From a legal standpoint, nonprofit board members are held to three standards:
- Duty of Care: Board members are expected to actively participate and use their best judgment when making decisions on behalf of the organization. Generally, this means that board members are responsible for being informed about issues facing the organization and use reasonable care in making decisions. This usually involves regularly attending meetings, reading materials provided, asking questions when unclear about a particular issue and ensuring records are kept of board decision-making.
- Duty of Loyalty: Board members must set aside their own personal and professional interests when making organizational decisions. It is generally a bad idea for board members, or close relatives of board members, to financially benefit from purchases, policy stances or programs affiliated with the nonprofit on whose board they serve. Conflict of interest policies that specify how such circumstances will be handled and documented can help protect both the organization and the board member.
- Duty of Obedience: Board members must ensure that the organization remains true to its mission and complies with all federal and state laws. This primarily refers to ensuring that the organization’s resources (including money, staff time, facilities, etc.) are used for activities in keeping with the overall goals of the organization. It also means that a board member who discovers illegal activity related to the organization is obligated to inform the rest of the board.