A board of directors is a requirement for the operation of a Rhode Island 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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Rhode Island Board of Directors Requirements
The Rhode Island Nonprofit Corporation Act, Section 7-6-2, defines a nonprofit board of directors as:
(3) “Board of directors” means the group of persons vested with the management of the affairs of the corporation (including, without being limited to, a board of trustees) regardless of the name by which the group is designated.
The number of required directors on the board is laid out in Section 7-6-23:
(a) The number of directors of a corporation shall be not less than three (3). Subject to limitation, the number of directors shall be fixed by the bylaws, except as to the number of the first board of directors, which number shall be fixed by the articles of incorporation. The number of directors may be increased or decreased from time to time by amendment to or as provided by the bylaws, unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment of the articles of incorporation. No decrease in number has the effect of shortening the term of any incumbent director. In the absence of a bylaw fixing the number of directors, the number shall be the same as that stated in the articles of incorporation.
Putting It Into Practice
A Rhode Island 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 Rhode Island MUST:
- Have at least three board members that are not related to each other
- Elect the following members: president, treasurer and secretary
Recommended: Read our full guide on How to Start a Nonprofit in Rhode Island.
What Is the Function of the Board of Directors?
The Nonprofit Corporation Act, Section 7-6-22 establishes the role of directors in the following manner:
(a) The affairs of a corporation are managed by a board of directors. Directors need not be residents of this state or members of the corporation unless the articles of incorporation or the bylaws requires it. The articles of incorporation or the bylaws may prescribe other qualifications for directors.
Putting It Into Practice
Before forming your Rhode Island 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:
- 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.
- 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.
- Incorporating New Members: A board also must source and incorporate new board members capable of effectively upholding the organization’s values.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 Rhode Island, a nonprofit’s board of directors also must fulfill certain legal responsibilities. The three most common legal responsibilities of a Rhode Island nonprofit include duty of care, duty of loyalty, and duty of obedience.
- Duty of Care: At a minimum, board members must attend and participate in meetings. In addition to this, read and review reports, record all actions made during meetings, and review the performance of the CEO or Executive Director.
- 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.
Developing Your First Board of Directors
If you’re still in the process of developing your Rhode Island 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 Rhode Island 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
Vacancies in a Rhode Island nonprofit’s board of directors can be filled according to Section 7-6-24 of the Nonprofit Corporation Act:
(a) Any vacancy occurring on the board of directors and any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the remaining directors, unless the articles of incorporation or the bylaws provide that a vacancy or created directorship shall be filled in some other manner, in which case the provision shall control.
(b) A director elected or appointed to fill a vacancy shall be elected or appointed for the unexpired term of the director’s predecessor in office.
(c) Any directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors.
Putting It Into Practice
When electing new members to your Rhode Island 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.
What Are Elected Officers?
Section 7-6-28 further outlines the election of officers to the board:
(a) The officers of a corporation consist of a president, one or more vice presidents, if prescribed by the bylaws, a secretary, a treasurer, and any other officers and assistant officers who are deemed necessary, each of whom shall be elected or appointed at the time and in the manner and for the terms not exceeding three (3) years that are prescribed in the articles of incorporation or the bylaws. In the absence of any provision, all officers shall be elected or appointed annually by the board of directors. Any two (2) or more offices may be held by the same person, except the offices of president and secretary.
(b) The articles of incorporation or the bylaws may provide that any one or more officers of the corporation are ex officio members of the board of directors.
(c) The officers of a corporation may be designated by any additional titles that may be provided in the articles of incorporation or the bylaws.
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 Rhode Island. 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 required for nonprofits in Rhode Island include:
- 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.
- Treasurer: The treasurer is responsible for evaluating the financial health of the organization by keeping track of receipts and spending.
- 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.
Note: In Rhode Island, the president and secretary position cannot be held by the same person.
Conclusion
Forming a board of directors is an essential part of creating and operating a nonprofit in Rhode Island. 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.