You should attend meeting of the board
and committees on which you serve. You must have knowledge and
understanding of how the organization is functioning, and you must have
particular knowledge and understanding about the purpose of the
organization and the specific responsibilities assigned to you.
Absence from meetings and inactivity do
not excuse you from legal responsibility.
Receive no material profit
Board members can only receive
reimbursement for reasonable expenses and costs incurred in carry board
responsibilities. Illinois law prohibits loans by the organization
to its directors and officers. If a board member is also an
employee, compensation can be paid but the employee/board member should
not participate insetting his or her compensation.
conflicts of interest
||As a board member, you owe a duty of
loyalty to the organization that takes precedence over your personal
Avoid transactions with the organization
in which you have a personal or business interest beyond your interest
as a board member. In the rare instance where it is not in the
best interests of the organization to deal with you, you should make a
full disclosure to the board of all the circumstances involved in the
transaction, be sure that the transaction is fair to the organization,
refrain from voting on the transaction as a board member, and not be
counted in determining the existence of a board quorum. This
restriction applies also to your relatives, business associates and
In all matters pertaining to the
organization, you must put its interests ahead of your own. If an
opportunity related to the organization's purposes comes to you either
as a board member or otherwise, you must make it available to the
organization before you take it for yourself or another entity.
judgment in overseeing the organization's affairs
||As a board member, you have a duty to
care for the organization's affairs in good faith and with at least the
degree of diligence, care and skill which ordinarily prudent people
would exercise under similar circumstance in like positions. Your
good faith is not enough. The board must act with knowledge and
after adequate deliberation. The board must carefully set
organizational policy and regularly oversee its administration by the
competent staff. To exercise its duty or care, the board must
appoint and regularly review the chief administrative officer of the
organization and establish and monitor, without getting involved in
day-to-day activities, basic organizational policies and procedures as
Become familiar with all financial
matters of the charity. Regularly request financial
information and review all annual reports and audits of the
organization's financial affairs. Each board member should be
sure to review and keep copies of the returns filed with the
Internal Revenue Service.
Provide for competent legal counsel
to assure compliance with applicable local, state and federal laws,
including timely filing of reports and meeting procedures.
Provide for regular meetings of the
board and its committees with adequate reports on (and discussion
of) organizational activities.
Maintain adequate minutes of board
and committee meeting as well as pertinent organizational records.
Provide for careful selection and
orientation of new board members.
Be sure that conflicts of interest
Require board review, adoption and
monitoring of the annual budget.
Ensure financial resources to
conduct organizational activities.
Clarify and assure adherence to the
purposes of the organization and monitor effectiveness in achieving
results. A copy of the charter, by-laws and tax exemption
letter, if any, will help with this.
Assure a personnel program that
provides competent staff.
Assure that staff compensation and
professional consulting fees are reasonable and set senior staff
Provide sound investment and
management of organizational funds and assets not expended directly
for charitable purposes, to yield a reasonable return without undue
Protect the organization's
property, including reasonable provision for safekeeping,
replacement and divestment procedures that will benefit the
with applicable governmental regulations
||A number of local, state and federal
laws and regulations apply to not-for-profit organizations. The
board is responsible for ensuring that the organization complies with
Illinois not-for-profit organizations
may be organized either as not-for-profit corporations or as charitable
trusts under a trust agreement. Not-for-profit corporations must
file annual reports with the Illinois Secretary of State's office and
annual financial reports with the Illinois Attorney General's office.
Charitable trusts must file reports with the appropriate court and/or
with the Illinois Attorney General's office.
The Illinois Charitable Trusts Act and
the Illinois Solicitation for Charity Act generally apply to charitable
not-for-profit organizations functioning in Illinois whose assets exceed
$4,000 or who solicit or plan to solicit funds from persons in this
state or from this state. Such organizations must register and
then file annual reports with the Office of the Illinois Attorney
General. The Attorney General is responsible for assuring that
charitable funds are properly solicited and administered.
Some not-for-profit organizations are
eligible for tax exempt status. Each exemption from income, real
estate or sales tax requires a separate application. Most taxing
authorities also require annual reports. Not-for-profit
organizations are subject to all employer-employee taxes and
In conducting their operations,
not-for-profit organizations are subject to most of the laws affecting
individual and corporate conduct.
The Illinois Attorney General has the
responsibility to the public of assuring sound and legal operation of
not-for-profit organizations. This includes bringing legal action
against board members for failure to exercise their legal
responsibilities. Board members can be held personally liable by
third parties injured by actions of the organization. Liability
insurance for directors and officers is often available to cover some of