th personin a decision-making group, each extramember reduces decision effectiveness by 10%.
While many nonprofit boards need more than seven members to fulfill core governance functions and achieve strategic plan goals, the “Goldilocks” concept is helpful when organizing board members into efficient and effective committees or action teams.
Balance is everything.
Building Out Your Board: What to Focus On
While finding the right number of board members is important, it’s just as vital to make sure you have the right people filling those seats. When recruiting board members, remember to consider each candidate’s:
- Unwavering commitment to your organization’s mission.
- Availability to fulfill the legal, ethical, and engagement requirements associated with serving on a nonprofit board.
- Depth of skills and diversity of experiences needed to you’re your organization overcome challenges and achieve goals.
Are you ready to build an efficient and effective board?
