Nonprofits and the Law: The Three Basic Legal Duties of Nonprofit Board Members

For most people, serving as a board member of a nonprofit organization is quite an honor. In addition, however, there are also some serious responsibilities and legal obligations that need to be observed throughout a board member’s term in order to avoid issues. Specifically, board members for nonprofits have three duties, which are the duty of care, duty of loyalty, and the duty of obedience. Understanding each of these is essential for ensuring you are properly fulfilling your duties as a board member.

The Duty of Due Care

The duty of due care means that you need to make prudent use of all the different types of assets that the nonprofit has. This includes any facilities that are owned or operated, the people (including volunteers), and the goodwill that is maintained by the organization. Any activities that are performed by the nonprofit, or in its name, should also be overseen by the board members to ensure they are done in such a way as to help ensure the organization’s effectiveness and sustainability are protected.

The Duty of Loyalty

The duty of loyalty comes into play when making decisions on behalf of the nonprofit corporation. All decisions that are made as a board member must put the nonprofit first, and never your own self interests. Taking any type of self-serving action may cast the nonprofit in a bad light, and if it can be shown that a decision was made that would benefit you and knowingly harm the organization, it can cause you significant legal difficulties.

The Duty of Obedience

The duty of obedience is the requirement that board members make sure the nonprofit is in compliance with all local, state, and federal laws. It also requires that they ensure the organization is acting ethically, and that it functions in accordance to the corporate purposes that were identified in the organization’s mission. This one generally applies both to the day-to-day activities of the nonprofit, as well as the long-term planning of activities performed by the organization.

Get the Legal Help You Need

Running a nonprofit organization can take a lot of work, and for board members, it is important to make sure you are taking care of all your duties at all times. Whether you are just starting a new nonprofit, accepting a board position, or you just want to ensure both you and the nonprofit are functioning as they should, it is a good idea to have an attorney available to consult with. Contact APH Law to discuss your nonprofit, and what we can do for you today.

Written by APH Law PLLC

APH Law PLLC

When we founded APH Law PLLC in 2010, we did so out of a desire to connect business owners with more and better opportunities. No matter what industry you’re operating in, creating a strong foundation, preparing for the future, and protecting against challenges are key to long-term success. It is this kind of support that we take tremendous pride in helping businesses.