Protecting Yourself While Serving on a Nonprofit Board
June 3, 2021
When serving on a nonprofit board, consider your vulnerabilities. Boards and board members do get sued. You can take steps to protect your family’s assets.
When serving on a nonprofit board, consider your vulnerabilities. Boards and board members do get sued. You can take steps to protect your family’s assets.
So, you’ve been invited to serve on a local charity board. Or you’re thinking about running for your school board. Serving on a nonprofit board is a great way to give back and make new connections by sharing your professional skills with the community. Consider your vulnerabilities, too. Boards and board members do get sued. And you can take steps to protect your family’s assets before that happens.
Board members make decisions that can have far-reaching effects. They have fiduciary responsibilities and are held accountable for the organization’s activities. Nonprofit board members generally have three areas of duty:
Duty of care: adherence to a standard of reasonable care while performing any acts that could foreseeably harm others. This is the first element that must be established to proceed with an action in negligence.
Duty of loyalty: the principle that directors and officers, in their capacities as corporate fiduciaries, must act without personal economic conflict.
Duty of obedience: making sure the nonprofit is abiding by all applicable laws and regulations and doesn’t engage in illegal or unauthorized activities.
In addition to these standard duties, you should get a job description from the nonprofit outlining what you’re personally accountable for. And make sure to stay engaged – attending meetings, thoughtfully reviewing materials and voting intelligently. You may even have to advocate for transparency to ensure you’re able to carry out your duties.
Even if you perform your duties completely and ethically, you can inadvertently expose yourself to tremendous risk. Board members are often among the first people employees, patrons, vendors and constituents target when they feel they’ve been wronged.
Take the homeowners association, for example. A resident slips and falls near the pool and blames the HOA for failing to ensure the area has a safe surface. He then sues the board members who voted against the safety measures.
Here are some other common areas of exposure:
In addition to vigilance in carrying out your nonprofit board member duties, you’ll want to make sure you have insurance in place to manage your risk.
In addition to partnering with companies and nonprofits, The Miller Group works with individuals on personal coverage. We’ll be happy to review your current policies to ensure you have the individual coverage you need.