I’m a Nonprofit Board Member – Now What?
If you’re on the board or in a decision-making role, you are a Fiduciary. Fiduciary excellence leads to trust. Trust leads to enhanced donor confidence and board engagement, which leads to increased donations, financial security and mission success.
“Somebody Told Me I’m a Fiduciary”
Not too many people walk around thinking about what it means to be a Fiduciary. But then again, since you’re a Nonprofit Leader, you’re special and it’s something you need to know.
Because if you breach your fiduciary responsibilities you could seriously jeopardize your Nonprofit’s reputation – and your personal assets could be at risk.
Generally, a Fiduciary is an individual who manages assets on behalf of others and is therefore in a special position of trust and responsibility. In the case of a Nonprofit, Board Members, the Investment Committee and Staff all have a hand in carrying out the objectives of the organization, including the management of its assets. Each of these individuals have legally defined roles and responsibilities.
The reality is that you’ll likely be considered to be a Fiduciary if you are:
- a Board Member, or
- in a decision-making position, or
- can influence investment, administrative or financial decisions for your Nonprofit.
So, what do Fiduciaries like you have to do?
You owe three fundamental duties to your Nonprofit:
- The Duty of Loyalty, which includes:
- Serving the Best Interests of your Nonprofit and its Beneficiaries
- Acting in Good Faith
- Avoiding or Managing Conflicts of Interest
- The Duty of Care, which includes:
- Acting with Skill, Diligence and Prudence
- Documenting Material Information and Evidence of your Sound Decision-Making Process
- The Duty of Obedience, which includes:
- Adhering to the Mission of Your Nonprofit
- Understanding and Obeying Applicable Laws and Regulations
- Following your Nonprofit’s Governing Documents including Bylaws, Investment Policy Statement and Trust documents.
That’s the basics, and there’s a straight-forward Four-Step Fiduciary Process you can implement to help assure that you and your Nonprofit are meeting your Fiduciary responsibilities.
By the way, many Nonprofit Board Members have never been told that they’re Fiduciaries, what it means and how they can minimize their personal liability. You know – and you’re ahead of the game!
Our team of experienced fiduciaries and CEFEX Analysts provides practical fiduciary education and consulting services to help you readily meet your fiduciary responsibilities so you can focus on what inspires and motivates you!
Download our training introduction here.