Directors on Nonprofit Boards

It is very popular to be on a nonprofit board for a church or charity. While a nonprofit does not have shareholders to whom a director is responsible, the nonprofit does generally have a constituency to whom the board is responsible, and in most instances, the attorney general of the state in which the nonprofit is organized has the right to act on behalf of the constituency to hold the board accountable.

Notably, the same general duties apply to the directors of a nonprofit, as apply to a corporation. Anytime the nonprofit is dealing with its compliance with tax issues, laws or regulations, or the handling of funds, the directors need to operate in a manner that is consistent with the role of a director. Failure to do so may jeopardize the ability of the nonprofit to accomplish its mission, may impact the reputation of the director, and could, in some circumstances, result in the directors being personally liable for some obligation or debt.

Taking on the role of a director is a serious task. Potential and existing directors need to recognize the scope of the role, the duties involved, and make reasonable efforts to meet the obligations involved.

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