June 2018 – Rick Szilagyi, Principal
You have stepped up to devote time, probably as a volunteer, to serve as a director on the board of a nonprofit organization. Board members have “fiduciary responsibilities,” and over the years we have noticed that many people believe the definition strictly focuses on finances. But it is much more.
There are three “duties” that fall under the heading of fiduciary responsibility, and there is certainly overlap amongst the three. They are listed and briefly described below and followed by links which can provide additional reading.
- The Duty of Loyalty requires that officers and directors must act in the best interest of the organization, rather than their own interests, or the interests of other persons or another organization.
- The Duty of Care requires that officers and directors must act with a suitable degree of diligence, participate in board meetings, and carry out the mission of the organization in a responsible manner.
- The Duty of Obedience requires that the officers and directors must act in compliance with the law and other potential restrictions and remain focused on the mission.
Recommended reading:
- A Nonprofit Board’s Fiduciary Responsibility
- Board Roles and Responsibilities
- What are a Board Member’s Responsibilities?
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