Board members are legally obligated to provide a Duty of Care to the nonprofit. What is the Duty of Care, and how can you fulfill this duty?
Board members are legally obligated to nurture and care for the nonprofit they serve. Board members must demonstrate the “care that an ordinarily prudent person would exercise in a like position and under similar circumstances.”
What does that mean? While the answer is simple, most boards have members that do not perform their duty of care. How can you fulfill this requirement?
#1 - Regularly Attend Board Meetings
Regular Board attendance seems obvious, but most nonprofit leaders I've talked to express frustration with Board members who are habitual no-shows. Why is meeting attendance necessary?
It is essential for meeting quorum requirements. Without a quorum, the Board cannot make decisions for the organization.
It affects decision-making. Board meetings are a source of rich information for Board members that is not captured in the minutes. Attendance ensures each Board member fully understands the issues and can make informed decisions.
It strains working relationships between Board members. Boards work together like a team. The team will suffer if some members are not present or fully engaged.
#2 - Be Prepared to Vote at Board Meetings
A mere presence at the Board meeting is insufficient to ensure Duty of Care. Board members are responsible for making educated and thoughtful decisions that further the organization's mission. Being prepared means:
Reviewing the Board packet materials ahead of time.
Thoughtfully considering the agenda topics and list any questions to be answered for better decision-making.
Soliciting expert advice when it is needed.
Conducting proper due diligence before making decisions.
The last two points are actions that the Board takes. As an individual Board member, you can request expert advice or more due diligence before making a decision. To preserve your Duty of Care when the Board decides against the request, ask that the minutes reflect your request.
"The board has the duty to fully investigate all possible decisions and how they may impact the business." – DirectorPoint.
#3 - Have a Working Knowledge of the Organization's Legal Documents and Policies
Every nonprofit has legal documents it must follow to keep its status as a nonprofit and as a legal entity. These regulate how the organization operates. You are responsible for understanding the content and following the procedures outlined in the documents.
Why is this important? Significant noncompliance can result in Board members being found personally liable for a breach of fiduciary duties. In extreme cases, noncompliance can force an organization to dissolve or lose its nonprofit status. Documents you should have and review include:
Articles of Incorporation and any amendments.
Bylaws
Financial Policies
Board Policies
Minutes
Conflict of Interest Policy
#4 - Support Program Initiatives
Board members are expected to support the work of the organization publicly. A Board is the nonprofit's #1 cheerleading squad and must be vocal about its excellent work. You joined because you believe in the work the nonprofit does. Your support in the community increases the knowledge of the services offered and can make fundraising easier.
Showing support includes supporting decisions that you voted against. You may still advocate for your positions within the confines of the Board meeting. The community, however, must see your stable support for the organization and what it does.
#5 - Follow Through on Assignments
Most Board directors in the U.S. are unpaid volunteers. The volunteer work does not stop at meeting attendance. Many essential jobs are done by Board members between Board meetings. This may include planning an event, writing thank-you notes to key stakeholders, and connecting a potential donor with the Executive Director / CEO.
This volunteer work is vital to the organization's success and is part of your Duty of Care to the organization. Complete any volunteer assignments on time and well.
It's Essential
Board members play a pivotal role in nonprofit organizations. Understanding your duty of care is essential for a well-functioning organization. Do you have a Board that needs help understanding its duties, including the Duty of Care? Contact me for a quote for one hour of training!