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Three Legal Duties of the Board of Directors

20 Aug 2016

Each Board member, in accepting a position on the Board, agrees to certain duties: the duty of care, the duty of loyalty, and the duty of obedience.

Duty of (Due) Care

This is the responsibility of Board members to ensure that the organization’s assets are properly used, and to supervise the organization’s actions diligently. Members of the Board of Directors are responsible for setting the foundation for the organization, and hence, to enable the organization to move towards greater sustainability. The duty of due care also covers the Board’s responsibility to ensure that all activities undertaken by the organization are those which help the organization move towards those future goals. The members of the Board should also make themselves aware of the affairs of the organization to be able to identify any instances of misappropriation or fraud. Under the duty of care, Board members are responsible to ensure a proper control environment exists; they take the time to understand the operations, funding streams, and underlying regulations; and they provide proper fiscal oversight.

Duty of Loyalty

The Board of Directors should always act with the best interests of the organization in mind and must not use organizational assets or information towards personal gain.


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