As a 501(c)(3) nonprofit organization, one of the first governing decisions you’ll need to make is determining how many directors to have on your board. While nonprofit boards are typically made up of volunteers, these individuals play a critical role in overseeing the organization’s activities and legal compliance. So getting the right board size and structure is important for your nonprofit’s success.
What is a 501(c)(3)?
A 501(c)(3) is a tax-exempt nonprofit organization in the United States as designated by the IRS. Some key features of 501(c)(3) nonprofits include:
- They must operate exclusively for religious, charitable, scientific, literary, or educational purposes.
- Net earnings cannot be distributed to individuals (like shareholders).
- 501(c)(3) donations are tax deductible for the givers.
- They are exempt from some federal income taxes.
To qualify for and maintain 501(c)(3) status, the organization must comply with IRS regulations. One such rule relates to board governance and structure.
What is the minimum number of directors?
According to IRS rules, a 501(c)(3) nonprofit must have a minimum of 3 directors. This 3-director requirement helps ensure proper oversight and control over the organization’s operations and finances. It prevents any one person from having too much unilateral power.
Having only one or two directors would concentrate too much authority in those individuals. And it increases the risk of self-dealing or private benefits that could jeopardize the organization’s tax-exempt status. The 3-director minimum helps diffuse responsibility across multiple people.
Can you have more than 3 directors?
Yes, 501(c)(3) nonprofits can definitely have more than 3 directors on the board. In fact, most established nonprofits have considerably larger boards than the minimum 3 directors.
Here are some common 501(c)(3) board sizes:
- Startups or small nonprofits: 3-5 directors
- Midsized nonprofits: 6-15 directors
- Large nonprofits: 16+ directors
While 3 directors is the legal minimum, most experts recommend having at least 5 directors to help ensure a well-rounded and capable board. Some reasons larger boards can be beneficial include:
- Broader range of expertise and perspectives.
- Increased fundraising capabilities.
- More potential connections and networks.
- Shared workload across more individuals.
- Improved continuity if board members leave.
What’s the ideal number of directors?
There’s no one-size-fits-all answer for the ideal number of nonprofit directors. The right board size depends on factors like:
- Organization size – Larger nonprofits often need bigger boards.
- Need for varied skills – More directors allows a greater mix of backgrounds.
- Meeting logistics – Large boards can be harder to coordinate and engage.
- Board culture – Some prefer smaller, tight-knit boards.
That said, research indicates the “sweet spot” for nonprofit board size is often around 8-12 directors. This allows for diversity of viewpoints, without the meetings becoming too unwieldy.
The following table summarizes common pros and cons of different 501(c)(3) board sizes:
| Board size | Pros | Cons |
|---|---|---|
| 3 directors (minimum) |
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| 5-8 directors |
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| 9-15 directors |
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| 16+ directors |
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How to determine your ideal board size
Consider these tips when deciding the right board size for your 501(c)(3) nonprofit:
- Assess your needs – What are the most important skills, experiences and resources your board should provide? How many seats do you need to fill these needs?
- Define roles and committees – Larger boards work better when members have defined roles like treasurer, secretary, committee chairs, etc.
- Consider board culture – Do you want a formal governing board or hands-on working board? What size and structure best fits your culture?
- Look at peers – Examine the board size of other similar nonprofits to get a sense for sector norms and best practices.
- Start small – It’s often easier to expand a board than shrink it. So lean towards smaller size initially, and grow it as needed.
- Review regularly – Assess if your board size continues meeting the nonprofit’s evolving needs.
There’s no single perfect nonprofit board size. Setting the right number of directors is a strategic decision based on your organization’s unique situation and needs. Aim to strike the ideal balance between inclusiveness and efficiency.
Can you have too many directors?
Yes, it is possible for a nonprofit board to become too large. While there’s no absolute maximum number of directors, research shows boards over 15-20 members start becoming less productive.
Disadvantages of an overly large 501(c)(3) board can include:
- Difficulty coordinating busy schedules for meetings and gathering input.
- Some members feeling disconnected or under-utilized.
- Slower and less decisive decision making.
- A tendency for some directors to be less engaged and leave responsibilities to others.
- More potential for factional disagreements and politics.
- Challenging logistics for meetings, seating, materials, etc.
To keep a large board engaged and functional, the chairperson must take special care in planning meetings, monitoring participation, defining member roles, and communicating frequently outside of meetings. Strong committees become particularly crucial to maintain operational efficiency.
Other board structuring considerations
In addition to total size, here are some other tips for structuring an effective 501(c)(3) nonprofit board:
- Term limits – Set term lengths for directors (e.g. 3 years) and term limits (e.g. maximum 2-3 terms). This allows gradual board rotation.
- Director diversity – Seek directors from diverse backgrounds, skillsets and demographic groups.
- Ex-officio members – The nonprofit’s CEO and other senior staff often serve as ex-officio board members.
- Honorary directors – Appoint well-known community figures as honorary directors in an advisory capacity.
- Board committees – Establish committees like executive, finance, programs, audit, fundraising to divide duties.
Frequently Asked Questions
Can a married couple serve together on a nonprofit board?
Yes, a married couple can serve together on a nonprofit board. There are no IRS rules prohibiting spouses or other family members from both being directors. However, it’s usually best for family members to avoid constituting a majority of the board to avoid concerns over undue influence or self-dealing.
Can nonprofit employees be board members?
It’s generally advisable to separate the board’s oversight role from the staff’s management role. However, in many smaller nonprofits the Executive Director serves ex officio on the board in a non-voting capacity. Other employees might participate on board committees but avoid being voting directors.
Does the board chair need to be independent?
To provide independent oversight, the board chair ideally should not be the nonprofit’s CEO or other employee. Many nonprofits require the chair to be an independent, non-executive director.
How often should a nonprofit board meet?
Most nonprofit boards meet about 4-6 times per year on a quarterly or bi-monthly basis. Committees may meet more frequently. Monthly meetings are less common for full boards unless necessitated by urgent matters.
Can we remove an underperforming board member?
Yes, the board can vote to remove a director for poor performance, misconduct or other reasons following procedures outlined in the bylaws. Grounds for removal are typically missing a certain number of meetings, failing to fulfill duties, or acts harming the nonprofit.The Bottom Line
At minimum, a 501(c)(3) nonprofit board must have 3 directors. But most nonprofits thrive best with between 5-15 directors to allow for diversity of viewpoints while maintaining efficiency. Consider your organization’s specific needs and capacities when determining the ideal board size. Strike the right balance, and review requirements regularly as the nonprofit evolves.
