Under well-established principles of nonprofit corporation law, a board member must meet certain standards of conduct and attention in carrying out his or her responsibilities to the organization. Several states have statutes adopting some variation of these duties, which would be used in court to determine whether a board member acted improperly. These standards are usually described as the duty of care, the duty of loyalty and the duty of obedience. Additionally board members have fiduciary responsibilities to the association.

Duties of a Board of Directors

  • The individuals who are selected to be on the board of directors of a non-profit corporation have overall responsibility for the activities of the corporation. The board acts on behalf of the association to make overall policy decisions and provide oversight. A non-profit board has great authority and great responsibility. Specific duties of the board of directors and of individual board members, committees, and officers are set by the board bylaws.
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.

Fiduciary Responsibility

By Board Source (BoardSource.org) & US Business Law/Taxes (About.com)

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