Nonprofit Board Member Duties
There are general fiduciary duties that all board members must comply with and other specific duties attorneys serving on nonprofit boards must comply with as well. According to the Model Nonprofit Corporation Act, each board member, when fulfilling their duties must act in good faith and in a manner the director reasonably believes to be in the best interests of the nonprofit organization. The members of the board of directors, when discharging the duties of a director shall act in good faith and in a manner the director reasonably believes to be in the best interest of the nonprofit corporation.
You can watch the complete Nonprofit Law CLE class here:
Nonprofit Law CLE
Gregory Nielsen, CEO, Center for Nonprofit Excellence (cnpe.org), holds a Bachelor of Arts Degree in Government and International Relations from the University of Notre Dame and a Juris Doctorate from Notre Dame Law School. He previously served as an officer and attorney in the United States Army Judge Advocate General’s Corps.
In this CLE class video clip, Mr. Nielsen discusses the duties of nonprofit board members.
The first duty as articulated in the Model Nonprofit Corporation statute, was the duty of care. The duty of care requires that board members use common sense, are diligent and attentive to the organization’s needs and management, as well as attempt to make sound, informed decisions. The duty of care requires board members to exercise the care and ordinary, prudent person would exercise under similar circumstances.
As a board member, you should do your homework. Read the Articles of Incorporation and other key documents the organization operates under. Also, attend meetings, participation as a board member requires attendance, so many organizations will specify an attendance requirement. Meetings are a great time to obtain adequate information and ask questions in order to render an objective, independent, fundamentally sound decision.
The Business Judgment Rule, states that a director will normally not be held liable if the director makes a decision in good faith, is disinterested, is reasonably informed, and rationally believes the decision is being made in the best interest of the organization.
The Duty of Loyalty, this requires the director to act in good faith and in a manner that the director reasonable believes to be in the best interest of the organization. The duty of loyalty also deals with conflict of interest situations. Directors are required to abstain from voting where there is possible conflict of interests exists. This aids in the director maintaining confidentiality where appropriate.
The Duty of Obedience, requires that the board members ensure the organization is carrying out its stated mission in compliance with applicable statutes and other governing documents. Directors are required to evaluate new opportunities through the lens of the mission, to further that mission.