Nonprofits are governed by their board of directors. Nonprofit boards are responsible for the financial security of the organization. The board oversees the organizational operation, and it supervises the appointment and evaluation of key staff. Boards develop nonprofit policy and engage in strategic planning .

Nonprofit Board Fiduciary Duties

Individual board members owe a fiduciary duty to the organization they serve. In other words, they must only act in the nonprofit’s best interest. Each board member owes a duty of care, loyalty, and obedience to their nonprofit.

• Duty of Care: Board members are expected to participate in organizational planning and decision-making actively and to make sound and informed judgments.
• Duty of Loyalty: Board Members should avoid using their position, or the organization‘s assets, in a way that would result in a financial gain for themselves or any member of their family.
• Duty of Obedience: Board members must ensure that the organization complies with all applicable federal, state, and local laws and regulations and that it remains committed to its exempt purpose.