How to Develop a Board of Directors for a Nonprofit in Arkansas

A board of directors is a requirement for the operation of an Arkansas nonprofit entity. This elected group serves as the governance of your organization in everything from finances to the nonprofit’s mission.

Electing the right personalities to your board of directors is essential for your organization’s success. This guide will help you select your first board or grow an established board to better serve your nonprofit.

Check out our other guides for a look at how to form a nonprofit organization or how to select a board of directors in other states.

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Arkansas Board of Directors Requirements

The Arkansas Nonprofit Corporation Act, Section 4-28-202, defines what a board of directors is:

(1) “Board of directors” means the group of persons vested with the management of the affairs of the corporation;

Then, the number of required directors on the board is plainly laid out in Section 4-28-211:

(b) The number of directors shall be fixed by the articles of incorporation except that they shall not be fewer than three (3).

Putting It Into Practice

An Arkansas nonprofit’s board of directors works as a support system for the organization. Its duties include financial management, structural guidance, the hiring of executive directors, and much more. While the board typically isn’t involved in day-to-day operations, it plays an active role in maintaining the well-being of the organization as a whole, its effectiveness, and its financial health.

A 501(c)(3) eligible nonprofit board of directors in Arkansas MUST:

  • Have at least 3 unrelated directors
  • Set minimum and maximum of directors in the corporation’s bylaws
  • Elect all members after the first board of directors at the annual meeting
  • Elect the following members: president, treasurer and secretary

Recommended: Read our full guide on How to Start a Nonprofit in Arkansas.

What Is the Function of the Board of Directors?

Before forming your Arkansas nonprofit’s board of directors, it’s important to understand the role this group plays in the success of your organization. The general responsibilities of a board include:

  1. Enforcing the Organization’s Mission and Purpose: The foundation of any nonprofit is its mission so a board’s chief task involves upholding that mission as well as the organization’s purpose.
  2. Hiring a CEO/Executive Director: While your board of directors plays an instrumental role in the success and effectiveness of your nonprofit, it doesn’t participate in the daily operations. That makes it vital for the board to hire a CEO or executive director who will provide effective, day-to-day leadership.
  3. Incorporating New Members: A board also must source and incorporate new board members capable of effectively upholding the organization’s values.
  4. Assessing the Allocation of Funds: Careful distribution of assets within an organization ensures all areas receive adequate funding and thus supports the success of each aspect of a nonprofit’s mission.
  5. Generating Funds and Ensuring Financial Stability: Alongside verifying the appropriate distribution of funds, the board also has a responsibility to generate more assets to create a solid foundation for the nonprofit’s long-term financial stability.
  6. Supporting and Evaluating the CEO/Executive Director: A nonprofit’s board of directors not only serves as a support system for the CEO/executive director, but also assesses their job performance.
  7. Ensuring the Organization Follows Legal and Ethical Practices: It comes as no surprise that upholding the ethics of a nonprofit is essential to its success in achieving its mission. In this case, the board’s task involves ensuring the organization consistently follows legal and ethical practices across its operations.
  8. Generating a Positive Public Image: Building trust within the community not only attracts private investors, but also develops credibility among community members who may use the services your organization offers.
  9. Acknowledging and Addressing Conflicts of Interest: The Internal Revenue Service (IRS) requires nonprofits to develop a written conflict of interest policy that the organization’s board of directors will enforce. This prevents any board member from using their position in order to serve their personal interests.

Additional Legal Responsibilities

In Arkansas, a nonprofit’s board of directors also must fulfill certain legal responsibilities. The four most common legal responsibilities of an Arkansas nonprofit include duty of care, duty of loyalty, duty of obedience, and duty of good faith.

  • Duty of Care: This involves making appropriate use of the assets held by the organization. Specifically, board members must ensure the use of such funds promotes the good of the organization and those who benefit from its services.
  • Duty of Loyalty: This involves acknowledging and disclosing any conflicts of interest as well as making decisions that benefit the nonprofit as a whole rather than a single board member.
  • Duty of Obedience: Board members also must ensure the nonprofit adheres to all applicable laws and regulations while operating under the mission and bylaws that form its foundation.
  • Duty of Good Faith: Board members must be honest, above-board and act in a reasonable manner.

Developing Your First Board of Directors

If you’re still in the process of developing your Arkansas nonprofit entity, choosing the right board members is key to ensuring the effectiveness and stability of your organization. Here are a few tips to help you get started:

  • Solidify Roles. Designating functional roles for individual board members — outside of your elected officer’s roles — can improve the board’s overall effectiveness and functionality.
  • Develop and Commit to Bylaws. Creating a set of bylaws to uphold the mission of your organization creates a strong foundation to guide board members’ decision-making. In addition, state law may require Arkansas nonprofits to develop bylaws.
  • Prioritize Your Mission. Another beneficial strategy when choosing board members is to seek candidates with a passion for your organization’s mission and goals.
  • Acknowledge Any Conflicts of Interest. Conflicts of interest will inhibit a board member’s ability to effectively uphold the values and best interests of your organization. That makes it extremely important to assess potential or existing conflicts of interest when evaluating board members for your nonprofit.

Filling Board Vacancies

Board of director vacancies are defined and laid out for corporations in general in Section 4-26-803 of the Business and Commercial Law statutes:

(1) A vacancy on the board of directors shall exist when a director dies or resigns or when he or she is removed by the shareholders or by virtue of newly created directorship resulting from any increase in the authorized number of directors.

(2) Any vacancy, other than a vacancy occurring through shareholders’ action in removing a director, occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board, unless it is otherwise provided in the articles of incorporation or bylaws, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced.

(b) If by reason of death, resignation, or other cause, a corporation should at any time have no directors in office, then any shareholder or the executor or administrator of a deceased shareholder may call a special meeting of shareholders and, over his or her own signature, give notice of the meeting according to § 4-26-703.

Putting It Into Practice

When electing new members to your Arkansas nonprofit’s board of directors, focus on finding individuals dedicated to your organization’s mission. Here are a few tips to consider as you begin your search:

  • Look to Your Volunteers. Volunteers who stand out can make excellent additions to a board of directors. These individuals already dedicate their time and energy to your organization and most likely will bring that same dedication and goodwill to your board.
  • Explore Candidates Among Loyal Donors. Donors represent another group to consider when electing new board members because they create the financial foundation for your organization. That means they have a track record of dedicating time and money to ensuring the success and sustainability of your nonprofit.
  • Expand Your Search. Diversifying your search to include outside groups can prove effective in creating a well-rounded board of directors.

In Arkansas, vacancies must be filled by a majority vote of the existing board of directors. In the event that three or more directors resign or are removed simultaneously, members must hold an election for the vacant spots to fill the remainder of the term.

What Are Elected Officers?

Section 4-28-211 further outlines the election of officers to the board:

(a) The officers of a corporation shall consist of a president, vice president, secretary, treasurer, and such other officers and assistant officers as may be deemed necessary.

(b) The officers shall be elected or appointed in such manner and for such terms, not exceeding three (3) years, as may be prescribed in the articles of incorporation or bylaws.

(c) The articles of incorporation or bylaws may provide that one (1) or more officers of the corporation shall be ex officio members of the board of directors.

Putting It Into Practice

Elected officers are members of the board with assigned roles focused on regulating the day-to-day activities of the organization and maintaining its success. Each position should have a clear role defined in the organization’s bylaws.

The board of directors is required to nominate elected officers in Arkansas. Elected officer roles can not only prove helpful in ensuring the effectiveness of the board of directors, but also provide a foundation of leadership.

The three elected officers for nonprofits in Arkansas include:

  • Treasurer: The treasurer is responsible for evaluating the financial health of the organization by keeping track of receipts and spending.
  • President: As the leader of the board, the president commonly has authority over key activities like signing contracts and hiring or firing employees. This role differs from the CEO/executive director position, which the board typically hires after assigning the president role.
  • Secretary: This individual serves as the organizer of the board meetings, which may include scheduling the meetings, informing board members of the meeting schedule, planning the meeting agendas, and recording meeting minutes.

Conclusion

Forming a board of directors is an essential part of creating and operating a nonprofit in Arkansas. Ideally, this group will advocate for your organization’s best interests in everything from finances to public relations. To form or expand a board of directors that will best represent your nonprofit’s needs, search for members who will uphold your organization’s mission and purpose.

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