Boards of directors have a fiduciary responsibility of care, loyalty, and obedience. Care means they must prepare themselves (do their due diligence) to make decisions on behalf of the corporation. Loyalty means that they must avoid conflict of interest and put the corporations needs over their own. Obedience means that they must follow all ethical and legal requirements as well as the firm’s Articles of Incorporation, bylaws, policies, and procedures. With regard to the
duty of care
, questions arise about whether buying these books for $500,000 was based on a needs assessment and did it fit in with the institution's strategic plan, was there a bidding process, and were there internal controls to insure that the books got into the hands of the children. Was there a process to evaluate the programs efficacy. Did it change behavior? With regard to
the duty of loyalty,
was conflict of interest avoided, was the institution's well being given paramount consideration over that of the board members? We would say not, even if the mayor had recused herself. This infusion of such a large amount of cash into the hands of the mayor at the time she was reportedly buying a house could have been anticipated to pose a reputational risk to the institution.