Fiduciary Duties of Nonprofit Directors and Officers (Portfolio 488)

Description

The Bloomberg Tax Portfolio, Fiduciary Duties of Nonprofit Directors and Officers, No. 488, examines in depth the legal obligations that directors and officers of nonprofit organizations must adhere to in order to avoid liability and to ensure the stability and success of the organization that they serve.

The Portfolio first analyzes basic issues such as the qualification of nonprofit directors and the general authority of a board of directors in the nonprofit context. It then reviews the origin and evolution of fiduciary obligations of nonprofit officers and directors, which have changed significantly over the years.

The core of the Portfolio is a detailed discussion of the basic fiduciary duties, i.e., the duty of care and the duty of loyalty. The Portfolio examines in depth the various facets of each of these duties, offering practical interpretations and insights. Complementing this is an analysis of circumstances under which the standard of care for nonprofit leaders can change depending upon specific circumstances.

An important part of the analysis is a discussion of investment responsibility, which is one of the principal sources of liability for nonprofit directors and officers.

Also included is a unique but vital discussion of the importance of the actual operations of a board.

The Portfolio next reviews which constituencies have standing to bring a legal action against an officer or director alleging breach of a fiduciary duty. These include state attorneys general, members, and beneficiaries. Finally, the Portfolio examines various statutory protections that are available to nonprofit officers and directors to minimize fiduciary liability exposure, including volunteer protection statutes and indemnification.

The Worksheets include sample conflict of interest policies and sample investment policies.

This Portfolio may be cited as Webster, 488 T.M., Fiduciary Duties of Nonprofit Directors and Officers.

Table of Contents

I. Introduction
II. Authority and Nature of the Board
III. Origin and Evolution of Fiduciary Obligations
IV. The Duty of Care
V. The Duty of Loyalty
VI. Federal and State Good Governance Efforts
VII. Duty of Obedience
VIII. Other Considerations
IX. Standing to Sue
X. Statutory Protections