If a director is an authorized signer on a checking account for a non-profit (no ownership interest), do we need to monitor overdraft activity on that account?

Related interests are not subject to the overdraft limitation provisions anyway - but the answer is no - it would not be a related interest.

No. Overdrafts don't apply to related interests. From 215.4:

"3 This prohibition does not apply to the payment by a member bank of an overdraft of a principal shareholder of the member bank, unless the principal shareholder is also an executive officer or director. This prohibition also does not apply to the payment by a member bank of an overdraft of a related interest of an executive officer, director, or principal shareholder of the member bank or executive officer, director, or principal shareholder of its affiliates."

Now to clarify, you said they don't have "ownership interest". Just keep in mind that a non-profit could be subject to Reg O for loan totals if they have "control" of the company, as defined in 215.2. In other words, just because they don't have "ownership" doesn't mean they don't have "control"... but you probably already know that, I just figured I would clarify.

As a member of the board for this particular non-profit, our director probably does have some "control". However, if we don't have to monitor overdrafts on the checking accounts, I would only need to be concerned about a loan (which probably isn't going to happen).

Adam is correct on the control issue - I should have caught that - sorry.

The only real issue is if the non-profit is deemed a related interest and the director is already at the $500,000 preapproval limit, you would need prior board approval to pay the non-profit overdraft.