LIABILITIES AND RESPONSIBILITES OF NONPROFIT BOARDS What every nonprofit board member should know STEVE McCLURY Introduction The following is a brief discussion of the duties and potential liability of the members of the board of directors of a non-profit corporation. An accurate description of the liability of a particular organization or director can only be judged by providing local counsel with full information on the specific facts of the particular situation. This overview can merely provide a general summary of existing requirements and standards. Two further cautions: First, this summary deals only with incorporated organizations. Second, this discussion avoids the possible effects of charitable immunity provisions within a jurisdiction. It does so on the basis that even in those areas where the doctrine still lingers, it has an excellent chance of succumbing to any sustained challenge. General Responsibilitie~ In general, boards of directors are charged with the overall management and supervision of the corporation. They have the power and duty to carry out whatever transactions the corporation itself has the power and duty to carry out in furtherance of its chartered purpose. As Zerman Steve McCurley is an internationally known trainer and consultant on nonprofit management, fundraising and volunteer involvement. He can be contacted at PO Box 18653, Washington, DC 30036. Page 18 RAIN Fall/Winter 1986 notes, "Within the purposes and powers of the association, the directo~s are free to change policies and short-range purposes, but unless the charter or by-laws expressly permit, they may not do acts that amount to changes in fundamental purposes or operational methods of the association." Included within the general duties of management or supervision of the board are: 1. Maintaining complete and accurate minutes and financial records. 2. Selecting, supervising, and removing executive personnel. 3. Fixing of compensation, fringe benefits, and retirement plans. 4. Selecting successors, trustees, and directors. 5. Making administrative policy decisions: level of staff, public relations, labor relations, etc. 6. Making program decisions: ensuring the implementation of the organizations' purpose. 7. Enacting charter and by-law changes. 8. Making financial and investment decisions. How many of the above duties must be directly performed by the board will depend to some extent upon the size of the organization, its complexity, and its available staff. The final determination, in any case, should undergo examination and approval by the board. It is noteworthy that recent years have witnessed a shift of emphasis from financial supervision to a growing responsibility for programmatic supervision by board members.
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