Nonprofit Myths: #9 - How Big Should a Board Be?

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Starting and running a 501(c)(3) tax exempt nonprofit is a lot of work and not everyone is cut out for it. Some go into the venture with false assumptions and myths and only later find out they didn’t understand what they were getting themselves into. Let’s examine some of those myths.

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Myth: I need a huge board of directors (or I don’t need a board at all, just me).

 

Truth: About half the states require one board member minimum, the other half require at least three. Only New Hampshire requires five. However, just about every state specifies in their statutes which positions need to be filled and what combinations are not allowed. For example, many states prohibit the board president from also being the secretary or treasurer. Even if the state does not specify, IRS scrutinizes any board of less than three unrelated board members. If you call them (and I have, several times, to see if I got the same answer every time) at 877-829-5500 and ask what the minimum number of board members is, you will get this answer: “IRS statutes do not specify a minimum number of board members.”

Next, ask, “How many board members does IRS want to see so that the number of board members is not an issue?”

The answer: “Three unrelated board members or five if two are related.”

 

Moral of this Myth: Pick at least three unrelated board members and be done with it, or five members if two are related. Board members do not have to be in the same state, and if your mission is international, they don’t even have to be in the same country. Note: Cousins, aunts, and uncles are not on the IRS list of relatives, but ancestors are. Go figure…

 

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"Nonprofit Myths" is a 12-part series by Dr. Kitty Bickford, founder of Pasture Valley Children Missions. As a nonprofit consultant, Dr. Bickford has provided guidance to thousands of nonprofit leaders in best practices for setting-up and effectively running their organizations. We're also proud to claim Dr. Bickford as an alumna of The Grantsmanship Center. 

© Copyright 2020 Kitty Bickford, DBS, CPC     Used  with permission

 

For further delight and edification, here's a short series on board development:

Who's On Your Board?     Where Can You Find Board Members?     What Does a Board Do?

 

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