Independent board
An independent board member is a director who isn't compensated by the organization and has no financial or family ties to it — watchdogs expect independents to hold the majority of votes.
Independence matters because the board sets executive pay and approves spending; a board dominated by insiders or relatives can't credibly oversee itself. Form 990 Part VI reports both total voting members and how many are independent.
The BBB Wise Giving Alliance standard also expects at least five voting members. Both checks feed the governance criterion of the CharityIndex rating.
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Related terms
- Form 990 — Form 990 is the annual information return that most U.S. tax-exempt organizations file with the IRS, disclosing their finances, governance and programs.
- Audited financial statements — Audited financial statements are a nonprofit's accounts examined by an independent CPA, giving donors third-party assurance the reported numbers are materially accurate.
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