You’ve been asked to serve as a nonprofit director or officer, or perhaps you are already doing so. What legal responsibilities do you take on as a director or officer? In legal terminology, these responsibilities are known as “fiduciary” duties, the first of which is the duty of care. Additional fiduciary duties of loyalty and obedience will be addressed in subsequent articles.
How does a nonprofit organization act? Why through its leaders, of course. But they do not – or at least should not – act without the board’s official approval on major decisions. In other words, the directors collectively “resolve” through their board – as the governing body – that the nonprofit shall take certain action. What do such resolutions look like, and where can they be found?
May directors and officers get paid by the nonprofit organizations they serve? This question often arises when a nonprofit’s founder seeks compensation for his or her services to the organization, as well as occasionally when payment to others seems warranted. The answer is generally “Yes,” but with several caveats.