What does it mean to be in the Board of Directors?
With the upcoming elections at the doorstep, many people ask themselves what it means to be in the Board of Directors, and whether they should run for a seat or not. Based on my experience with being in the board of the German association Freies Office Deutschland e.V., I would like to share some thoughts with you. The most important is that all future board members cooperate openly, transparently and effectively together, and that they have a common understanding of their duties, so they can drive the foundation and its projects into a bright future. While I do not have a hands-on experience in a “Stiftung” (foundation), I assume that many of the principles in associations are similar to those of a foundation.
First of all, being in the Board of Directors is not just a title you get awarded because your contributions have been extraordinary. Of course, people active and gaining merit are likely to be voted in the future board, but this honour also comes with a lot of new work. Being in the board does not mean that you can just continue your contributions, but you rather will get additional administrative work, that is not related to your current tasks at all. The Board of Directors is the body responsible for legally representing the foundation, so duties like tax declarations, correspondence with the governments, overseeing trademark, copyright, competition and cartel law and many other tasks are the daily business of board members. While many of those duties can be shared with external professionals, given the foundation is wealthy enough, it is still the board’s duty to oversee and coordinate them, which is a fair amount of work by itself.
In addition, for wilful intent or gross negligence, the Board of Directors can be held personally liable in civil and criminal law. We will have insurances in place that limits most of the risks effectively. However, inactivity or just lazyness may already be seen as gross negligence, and then the insurance will not kick in. By the way, this liability is no different to any other association, corporation or charity, so it is in no way special to German law.
One of my main concerns is the participation rate in discussions and phone conferences. Right now, with the steering committee not legally representing the legal entity, it might just be an annoyance. When later on, the Board of Directors has many administrative tasks and legal liabilities, it is absolutely crucial that all members regularly join the phone conferences and e-mail discussions. Of course, people are on vacation, get ill or are otherwise busy, but if we have ten future board members, I would feel uncomfortable if the average participation rate was below nine out of ten (for comparison, right now the average participation rate is only about five out of nine steering commitee members). Arrangements on when and how often conferences take place can be done, but the rationale behind this is that being in the board involves continuous, active participation. The same is true for reading e-mails: At least once every workday, board members should have a look into their mailbox to get aware of important notices, and a reaction time to important mails of no longer than one work day is highly advised. There are already court decisions where a slower reaction has been seen as gross negligence, with all attached liability risks.
Many people also asked whether a good knowledge of German is required to run for an official role. Although the legal correspondence with the authorities will be in German, this is not the major task of the Board of Directors, so not everyone in the board needs to speak German. The experience from the past months has shown that using English as language of correspondence works out very well, so the only thing I consider crucial is that all future board members are very fluent in written and spoken English. Like we do now, e-mails will be exchanged in English, and phone conferences will take place in English as well. As legal topics and administrative tasks will be part of these calls, a good understanding of English is indeed crucial, as misunderstandings can cause troubles.
For the probably most interesting question – how much time is required for fulfilling these duties – I really have no good answer, as it is hard to foresee. My gut feeling tells me that seat holders should be able to spend a few hours per week for their duties, next to the time they spend for their community engagement. The exact time will heavily depend on how the foundation develops, how many external professionals are involved, and how effectively the board will work together. Below a few hours per week, however, I doubt that this role can be fulfilled.
So, in a nutshell: Being in the Board of Directors means additional work, lots of administrative and legal tasks, and an active commitment to fulfill these, besides all other duties you have in the project. If all ten members of the future board have a common understanding of that, and are willing to dedicate their time and passion for the foundation – then they are the right ones to lead the foundation into the future.
After all, being in the Board of Directors is a very honourable and truly exciting duty, when you are prepared and willing to commit.
