Serve and protect

Serving on a nonprofit board in the
current period entails difficult
choices with enhanced rewards.

Board service on a nonprofit is no longer
merely a fun activity.

Smart Business spoke to Mark I.
Murovitz, partner at Habif, Arogeti &
Wynne, LLP
, about how recent economic
conditions have put board members in
difficult and unfamiliar positions.

What considerations should be made
before accepting a board position?

Before accepting a nonprofit board
position, consider what is expected of
you in terms of responsibility, legal obligations, experience and accountability.
In Georgia, as in many states, the unpaid
board member has protection for simple
negligence. However, that protection
does not cover behavior considered
gross negligence or willful misconduct.
If board members do not take their
responsibility seriously, they could face
negative public exposure and financial
liability as a responsible party of a failed
entity. As the nonprofit community deals
with the current economic uncertainty
the board member must be cognizant of
all the forces impinging on the organization and its mission and weigh those
with her or his legal responsibilities.

How does a board member ensure the
experience is meaningful and responsive to
our changed economic environment?

The fundamental concept is to make
sure that the organization’s management
is aware of the financial constraints that
exist and the organization’s resources
are used as intended to fulfill its mission.
This requires an understanding of the
resources available and management’s
plans to meet the mission within the new
economic constraints.

Frequently, the only tool utilized by the
board member is the financial information produced by management. The
member must ensure that management
and the board has current information
on revenues, expenditures and assets
available for current and future needs. In
addition, management must constantly
update the organization’s operating
budget for variations caused by the swift
changes we are experiencing in our
national and local economies.

How can the board member get a better
understanding of the organization’s mission?

The member should be asking ‘Who is
to be served and why, and what are the
demands for services in the community?’
From this baseline of information, the
board member must understand how
those needs are converted into a priority
schedule as the potential for decreasing
resources must be factored into the decision making process. With current and
valid information the board can work
with management to reset the organization’s priorities to enable it to successfully factor in the new reality.

What are the roles of the organization’s
management team and that of the board
member?

The professional management team of
the nonprofit is the mechanism by which
the goals and objectives are transformed
into the desired results. The board member, in his or her oversight role, is
responsible for governing, not for managing the organization. To govern, the
board member must understand the
qualifications and ability of management
to deal with the new economic paradigm. The board must not only approve
their compensation and evaluate the efficiency and effectiveness of their performance in the changed environment
but also must help management make
the hard decisions with respect to
staffing levels and other mission critical
issues in a time of reduced resources
and increased needs. In addition, the
member must be personally responsive
to the difficulty management is likely to
encounter with the threats to the efficacy of the organization in a severely constrained financial environment.

Board members must be satisfied that
information used by management and
the board is current and accurate.
Budgets must be constantly updated and
revised based on changes that are occurring in the organization’s resources. In
these times, management must have a
daily dashboard of financial information,
including cash available, receivables,
payables and other important operating
information.

It is difficult to be excited about governing in the current economic environment, but these times present the greatest opportunity for the intrinsic rewards
of service to others.

MARK I. MUROVITZ, CPA, MBA, is a partner in the Forensic and Litigation Services Group at Habif, Arogeti & Wynne, LLP and an
adjunct instructor of accounting at the J. Mack Robinson School of Business at Georgia State University. With more than 40 years of professional experience, he has been an adviser to business and nonprofit entities on systems and operational matters, audited public and
private entities including nonprofits and performed financial investigations. He has served as a board member and officer for nonprofit
organizations in the Atlanta community. Reach him at (404) 814-4940 or [email protected].