Warren Buffett’s Guide to Mastering the Board of Directors

Phase 1: Explore

Before setting sail, explore services in your specific geographic and subject areas. Leverage platforms like Guidestar and Charity Navigator to comply with legal requirements and gain a strategic advantage by identifying gaps and opportunities in the nonprofit ecosystem.

Phase 2: Organize

Write Your Mission Statement: Craft a compelling mission statement – the heartbeat of your organization.
Develop a Fundraising/Business Plan: Lay the foundation for your nonprofit’s financial success.
Recruit and Select a Board of Directors: Involve legal professionals and individuals aligned with your mission. Craft a diverse Board of Directors that brings varied expertise.
File Articles of Incorporation: Establish non-stock corporation status with the Delaware Division of Corporations.
Application: Delaware Division of Corporations – Articles of Incorporation
More Information: Delaware Division of Corporations – How to Form a Corporation
Obtain Federal Employer Identification Number (EIN): Get your EIN from the IRS.
Application: IRS EIN Online
Draft By-laws: Though not required by Delaware, attach them to the federal tax exemption application. Hold organizational meetings.

Phase 3: Obtain Federal Tax-Exempt Status

Complete and file either Form 1023 or Form 1023-EZ based on your organization’s financials.

Phase 4: Register for Property Tax Exemptions

If holding real property, register for property tax exemptions.

New Castle County: (302-571-7500)
Kent County: (302-736-2000)
Sussex County: (302-855-7700)

Phase 5: Maintain Status

Ensure ongoing compliance with an annual filing with the Secretary of State’s office (Franchise Fee). File Form 990-N, 990-EZ, or 990 based on annual gross receipts.

Visit StayExempt for additional details.

Phase 6: Employees or Independent Contractors

Ensure compliance with employment laws:

Pay state and federal employment taxes.
Pay worker’s compensation insurance.
Display required posters.

Phase 7: Obtain Proper Insurance

Assess property and liability insurance needs. Directors & Officers coverage is crucial for all nonprofit organizations.

Tips for Launching Your Nonprofit in Delaware

Delving into existing services within your geographic and subject areas is like mapping the terrain before setting sail. Engage with community leaders, potential collaborators, and subject matter experts during the initial planning stages. Conduct a SWOT analysis for a nuanced strategy.

Establishing a nonprofit requires more than paperwork. Craft a compelling mission statement, involve legal professionals, and develop a comprehensive business plan. Utilize resources from SCORE as a partner in shaping a robust business strategy.

Securing federal tax-exempt status is a crucial step beyond legalities. Seek guidance from reputable services like Liftoff or Foundation Group. Navigate the IRS application process meticulously.

Register for property tax exemptions strategically. Engage with county offices, legal advisors, and real estate professionals as collaborative efforts to optimize your nonprofit’s financial structure.

Ensuring ongoing compliance is a commitment to transparency and accountability. Appoint a compliance officer, collaborate with legal and financial professionals, and establish a dynamic compliance calendar.

Adhering to employment laws and securing proper insurance coverage protects your team. Engage with legal advisors and HR professionals, implement measures proactively, and leverage resources like the IRS Employer Tax Guide.

Assessing and obtaining appropriate insurance coverage is a strategic move. Explore options with companies like Nonprofits Insurance Alliance or The Hartford.

In conclusion, this Ultimate Guide serves not just as a lead magnet but as a strategic companion. Utilize it to navigate the complexities of starting a nonprofit in Delaware – to inform, inspire, and guide your nonprofit’s transformative journey.

Want Done For You Delaware Nonprofit Creation?

Task 2: Keep the CEO in Check:

“CEOs often stack the deck in their favor when presenting acquisition proposals to the board.”

Buffett acknowledges the risk of CEOs succumbing to their egos and making grandiose deals with other people’s money. To prevent unchecked behavior, boards must actively keep the CEO in check. Establishing a culture of accountability becomes paramount, ensuring that the CEO’s actions consistently align with the company’s and its shareholders’ best interests. Regular performance evaluations, open communication channels, and a robust governance framework contribute to maintaining a healthy balance of power and responsibility.

Task 3: Solicit Unbiased/Independent Judgment Regarding Acquisitions:

“The board should bring independent judgment to major acquisitions.”

Warren Buffett advises boards to exercise independent judgment when evaluating acquisition proposals. CEOs often present deals that may skew in their favor, neglecting potential risks or adverse effects on shareholders. Boards must critically evaluate such deals, meticulously weighing the value received against what is given away. In addition, Buffett stresses the significance of discussing the long-term implications of dilution, which is often disregarded. Engaging in thorough discussions and seeking external advice, free from bias, enable boards to safeguard shareholders’ interests and ensure fair and equitable outcomes.

Bonus: Leveraging Board Portals for Enhanced Governance:

“In the business world, the rearview mirror is always clearer than the windshield.”

This quote underscores the importance of leaders learning from the past while emphasizing the need to focus on the future. Successful leadership requires anticipating and preparing for upcoming challenges and opportunities rather than getting stuck in the past. When leveraging a board portal like BoardDirector.co, this quote reminds us of the significance of staying forward-looking. Board portals provide a technological advantage that allows leaders to access real-time data, collaborate efficiently, and make informed decisions. By embracing the power of technology and adopting a future-oriented mindset, leaders can navigate their organizations toward sustainable success.

Conclusion: Warren Buffett’s wisdom provides valuable guidance for boards of directors to excel in their corporate governance role. By mastering the three main tasks of selecting the right CEO, keeping the CEO in check, and soliciting unbiased judgment regarding acquisitions, boards can fulfill their responsibilities and contribute significantly to long-term success. Moreover, with the integration of cutting-edge tools like board portals, such as BoardDirector.co, boards can optimize their collaboration and decision-making processes, paving the way for a brighter future.

Reference:
Buffett, W. (2018, February 24). Berkshire Hathaway Annual Shareholders Meeting. Retrieved from https://www.youtube.com/watch?v=2GddFx-TZP0