D&O Insurance for Nonprofits: The Difference Between a Working Board and a Governing Board

Maureen Dyson, Area Executive Vice President, Charity First

The board of directors plays a pivotal role in the governance of a nonprofit, overseeing the organization’s mission, objectives, strategic direction, and financial well-being. From approving budgets to formulating policies to ensuring the legal and ethical integrity of the organization, the board’s collective decisions have significant impact on a nonprofit’s ability to effectively serve the community and ensure its ongoing success.

Today, it’s not uncommon for a nonprofit to have a working board and a governing board. Each type of board plays a very different and specific role in serving the organization. The main differences between a working board and a governing board lie in two key areas:

1.       The board’s level of involvement in the organization’s operations

2.       The primary responsibilities of appointed board members

Here, we’ll look at what separates the board types and the roles each plays.  

The level of involvement in the organization

·         Working board: In addition to their assigned governance responsibilities, members of a working board are also very involved in the day-to-day operations of the organization. For example, they may take on additional tasks such as fundraising, program delivery, and administrative duties. They are also responsible for carrying out their own directives.

·         Governing board: In contrast, a governing board is less involved in the daily operations of the organization. This type of board assumes a more strategic planning and policy-making role, leaving the execution of new initiatives to be carried out by the organization’s volunteers and staff.

The primary responsibilities of board members

·         Working board: The responsibilities of a working board typically extend beyond basic governance. In fact, working board members are often involved in overseeing operational tasks such as organizing events, managing staff and volunteers, and providing services. For example, a small nonprofit on a tight budget may involve its board members in several operational tasks, as there may not be enough staff to handle all operational duties.

·         Governing board: The responsibilities of a governing board are to provide oversight and direction for the organization. Responsibilities include establishing the nonprofit’s mission and strategic direction, ensuring financial stability and continuity, and maintaining legal compliance and ethical integrity.

Simply put, a working board is more hands-on and operationally focused, while a governing board is more strategic and oversight-focused. Both types of boards play crucial roles in a nonprofit organization, and their specific duties may vary based on the organization’s size, mission, and resources.

Regardless of the type of board your nonprofit clients may have, the importance of a directors and officers (D&O) insurance policy cannot be overstated. Given the significant personal liability exposure that boards face (coupled with the high costs associated with legal claims), D&O insurance for nonprofits provides essential financial protection that covers defense costs, settlements, and judgments arising from lawsuits and wrongful allegations. Moreover, it addresses the majority of claim dollars related to employment practices (a common risk exposure for nonprofits) – making it a vital safety net that enables nonprofit leaders to carry out their duties confidently and effectively.

About Charity First
Charity First is committed to providing our retail partners nationwide with best-in-class underwriting, consistent and responsive service, and risk management services such as directors & officers liability insurance and accident coverage for volunteers & participants.

To learn more, call 800-352-2761 or email marketing@charityfirst.com.

Reach out to Maureen Dyson, Area Executive Vice President, at maureen_dyson@charityfirst.com or connect with her on LinkedIn.