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Duty of Care – exercise reasonable care, actively participate in decision-making and liable for ordinary negligence.
But what is the context for carrying out this duty? It starts with your responsibility as a Director for ensuring that the organization has clearly defined its mission and purpose; that the organization is effectively planning to fulfill their purposes; that there are adequate financial resources; that the organization’s public standing is enhanced; that programs and services are monitored and strengthened; that assets are protected from fraud and loss; and that a competent Chief Executive is hired and evaluated annually. Exercising reasonable care means you must use good business judgment and perform your due diligence when making decisions. If you feel that you don’t have adequate information, ask questions, seek more data and abstain from voting until satisfied that you can make an informed decision.
Duty of Loyalty - not use the position as a director to benefit from transactions with the nonprofit organization or to pursue personal outside interests or transactions that use the organization’s staff, reputation or network.
Your loyalty to the mission and reputation and public standing of the organization takes precedence over your personal interests. Ethical integrity is a key responsibility of a Director and building a competent and ethical Board is a basic responsibility of all Board members. Duty of loyalty also encompasses loyalty to the organization’s confidential and competitive business matters. Respecting the role of the Chief Executive and not divulging confidential information is essential to loyalty to the organization.
Duty of Obedience - directors and the organization must comply with applicable federal, state and local laws, adhere to the organization’s bylaws, and remain guardians of the mission.
In fulfilling the Director’s oversight responsibility attention must be given to legal, tax, personnel, and contract compliance. Laws and regulations can be complex and an effective Board ensures that there is expertise engaged to support the organization’s human resources, financial and program practices and procedures.
But this duty also encompasses adhering to the organization's mission and governing documents. Weighing in on the decisions about mission and program creep, ensuring that strategic goals are measured, evaluated and achieved, and periodically reviewing the bylaws are important aspects of maintaining obedience to the organization’s mission.
If you haven’t spotted the ten basic responsibilities arrayed within the 3 Fiduciary Duties, here they are, arranged by Board role:
Establish Organizational Identity
1) Define mission and purposes and advocate for them
2) Ensure effective planning
Ensure Resources
3) Select the Chief Executive
4) Ensure adequate financial resources
5) Build and sustain a competent Board
6) Enhance organization’s public standing
Provide Oversight
7) Support and evaluate the Chief Executive
8) Monitor and strengthen programs and services
9) Protect assets and provide financial oversight
10) Ensure legal and ethical integrity
Join us on November 21st for the next segment on Developing and Engaging Your Nonprofit Board. Click here for details.
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