MONTANA NONPROFIT CORPORATION ACT

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The nonprofit board of directors is the organization’s fiduciary steward and also strategic leader. Because of this, the board is responsible to keep public trust and assure the organization’s mission is met legally, successfully and also properly. A board of directors deserve to be effective in fulfilling its goals and also expectations just as soon as a clear shared understanding of its duty and also responsibilities is establiburned and cultivated. Boards only have power when they sheight together with a corpoprice motion. A nonprofit board considers the organization and its mission from a holistic perspective as it provides feeling of the previous, looks towards the future, offers strategic management, sets policy and ensures the company has enough sources. Board members serve complex and multiple roles; they need to understand and maintain borders between any type of volunteer duties they underrequire to aid via direct programs or solutions and their board function as a member of the governing body. The board provides assistance, straight oversight and also direction for the Chief Executive Officer and is responsible for evaluating her/his performance, and approving competitive compensation. A nonprofit board likewise has actually a responsibility to routinely evaluate its very own effectiveness—both jointly and as individual members—according to the organization’s governing files and board policies.

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Legal Practices are legally forced of all Montana nonprofitsEssential Practices are widely recognized as market standards and also generally intended of all nonprofitsRecommended Practices have to be considered by all nonearnings, with implementation dependent on capacity and life stage

Directors of nonprofit organizations are organized to fundamental legal duties as a issue of state law, widespread law, and federal law. The core fiduciary duties are the duty of care, duty of loyalty, and duty of obedience to mission.

Duty of care—a director of a nonprofit company shall discharge all his/her duties as a director, consisting of those performed as a committee member:

In great faith;With the treatment that an ordinarily prudent perchild in a similar place would exercise under comparable circumstances; andIn a manner the director sensibly believes to be in the ideal interests of the company.

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The duty of care entails a duty of reasonable inquiry. Each director is obligated to ask questions and also demand indevelopment to enable him/her to have actually sufficient indevelopment and expertise to make decisions he/she reasonably believes are in the nonprofit’s best interests. This duty means that the director should make time to attend meetings, and also come prepared to participate.

Duty of loyalty—Directors are obligated to exercise an undivided and also unselfish loyalty to the company they serve. Directors must exercise their responsibilities and also powers in the best interests of the company and its charitable mission, not in their very own interests or in the interests of one more perboy or entity (even if charitable in nature). To ascertain that directors are operating within the scope of the duty of loyalty they are forced to complete problem of interest disclosures yearly and also acunderstanding any kind of dispute that may aincrease during the year.

Duty of obedience—Directors are obligated to further the mission of the organization they serve; to be faithful to its objectives and also objectives as identified by the posts of incorporation and also bylaws; to act in conformity through all state, federal and local laws; and to obey board-approved business policies.


GENERAL

★★★ The board of directors has ultimate legal obligation for the welfare and actions of the nonprofit organization. All the organization’s powers are worked out under the authority of the board. MT★★ The board assumes responsibility and also accountability for healthy functioning, diversity of believed and depiction, and also culture.★★ For the staffed nonprofit, directors carry out not regulate the day-to-day affairs of the nonprofit. Instead, they delegate that attribute to others. Directors have to, however, exercise credible, reasonable, and prudent oversight without individual prejudice in respect to corporate policemans, agents, and employees to whom such affairs are delegated. Wbelow board members can individually meet straight programmatic or member company functions, it is essential to develop clear boundaries between the duty of people as soon as they volunteer in these support/direct mission fulfillment roles, and their duty as a member of a cumulative decision-making governing body.★★★ In the performance of his/her duties, a director may count on information and reports got from officers or employees whom the director reasonably believes to be reputable and knowledgeable, as well as on skilled advisors (e.g., attorneys and certified public accountants) and also various other persons with regard to matters the director fairly believes are within the person’s professional or skilled competence. A director may also depend upon a committee of the board of directors of which the director is not a member as to matters within its duty, if the director reasonably believes the committee merits confidence. MT★★★ If urgent and essential, a board may take an action without a meeting if the activity is taken by all members of the board by created consent out describing the action taken, which can be distributed and also changed through e-mail or post, signed by 100% of the board members; this should take place hardly ever. The signed, created consents need to be contained in the nonprofit’s minutes. If the activity warrants discussion, the conversation takes area in perkid, by phone via a conference speak to or various other interenergetic audio-visual interactions technology prior to the action being apconfirmed. A committee of the board, such as an Executive Committee, also may be authorized by the board in the articles of incorporation or bylegislations to act in area of the board in emergencies via some exceptions. MT

GOVERNING DOCUMENTS

★★★ A nonprofit have to file appropriate Form 1023 with the Internal Revenue Service to be known as taxes exempt under federal legislation as a 501(c)(3) company. Excepted from this necessity are churches, synagogues, holy places, and mosques. US★★★ A nonprofit is required to file short articles of incorporation and all amendments through the Montana Secretary of State. MT★★★ A nonprofit is compelled to maintain current bylaws. MT★★★ A nonprofit need to file for state nonprofit tax exempt standing certification via the Montana Department of Revenue. MT★★★ A nonprofit is forced to file a present yearly report through the Secretary of State due by April 15. MT★★★ A nonprofit need to annually file an applicable Internal Revenue Service Form 990 according to its annual gross receipts and also any state filings as forced. Also in “Financial Management”, MT, US★★ The board of directors performs a systematic evaluation of Form 990 before filing. Also in “Financial Management” ★★★ A nonprofit that owns and provides real residential or commercial property for its charitable work have to apply to the Department of Revenue to obtain exemption from residential property taxes. MT★★ The members of a nonprofit board are liked to reexisting the finest interests of the organization. The board specifies what diversity indicates for the board and also the company. Diversity covers a range of characteristics and will look various from organization to organization; however, it mirrors the diversity of the community and also that the organization aspires to serve, including traditionally marginalized members of the neighborhood. Board diversity is important to encertain a well balanced approach toward organization delivery and for an expertise of the area and targeted populations’ concerns in the near- and also long-term. ★★ A comprehensive majority of the board of directors of a nonprofit, generally meaning at leastern two-thirds of the members, are independent. The Internal Revenue Service defines independent individuals as those:Who are not compensated by the company as an employee or independent contractor;Whose compensation is not established by individuals that are compensated by the organization;Who execute not obtain, straight or instraight, material financial benefits from the organization other than as a member of the charitable course served by the organization; andWho are not pertained to (as a spouse, sibling, parent or child), or carry out not reside with any kind of individual defined over.★★★ A nonprofit must have a minimum of three board members. MT★★ A nonprofit board of directors has at leastern five persons, unpertained to each other or to staff, to ensure proper consideration and also diversity. ★★ The executive director or other staff might be members of the board of directors; however, due to disputes of interemainder, the executive director or various other staff are not voting board members.★★★ The officers of a nonprofit are designated in the bylegislations and/or short articles of incorporation. MT★★★ Unless otherwise offered in the bylegislations or write-ups, a nonprofit has actually a president, secretary, treasurer, and other officers appointed by the board of directors. MT★★★ A person might at the same time organize more than one office in a corporation; however, it is not recommfinished for the board president to host more than one office to permit for distribution of power. MT★★★ A nonprofit might not lfinish money to, or guarantee an obligation of, a director or officer of the corporation. MT★★ Although financial compensation for board members is not prohibited by legislation, in general nonprofit board members perform not receive financial compensation for their board duties various other than reimbursement for board-connected prices.★★★ If a board member is hired for professional solutions, compensation for the solutions should be reasonable. MT, US★★ If a board member is hired for experienced services, the board of directors determines that the board member is qualified and that the compensation is reasonable based on equivalent information prior to giving and paying the compensation. The board member to be hired, and also any kind of various other board members via a conflict of interemainder in the decision, recuse themselves. The basis for the board’s determination, the recusals, and approval is promptly recorded in board minutes. ★★★ Board member term lengths and borders are designated in the bylaws or posts. MT

BOARD RESPONSIBILITIES

★★ The board of directors, together with staff, actively participates in occurring plans to accomplish the organization’s mission, annually or as established by the board. The board oversees the implementation of the setup and also evaluates its success.★★ Board meetings are to be hosted at least quarterly. Board members are meant to attend all meetings preferably in perboy or by means of interenergetic modern technology such as conference calls or audio-visual software.★★★ A nonprofit corporation need to save as permanent records minutes of all committee, board, and also distinct meetings and also financial and also membership indevelopment. MT★★ The board of directors develops and also leads a procedure for selecting brand-new board members through input from the executive director. The procedure ensures adequate infusion of new ideas and community perspectives, while preserving institutional memory.★★ Directors articulate prerequisites of board membership to prospective board members; brand-new and also prospective board members are offered with a place summary that consists of clearly stated expectations, a history of the organization, and a summary of existing programs. Board members totally understand their duties and also responsibilities to the company and also to the public; they are prepared to articulate the organization’s mission and vision and also define its programs to the public. The executive director/CEO ensures that board members are gave regularly via indevelopment around present programs and also activities that will certainly strengthen the board members’ duty as business ambassadors.★★★ The write-ups of incorporation and byregulations are legal governing papers of the organization; board members familiarize themselves through the posts of incorporation and bylaws upon joining the board, and refer to and also follow the byregulations when tbelow is question about activity in board meetings. MT, US★★ The board consistently reviews and, if appropriate, updates the bylegislations.★ New board member orientation is carried out before a board member is intended to attend a meeting and also vote on board company. The orientation is led primarily by board members via a focus on board duties, responsibilities, expectations, and vital business inquiries.★★ At least biyearly, the board of directors reviews the organization’s write-ups of incorporation and bylegislations, mission statement, and also governance plans and amends each as essential to reflect business development and advance. The nonprofit considers if the amendments to the arranging files satisfy the disclosure necessity on the 990.★★ A nonprofit’s board of directors assumes all at once obligation for ensuring sufficient resources are increased to meet the organization’s budgeted goals.★★ As fiduciary stewards of the organization and also to set an example for all stakeholders, all board members make an annual financial contribution to the organization that is generous within their indicates. In addition, board members connect in activities that raise and/or generate funds from exterior sources. Also in “Fund Development” ★★ The board of directors reviews and approves an yearly budobtain for the company. The board is responsible for ensuring governmental and also fundincreasing expenses are realistic and also are not unsensibly disproportionate to regimen expenditures. Also in “Financial Management” ★ When approving an yearly budget, the board reviews and approves an yearly operational plan and money advancement setup.★ When hiring a new chief executive, the board of directors creates a hiring plan that supports the comprehensive organizational setup and also identifies the skills and also endure essential to meet permanent objectives.★ The board of directors conducts an annual outcome-based performance testimonial of the chief executive. The chief executive’s performance is assessed in light of organizational success.★★★ A nonprofit’s board of directors or its designees need to collection reasonable compensation for the organization’s chief executive; such compensation contains salary, raises, bonoffers, and also various other benefits. Also in “Employees and also Volunteers”, US★★ The board of directors determines that the compensation is reasonable based upon comparable data, and also reflects the chief executive’s qualifications and performance, before providing and also paying the compensation. Any board members through a conflict of interest in the decision recusage themselves. The basis for the board’s determicountry, the recusals, and also approval is promptly documented in board minutes. They also stay indeveloped around the compensation of various other essential personnel. Also in “Employees and Volunteers” ★ The board of directors creates a short-lived business transition for planned or unplanned absences and succession arrangement to maintain day-to-day procedure in the time of the moment of a change in executive or board leadership.★★ The board of directors develops business plans, including policies that overview just how the board will certainly govern and also plans that are listed in Form 990, Part VI. See also organizational policies under list under various other principles.★★★ Directors and officers should recusage themselves when they have actually a dispute of interemainder about a transactivity over which they have authority on befifty percent of the nonprofit. Also in “Accountability and also Transparency”, MT, US★★ To assist directors and police officers in recmaking use of themselves once they have actually a dispute of interest, the board of directors adopts a composed dispute of interemainder policy regarding board members, staff, volunteers, consultants, and other builders and adheres to this policy in all dealings. The conflict of interemainder plan clearly outlines potential disputes and measures for disclocertain and dealing with conflicts; it offers for evaluation by members of the board not affiliated in the problem. Each director reviews, updates, and also indications his/her problem of interemainder statement each year. Potential disputes are monitored and also the dispute of interest policy is applied in the event of a problem.★ The board of directors establishes and implements a Code of Conduct and Code of Confidentiality governing the skilled behavior of board members, including a need that eincredibly director publicly support actions taken and also decisions made by the board and also a need to keep corpoprice plans and actions along with donor and also client information confidential.★ As organizational leaders, the board assures that tright here is a clearly defined set of organizational worths. It is the board’s duty to emulate these worths in all their actions and also to encertain that these values guide organizational and also staff decisions and actions.★ Board members are provided an opportunity each year to evaluate and also collectively evaluation their individual goals; participation; educational and also skill breakthrough needs; and also the all at once efficiency of the board of directors overall.★★★ The Montana State Attorney General oversees charitable nonrevenues in Montana. Dissolution, disposal of all or significantly all assets, and also stated mergers should be reported to the Montana Attorney General. MT