Legally boards are required to ensure that the organization is able to fulfill its mission, has a solid strategy and doesn’t get into legal or financial difficulties. The way boards take on these responsibilities varies greatly and is highly dependent on the specific circumstances.

A common error is that boards become too involved in operational aspects that should be left to management, or that they are not aware of their own legal responsibilities for the decisions they make and the actions they undertake on behalf of the company. This confusion is usually caused by boards not keeping up with the evolving requirements of boards or unexpected issues like financial crises and resignations of staff. Typically, this can be remedied by taking time for discussion of the issues faced by directors and board portals for nonprofits by giving them an orientation and simple written material.

A second common mistake is when the board is able to delegate too much power and not be able to review the issues it has given to others. (Except for the tiniest NPOs). In this situation the board loses its ability to evaluate and no longer assess whether these operating activities add up to satisfactory performance for the organization as a whole.

The board must also develop a governance system including how it will interact with the general manager or CEO. This includes determining how the board will meet regularly, how members will be chosen and removed and how the board will make its decisions. The board should also create information systems that collect data on their past and expected performance to support their decision-making.