Regulations on training trustees: What volunteer boards need to know

Whether you’re with a charity, foundation or trust, credit union or community health provider, familiarity with relevant regulations — from financial disclosures to fundraising — provides vital context for your work as a volunteer board member.

Your personal experience and expertise provide real value only if you also know how to apply governance best practices. Governance training unifies the board, forging individual experts into a team capable of working efficiently and in concert. Board decision-making and other activities — from fundraising to oversight — benefit from detailed and up-to-date knowledge in compliance, transparency, security and accountability.

That means there are real stakes for compliance on board member training. Funders expect the organizations they work with to operate with highest standards for legal compliance. And certain types of board training are required by law — especially for organizations in the financial or healthcare sectors.

To help out busy board administrators, we’ve rounded up regulations and official guidance from around the world and compiled them into a user-friendly guide that offers:

• A region-by-region breakdown of laws and regulatory frameworks to know, and agencies to watch, when crafting your board training plan.
• Overall tips and guidance for effective board member training, contributed by peers who’ve been there.
• Ways modern governance software can help.

Board training regulations for nonprofits by region

Americas

Canada

Canada follows a common model in nonprofit governance law: while the Canada Not-for-profit Corporations Act (CNCA) sets no specific rules for the training of board members, it does mandate fiduciary duties that may require educational materials or briefings.

Canada specifies two top-level responsibilities: the duty of care and the duty of loyalty. A key component of the duty of care is the expectation that nonprofit directors and charitable trustees possess the skills and competence to oversee — and improve, when necessary — all aspects of organizational function, from the finances to technical concerns. Where a director lacks important knowledge, training may be appropriate.

Within Canada, certain provinces set their own additional standards — in Ontario, for example, directors serving on the boards of credit unions must meet financial literacy requirements. While not a rule or requirement, the Canadian Credit Union Association (CUDA) provides a wealth of valuable resources for training board members in the country.

United States

United States – federal regulations

In the United States, nonprofit organizations are regulated at the federal level by the Internal Revenue Service (IRS). While the IRS sets no legal requirements for board member training, it does recommend a detailed set of good governance practices spelled out in tax Form 990 and IRS Publication 4221-PC.

The full list of recommendations can be found in the official IRS compliance guide — they will be familiar to those with fiduciary duties, and include considerations such as written conflict of interest waivers, formal whistleblower protection policies and the board’s responsibility to provide financial oversight.

Nonprofits providing healthcare services should also consult the most recent guidance provided by the Centers for Medicare and Medicaid (CMS), and may wish to seek voluntary accreditation from the Joint Resources Commission — which sets expectations for board education and training.

Credit union directors must receive and certify financial literacy training within 6 months of their appointment, according to guidance from the National Credit Union Administration (NCUA). Board members for banks providing federally-backed home loans are expected to participate in ongoing education.

United States – state-level regulations

Almost all 50 U.S. states choose not to regulate the training of nonprofit board members. Each state’s governing law sets standard fiduciary duties — following the example laid out in the Model Nonprofit Corporations Act of 2021 — typically care, loyalty and obedience, including relevant skills and competencies. Examples of such state laws include those passed by Alabama and New York.

Several states do mandate some board training under specific circumstances. California, for instance, requires sexual harassment prevention training for boards of nonprofits with more than five members. In Massachusetts, nonprofit hospital boards must learn to conduct a state-specific needs assessment process.

Asia-Pacific

Australia

The Australian Charities and Not-for-profits Commission (ACNC) sets both governance standards and training recommendations, although board members are not legally required to undergo any specific education or onboarding process.

Board members of healthcare nonprofits should also consult the Australian Commission on Safety and Quality in Health Care, which regularly updates safety and quality standards for nonprofit healthcare providers.

New Zealand

New Zealand, like many of its peers, opts to provide training resources rather than regulatory requirements. Government bodies operating under the Charities Act of 2005 and the Friendly Societies and Credit Unions Act of 1982 prepare Officer Kits to support ongoing education, as does the nation’s professional body for nonprofit directors.

Singapore

Board members working for nonprofits based in Singapore will soon become familiar with the Singapore Exchange (SGX) and its requirements, including a mandate that first-time directors of listed companies undergo training “in the roles and responsibilities of a director of a listed issuer.”

Singapore’s regulatory framework for nonprofits, established by the Charities Act of 1994 and the Code of Governance for Charities and IPCs, does not require specific board member training.

Europe

United Kingdom

The United Kingdom’s Charity Commission adopts an approach similar to those in Canada and other Commonwealth nations. While it mandates fiduciary duties of care and loyalty for directors and trustees, including the possession of relevant expertise, it sets no regulatory requirement for trainings or educational sessions.

In parallel, the Commission provides both public resources to support board member training and a non-binding Charity Governance Code that provides recommendations, suggestions and useful guidance.

Trustees for healthcare charities should also consult the latest guidance from the Care Quality Commission (CQC) to ensure compliance with up-to-date governance best practices, while governors serving the NHS foundation trust may benefit from the abundance of resources that support their work. At credit unions, trustees may benefit from consideration of the Financial Conduct Authority’s recommendations for board members.

Ireland

Ireland’s Charities Regulatory Authority lays out guidance similar to the fiduciary duties specified in other countries, but adopts a plain-language approach. Trustees of Irish nonprofits must “act with reasonable care and skill” in prosecuting their leadership and oversight responsibilities.

Charities engaged in healthcare services should also follow guidance from the Health Service Executive and Health Information Quality Authority, although here, too, board member training is recommended rather than required.

European Union (EU)

The EU leaves board member training to the discretion of member states, and — speaking broadly — most EU nations’ association laws set fiduciary responsibilities without mandating educational courses.

One exception concerns credit unions, the boards of which — under the European Banking Authority — are subject to detailed guidance on fitness to serve and governance best practices.

Switzerland

Switzerland provides a clear example of regulatory patterns typical of EU member states. While it sets no training requirements for nonprofit directors generally, the country’s independent regulator for financial markets, FINMA, provides legally mandated licenses to trustees of financial services companies.

Africa

Botswana

The Botswana Council of Non-Governmental Organisations (BOCONGO) offers support in areas including governance.

Ghana

National Non-Profit Organisation Policy in Ghana stipulates orientation and skills training for nonprofit staff, provided by the sector’s Ministry.

Lesotho

The Lesotho Council of Non-Governmental Organisations includes leadership training in its services and support.

Malawi

The Non-Governmental Organisations Act of Malawi includes provisions on NGO registration, fundraising and board duties, functions and powers which should be included in board member training and education.

Namibia

The Trust Administration Act of 2023 mandates training for registration as a trust practitioner in Namibia. Registration requirements for welfare organizations and companies not-for-gain in Namibia also support a need for board member training.

Nigeria

In Nigeria, it’s important for volunteer directors to be familiar with the Not-for-Profit Governance Code. Those in the financial sector, such as microfinance providers, should be mindful of leadership training requirements by financial regulatory authorities.

South Africa

Volunteer boards here should be conversant with the Nonprofit Organisations Act of 1997 and the Companies Act of 2008, as well as the voluntary principles and practices in the King IV ™ code of corporate governance.

Tanzania

The detailed regulatory framework governing nonprofits and NGOs in Tanzania, along with amendments to the Non-Governmental Organizations Act of 2002, underscores the need for comprehensive, ongoing board training.

Uganda

The detailed regulatory framework governing nonprofits and NGOs in Uganda underscores the need for comprehensive education on board roles and responsibilities.

Zimbabwe

Board member training in Zimbabwe should include comprehensive education on the nation’s NGO Non-Governmental Organisations Act along with evolving developments in the regulatory landscape, such as proposed amendments to the Private Voluntary Organisations Act.

Practical tips and resources for your volunteer board

While mission-driven organizations differ widely in structure, size and intent, a few pieces of guidance remain overarching and evergreen:

• Board development is an ongoing journey, not a one-stop destination. “Learn from multiple sources. Read voraciously. Actively seek knowledge versus being a passive recipient,” advises former trustee Helen Warwick.
• Some training basics include thorough job descriptions covering board and individual expectations and an annual plan for board education. Also include an evaluation plan, so the board continues to improve over the long term.
• Veteran members can play a valuable mentorship role, passing along institutional knowledge and helping new trustees and directors grow into confident leaders.
• Educational activities such as retreats, workshops and conferences also provide valuable opportunities for boards to connect, strengthening their ability to govern when they’re faced with challenges.
• It’s good strategy to map your board’s current skills against the skills you’ll need in the future, identifying gaps and adjusting curricula accordingly.

“What you need for a successful board are people who understand the fiduciary obligation, understand the legal obligations that come along with being a board member, and can help coach and guide and push the nonprofit executive director or CEO to do the right things. And that requires the board member to have a certain understanding of leadership and of executive management and how the board differs from those things.” – Dottie Schindlinger, Co-founder of Board Effect and Executive Director of Diligent Institute

Learn more in detailed Diligent blog posts on the importance of board and governance training and experts sharing their thoughts on board development for nonprofits.

To make sure your board training ticks all of the latest compliance requirements, bring in your legal advisor or outside counsel early — and don’t be shy about hiring extra help if you think the organization needs it.

Navigating the nuances of fundraising regulations

Fundraising is both the engine that powers your organization’s success and a tightly regulated space where small missteps can carry heavy consequences. Complicating matters even more, regulations for nonprofits and charities can vary widely by jurisdiction and region. Use this comprehensive overview as a foundation for getting your board up to speed.

BoardEffect: Training that’s easy to access, administer and evolve

Just as volunteer board members have limited time for keeping up with relevant regulations, board administrators’ schedules are just as packed for preparing and delivering this training.

BoardEffect brings ease to all parties. Designed with the needs of mission-driven organizations worldwide in mind, this board management software:

• Consolidates all materials, from official policies to the latest onboarding program, into a convenient central portal.
• Makes these materials accessible from any device, so users can consume training programs on their own time and administrators can easily update content based on new regulatory developments.
• Facilitates knowledge-building even more with built-in annotation tools like highlighting, drawing and “sticky notes” for board members to use as they learn.
• Gives administrators a real-time glimpse into engagement and progress via online surveys and polls.
• Keeps training programs and compliance deadlines on track with user dashboards that put RSVPs, approvals and updates front and center.
• Corrals file-sharing and discussion into dedicated workrooms, secure messaging apps the portal itself — no more disparate (and vulnerable) text messages or email attachments.

Incorporate nonprofit regulations into board member training. Boost efficacy — and get seamless results — with the best software on the market. Schedule a demo today.