A Board’s Legal Responsibilities – Do They Know Them?

Is your board taking enough responsibility for your organization’s results in the world? Do your board members really understand how firmly the monkey is stuck on their back, so to say?

Let’s hope they recognize it!

Do Your Board Members Understand that the Monkey Is on Their Back

I really wonder if board members understand their incredible responsibility.They are the LEGAL GUARDIANS of your organization.

I’ve been thinking a lot about boards this month as I work on my new webinar series, “Create a Fired Up Board in Action for the Cause.”

I personally study “high performing boards” that I run across in my work. And I pay attention to what they are doing to be so successful.I find that many, many boards don’t even understand their legal job.

So let’s just lay this out.  I’m quoting from a great little web article from BoardSource, that aptly summarizes the legal responsibilities of boards.

These come from well-established principles of nonprofit corporation law. Most states have adopted some variation of these. And courts would use these to determine if a board member might have acted improperly.

These standards of conduct are usually described as the THREE DUTIES OF A NONPROFIT BOARD MEMBER:  duty of care, the duty of loyalty and the duty of obedience.

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.