Legal Responsibilities of Nonprofit Board Members

Nonprofit board members are fiduciaries of the nonprofit corporations that they serve. Nonprofit state laws and federal tax law generally look to the following established standards of conduct for fiduciaries of nonprofit corporations.

Duty of Care
The duty of care describes the level of competence that is expected of a board member and is commonly expressed as the duty of “care that an ordinarily prudent person would exercise in a like position and under similar circumstances.” This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

Duty of Loyalty
The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

Duty of Obedience
The duty of obedience requires board members to be faithful to the organization’s mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public’s trust that the organization will manage donated funds to fulfill the organization’s mission. This duty also requires board members to obey the law and the organization’s internal rules and regulations.

 

A nonprofit board portal like BoardSpot helps nonprofit board members abide by their fiduciary responsibilities by:

  • Ensuring all board members have access to governing documents such as articles of incorporation, bylaws, and policies
  • Ensuring organizational transparency by ensuring all information is accessible to all board members
  • Providing access to all board and committee meeting minutes for all board members
  • Ensuring board members have the most up-to-date information through easy-to-access agendas, even if they miss a board meeting
  • Providing access to annual or multi-year planning documents including the strategic plan, operating budget, and annual work plan

 

BoardSpot board management software helps you and your nonprofit board meet your fiduciary responsibilities. Schedule a free demo of BoardSpot board portal today to learn more.