Fiduciary duties of a non profit board member
The member of a board of non profit organization has several responsibilities towards the organization and towards the stakeholders of the non-profit organization and it is important that the you know your duties before you start a non profit
The duties of a non profit board member can be broadly classified into two- the statutory duties and the non statutory but desirable duties. While the laws and procedures for starting a non profit organization differs from place to place, the underlying concepts remain the same.
Common duties of board members
1) Duty to attend board meetings – The frequency of board meetings is laid down in the bye laws of the organization. Most of the boards meet at least once in the annual general meeting and at least twice more during the year. The chairman of the board generally has the discretion of calling the members for more frequent meetings or to discuss some urgent issue. The board members have a duty to keep themselves abreast of the activities of the organization by participating in the meetings.
2) Duty to monitor the activities of the organization – The board members are representatives of the various stakeholders in the organization. In this capacity, a board member should keep himself informed of the activities of the organization and to monitor the progress of the organization. The board members must periodically inspect the documents of the organization to ensure that they adhere to the legal requirements as well as to the internal policies of the organization.
3) Duty to express independent views on matters – The board members must act independently and should not accept or reject a decision on some personal grounds. The board member is also responsible for ensuring that his decisions are objective and are
not based merely on emotional or personal justifications.
4) Duty to be familiar with the legal requirements – A non profit organization is supposed to comply to many rules and regulations. This includes compliance to the state policies, the revenue department policies, policies on hiring people, licensing policies, accounting policies and many others. A board member has the duty to acquaint himself with these policies for an effective compliance.
5) Duty of being loyal – A board member is to act in the interest of the non profit organizations. Acts done in self -interest must be clearly demarcated and should not be undertaken with the resources of the non-profit organization under any circumstances. If the organization enters into an agreement where you have a personal interest, the interests of the organization should always supersede the member’s interests and this fact should be clearly disclosed to the stakeholders of the organization through the annual report of the organization.
To conclude, these duties do not in any way expect a board member to be an all knowing expert. Instead if the board member works in good faith and attempts to upgrade his understanding of the various aspects of running the non profit organization and is not guilty of willful neglect of his duties, he is considered to be doing his duty well.