Governance

n the complex landscape of nonprofit corporations, the role of the board of directors is crucial in steering the organization towards its mission. To ensure transparency, accountability, and sound decision-making, boards must establish and implement robust policies and procedures.

The extent to which a board participates in its daily operations varies. Whether your board is a hands-on board or a policy-making board, several fundamental decisions must always remain in the board’s hands: 

Ultra vires is a Latin term conveying that acts outside the permissible scope of authority set forth in a corporation’s governing documents are an unauthorized activity that cannot be ratified by its Board of Directors. Although many states have effectively abolished this common law concept by granting corporations significant autonomy, ultra vires continue to be an important doctrine in the tax-exempt nonprofit context because such organizations are required to limit their powers to qualify for tax exemption.

Nonprofit organizations are governed by a board of directors responsible for making significant decisions and ensuring that the organization operates in compliance with relevant laws and regulations. However, to carry out the board’s responsibilities, nonprofit corporations need to have officers elected by the board.

The end of the year is a busy time for all nonprofits. Because of this, some obligations tend to slip through the cracks. Since the consequences can devastate a nonprofit, it is vital to ensure certain responsibilities are met by year-end.