When starting a nonprofit organization, one of the most important decisions you'll make is determining the size and structure of your Board of Directors. The Internal Revenue Service (IRS) requires a minimum number of board members, but beyond that, you have flexibility to build a board that suits your organization’s needs.
IRS Minimum Requirements
The IRS mandates that a nonprofit organization have at least three individuals serving as Officers and Directors. These individuals help manage and govern the organization, ensuring legal compliance and acting in the organization’s best interest.
The required officer positions are:
President (also called the Chair)
Secretary
Treasurer
Can Officers Serve as Directors?
Yes! A common structure, and one that we recommend, is to have the same individuals serve as both Officers and Directors. This setup helps streamline board meetings and decision-making. For example, you could have:
Director/President: This person serves both as a Director and the President (or Chair) of the board, guiding board meetings and strategic discussions.
Director/Secretary: This individual handles both Director responsibilities and the administrative duties of the Secretary, including maintaining meeting minutes and official records.
Director/Treasurer: As both a Director and Treasurer, this person ensures financial oversight, manages budgets, and oversees financial reporting.
By combining these roles, you keep your board lean, which can be ideal for a newly established nonprofit that may have limited resources and needs an efficient governance structure.
State Requirements for Board Members
In addition to the IRS requirements, your state may have specific rules regarding the number of board members your nonprofit needs. While most states also require at least three board members, some states may have additional requirements or restrictions.
For example:
Some states require that your board members be unrelated individuals, to avoid conflicts of interest and ensure diverse perspectives.
Others may have rules about term limits or maximum lengths of service for board members.
It’s important to check with your state’s regulations to make sure you comply with any additional requirements.
How Many Board Members Should You Have?
While three is the minimum, the number of board members your nonprofit should have depends on several factors, including the size of your organization, your goals, and your operational needs. Consider the following when deciding on your board’s size:
1. Organizational Size and Complexity
If your nonprofit is small, a board of 3 to 5 members may be sufficient to handle governance responsibilities efficiently.
For larger nonprofits with more complex programs, a board of 7 to 15 members can offer a broader range of expertise and ensure that the workload is shared among more people.
2. Skill Sets and Expertise
To effectively oversee your nonprofit, you’ll want board members who bring a mix of skills and perspectives, such as:
Financial Expertise: Board members with accounting or financial backgrounds can help ensure sound fiscal management.
Fundraising Experience: Individuals with fundraising or development experience can support revenue-generating efforts.
Legal or Compliance Knowledge: Having a board member with legal expertise can be invaluable in ensuring your nonprofit complies with regulations.
Mission Alignment: Seek individuals passionate about your mission who can bring connections, advocacy, or programmatic insight.
A well-rounded board brings diverse talents to the table, improving decision-making and strategic planning.
3. Board Efficiency
Having too many board members can slow down decision-making processes, while too few might overburden individual members. A mid-sized board (7-9 members) can often strike the right balance, offering diverse perspectives while still being agile enough to make timely decisions.
4. Board Committees
Some nonprofits choose to establish committees (e.g., finance, governance, fundraising) to divide tasks and make governance more manageable. If you plan to have committees, you may need a larger board to ensure that each committee has enough members to function effectively.
Balancing Legal Requirements with Organizational Needs
It’s important to remember that while the IRS and state governments have minimum requirements, your nonprofit’s unique goals and operational needs should guide the ultimate size and structure of your board. As your organization grows, you may need to adjust your board’s size to ensure effective governance.
Conclusion
At a minimum, the IRS requires three individuals to serve as Officers and Directors in a nonprofit organization, filling the roles of President, Secretary, and Treasurer. You can streamline your board by having these officers also serve as Directors. Beyond that, the ideal number of board members will depend on your state’s requirements, the size and complexity of your organization, and the expertise you need on your board.
By assembling a thoughtful, mission-driven board, you’ll help ensure the long-term success of your nonprofit.