Nonprofit Board of Directors: Requirements & Best Practices

Your board of directors is your nonprofit's governing body — responsible for oversight, strategic direction, and fiduciary duty. Before you can apply for 501(c)(3) status, you need a board in place.

This guide covers minimum requirements by state, the three fiduciary duties every director must understand, required officer roles, board meeting rules, recruitment strategies, and the governance policies the IRS expects.

Minimum Board Size by State

Most states require at least 3 directors. Some allow fewer:

Minimum Directors	States
1	Arizona, California, Colorado, Delaware, Iowa, Maryland, Washington
3	Alabama, Alaska, Arkansas, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming

IRS expectation: Regardless of state law, the IRS prefers at least 3 independent directors for 501(c)(3) organizations. "Independent" means the director is not an employee, a family member of an employee, or a person with a financial interest in the organization.

Best practice: Start with 3-5 directors and grow to 7-15 as your organization matures. Odd numbers avoid tie votes.

For your state's specific requirement, see our state-by-state guide or use the Nonprofit Startup Checklist.

The Three Fiduciary Duties

Every nonprofit board member has three legal fiduciary duties. These aren't suggestions — they're legal obligations that can result in personal liability if violated.

Duty of Care

Board members must act with the care that a reasonably prudent person would exercise in similar circumstances. This means:

• Attend meetings — Regular attendance is expected, not optional
• Read materials — Review financial reports, meeting minutes, and proposals before meetings
• Ask questions — If something doesn't make sense, ask. Silence implies consent
• Make informed decisions — Gather relevant information before voting
• Stay current — Understand your organization's programs, finances, and challenges

What triggers a violation: Rubber-stamping decisions without reading the materials, consistently missing meetings, or failing to ask obvious questions about financial irregularities.

Duty of Loyalty

Board members must put the organization's interests above their own personal or professional interests. This means:

• Disclose conflicts of interest — Financial relationships, family connections, or business dealings that could influence decisions
• Recuse from conflicted votes — Leave the room during discussion and voting when you have a conflict
• Protect confidential information — Board discussions, donor information, and personnel matters are private
• Don't compete — Don't use your position to benefit yourself or another organization at the expense of this one

What triggers a violation: Steering a contract to a company you own, sharing confidential donor data, or voting on your own compensation.

Duty of Obedience

Board members must ensure the organization follows its mission, bylaws, and the law. This means:

• Stay true to the mission — Don't approve programs or expenditures that don't further the exempt purpose
• Follow the bylaws — Meeting procedures, voting rules, and governance processes matter
• Comply with laws — Tax filings, state registrations, employment laws, and reporting requirements
• Maintain tax-exempt status — No political campaign intervention, limited lobbying, no private benefit

What triggers a violation: Approving programs that have nothing to do with the mission, ignoring the bylaws, or failing to file Form 990.

Required Officer Roles

Most states and the IRS expect at least three officer positions:

President / Board Chair

Responsibility	Details
Presides over meetings	Sets agenda, facilitates discussion, manages time
Primary spokesperson	Represents the board to the public, media, and funders
Signs legal documents	Contracts, bank documents, official correspondence
Strategic leadership	Works with ED/CEO to set organizational direction
Board management	Recruits new directors, manages board dynamics

Secretary

Responsibility	Details
Meeting minutes	Records attendance, motions, votes, and key discussion points
Official records	Maintains bylaws, articles, board resolutions, and policies
Meeting notice	Sends meeting notices per bylaws requirements
Certifies actions	Signs certificates of board actions and resolutions

Treasurer

Responsibility	Details
Financial oversight	Reviews monthly/quarterly financial reports
Budget management	Leads the annual budgeting process
Tax compliance	Ensures timely filing of Form 990 and state reports
Audit coordination	Works with auditors (if applicable)
Board reporting	Presents financial status at each board meeting

Can one person hold multiple offices? In many states, yes — especially for small boards. However, best practice (and some states) prohibit the same person from serving as both President and Secretary.

Optional: Vice President / Vice Chair

Acts in the president's absence and often chairs a standing committee. Helpful for succession planning.

Board Meeting Requirements

Frequency

• Most states require at least one annual meeting
• Best practice is quarterly (4 per year) for most small nonprofits
• Growing organizations often meet monthly or bi-monthly

Quorum

A quorum is the minimum number of directors who must be present for the board to conduct business. This should be defined in your bylaws.

• Common standard: Majority of directors currently in office
• Example: If your board has 7 members, 4 must be present
• Never set quorum too low — A quorum of 2 means 2 people can make binding decisions

Virtual Meetings

Most states now allow virtual board meetings (phone or video conference). Your bylaws should address:

• Whether virtual attendance counts toward quorum
• How votes are recorded for remote participants
• Technical requirements (all participants must be able to hear each other)

Minutes

Board minutes are a legal record of governance. They should include:

• Date, time, and location (or virtual platform)
• Attendees and absentees
• Motions made, seconded, and voted on (with vote count)
• Key discussion points (not a transcript — a summary)
• Action items and responsible parties

Minutes should be approved at the following meeting and kept permanently.

Board Independence: What the IRS Wants

The IRS scrutinizes board composition when reviewing Form 1023 applications and Form 990 filings. They look for:

• No majority of related individuals — Family members, business partners, or employees should not constitute a majority of the board
• Independent compensation decisions — Compensation for officers and key employees should be approved by disinterested board members
• Conflict of interest policy — Required for Form 1023; reviewed annually
• Arm's-length transactions — Any business between the organization and a board member must be at fair market value and properly disclosed

Red flags for the IRS:

• Board of 3 where 2 are married to each other
• Founder serves as board chair, executive director, and treasurer
• Board member's company receives a major contract without competitive bidding
• No conflict of interest policy or annual disclosures

How to Recruit Board Members

Where to Find Directors

• Your network — Friends, colleagues, and community members who share your passion
• Professional associations — Your local nonprofit association often has board-matching programs
• Community leaders — Business owners, educators, faith leaders, retired professionals
• Your volunteers — Long-term volunteers who understand your mission
• Board recruitment platforms — BoardSource, VolunteerMatch, LinkedIn

What to Look For

Build a board with a mix of skills:

Skill Area	Why It Matters
Finance/Accounting	Budget oversight, Form 990 review, financial controls
Legal	Governance, compliance, contracts
Fundraising	Donor connections, event planning, grant writing
Marketing/Communications	Brand awareness, social media, public relations
Program expertise	Deep knowledge of your mission area
HR/Management	Hiring, personnel policies, organizational development
Community representation	Lived experience, diversity, community connections

Board Recruitment Process

1. Identify gaps — What skills does your current board lack?
2. Create a board profile — Written description of ideal candidates
3. Nominate candidates — Through your governance/nominating committee
4. Interview candidates — Meet in person; discuss time commitment, expectations, and financial contribution
5. Provide orientation — Mission, bylaws, financials, current programs, board calendar
6. Vote to elect — Per your bylaws' election procedures

Setting Expectations

Before someone joins your board, make sure they understand:

• Time commitment — Meeting frequency, committee work, events (typically 5-10 hours/month)
• Financial expectation — Many boards have a "give or get" policy (personal donation or fundraising amount)
• Term length — How long they're committing (typically 2-3 year terms)
• Fiduciary duties — The legal responsibilities outlined above
• Attendance policy — What happens if they miss meetings

Conflict of Interest Policies

The IRS requires a conflict of interest policy for 501(c)(3) organizations. It should include:

1. Definition — What constitutes a conflict (financial interest, family relationship, business relationship)
2. Disclosure requirement — Annual written disclosure from every board member
3. Procedures — What happens when a conflict is identified (disclosure, recusal, board vote)
4. Documentation — Minutes must record the conflict, discussion, and resolution
5. Annual review — Board reviews and signs the policy each year

For a template, see our Bylaws Guide — the conflict of interest policy can be part of your bylaws or a standalone document.

Board Compensation and Expenses

Type	Typical Practice	Disclosure
Board compensation	Usually $0 (volunteer)	Must disclose on Form 990 if paid
Meeting expenses	Reimbursed (travel, meals)	Reasonable; documented with receipts
Stipend	Uncommon for small nonprofits	Must be reasonable and approved by independent directors
D&O Insurance	Recommended	Protects directors from personal liability

Key rule: Any compensation to board members must be "reasonable and not excessive." The IRS compares to similar organizations. When in doubt, don't pay board members — it raises more questions than it resolves for small nonprofits.

Common Board Governance Mistakes

1. Founder's syndrome — One person controls everything; board exists on paper only
2. Rubber-stamp board — Directors approve everything without discussion or scrutiny
3. Too small — A board of 3 with 2 related members has no real independence
4. No financial oversight — Treasurer doesn't review financial reports; no one understands the budget
5. No succession plan — What happens when the founder leaves? Or the board chair?
6. Missing policies — No conflict of interest policy, no whistleblower policy, no document retention policy
7. Unclear roles — Board members try to manage day-to-day operations instead of governing

Board Governance Checklist

Use this to evaluate your board health:

• ☐ Board has at least 3 independent directors
• ☐ Officers include President, Secretary, and Treasurer
• ☐ Board meets at least quarterly
• ☐ Minutes are recorded and approved
• ☐ Conflict of interest policy adopted and signed annually
• ☐ Financial reports reviewed at every meeting
• ☐ Form 990 reviewed and approved by the board before filing
• ☐ Board members have clear term limits
• ☐ New directors receive orientation
• ☐ Board conducts annual self-evaluation

For the full startup process, see How to Start a Nonprofit. To write your governance documents, see How to Write Nonprofit Bylaws. Once your board is in place, set up fund accounting so your treasurer can review real-time financial reports at every meeting.

Ready to set up your new nonprofit? Schedule Your Free Setup | Start Free — Under $100K in Donations

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Related:

• How to Start a Nonprofit: The Complete 2026 Guide
• How to Write Nonprofit Bylaws
• Nonprofit Articles of Incorporation
• How to Start a 501(c)(3)