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

A board of directors is a requirement for the operation of a Utah 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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Utah Board of Directors Requirements

The Utah Revised Nonprofit Corporation Act, Section 803, lays out the requirements for the size of a nonprofit board of directors:

(1) A board of directors shall consist of three or more directors, with the number specified in, or fixed in accordance with, the bylaws.

(2) (a) The bylaws may establish, or permit the voting members or the board of directors to establish, a range for the size of the board of directors by fixing a minimum and maximum number of directors.

(b) If a range for the size of the board of directors is established in accordance with Subsection (2)(a), the number of directors may be fixed or changed from time to time within the range by:

(i) the voting members; or

(ii) the board of directors.

Putting It Into Practice

A Utah 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 Utah MUST:

  • Have at least three board members that are not related to each other

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

What Is the Function of the Board of Directors?

The Revised Nonprofit Corporation Act, Section 801 establishes the role of the board of directors in the following manner:

(1) A nonprofit corporation shall have a board of directors.

(2) (a) [A]ll corporate powers shall be exercised by or under the authority of, and the business and affairs of the nonprofit corporation managed under the direction of, the board of directors.

(b) (i) The articles of incorporation may authorize one or more persons to exercise some or all of the powers that would otherwise be exercised by the board of directors.

(ii) To the extent the articles of incorporation authorize a person other than the board of directors to have the authority and perform a duty of the board of directors, the directors shall be relieved to that extent from such authority and duty.

(3) The board of directors may be divided into classes, each with such respective rights and duties as the articles of incorporation or bylaws may provide.

(4) The board of directors and the directors may be known by any other name designated in the bylaws.

Putting It Into Practice

Before forming your Utah 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 Utah, a nonprofit’s board of directors also must fulfill certain legal responsibilities. The three most common legal responsibilities of a Utah 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 Utah 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 Utah 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 Utah nonprofit’s board of directors can be filled according to Section 810 of the Revised Nonprofit Corporation Act:

(1) Unless otherwise provided in the bylaws, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:

(a) the voting members, if any, may fill the vacancy;

(b) the board of directors may fill the vacancy; or

(c) if the directors remaining in office constitute fewer than a quorum of the board of directors, the remaining directors may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

(2) Notwithstanding Subsection (1), unless otherwise provided in the bylaws, if the vacant office was held by a director elected by a voting group of voting members:

(a) if one or more of the remaining directors were elected by the same voting group of voting members:

(i) only the directors elected by the same voting group of voting members are entitled to vote to fill the vacancy if it is filled by directors; and

(ii) the directors elected by the same voting group of voting members may fill the vacancy by the affirmative vote of a majority of the directors remaining in office; and

(b) only that voting group is entitled to vote to fill the vacancy if it is filled by the voting members.

(3) Notwithstanding Subsection (1) and unless otherwise provided in the bylaws, only the directors elected by the same voting group of directors are entitled to vote to fill the vacancy if:

(a) the vacant office was held by a director elected by a voting group of directors; and

(b) any persons in that voting group remain as directors.

(4) Unless otherwise provided in the bylaws, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.

(5)

(a) If a vacant office was held by a designated director, as provided in Subsection 16-6a-804(5), the vacancy shall be filled as provided in the bylaws.

(b) In the absence of an applicable bylaw provision, the vacancy may not be filled by the board.

(6) A vacancy that will occur at a specific later date by reason of a resignation effective at a later date under Subsection 16-6a-807(2) or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

Putting It Into Practice

When electing new members to your Utah 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 818 further outlines the election of officers to the board:

(1) (a) A nonprofit corporation shall have the officers designated:

(i) in its bylaws; or

(ii) by the board of directors in a manner not inconsistent with the bylaws.

(b) An officer shall be:

(i) a natural person; and

(ii) 18 years of age or older.

(c) An officer need not be a director or a member of the nonprofit corporation, unless the bylaws so prescribe.

(2) (a) An officer may be appointed by the board of directors or in such other manner as the board of directors or bylaws may provide.

(b) An appointed officer may appoint one or more officers or assistant officers if authorized by:

(i) the bylaws; or

(ii) the board of directors.

(3) The bylaws or the board of directors shall delegate to the secretary or to one or more other persons responsibility for:

(a) the preparation and maintenance of:

(i) minutes of the directors’ and members’ meetings; and

(ii) other records and information required to be kept by the nonprofit corporation under Section 16-6a-1601; and

(b) authenticating records of the nonprofit corporation.

(4) The same individual may simultaneously hold more than one office in a nonprofit corporation.

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 not required to nominate elected officers in Utah. 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 four elected officers for nonprofits in Utah 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.
  • Vice President: The vice president serves as support for the president. In many cases, the vice president moves into the role of president after the current president completes their term.
  • 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 Utah. 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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