Have you been asked to serve on the board of a local nonprofit organization? Chances are you have a history of volunteering with or donating to this organization and already know its mission. But moving into a board position does bring some legal duties, and most likely an additional commitment of your time. If you accept the position, there are some things to consider. In Connecticut, nonprofit board members have two primary legal duties: the duty of care and the duty of loyalty.

Duty of Care
The duty of care includes two main components. First, directors must be reasonably informed about the nonprofit and its activities. That means that you should attend regular board meetings, read any materials that are distributed to the board, and ask questions about the nonprofit’s activities. You are entitled to rely on information presented to the board by the nonprofit’s officers, other directors or committees of the board, as well as professionals hired by the nonprofit, such as accountants or legal counsel to provide the board with guidance.  However, if you have personal knowledge that information presented to the board is unreliable or incomplete, you may not rely on such information. You should also share your knowledge with the rest of the board.

The second component of the duty of care is a requirement that directors must discharge their duties in good faith, with the care that a person in a similar position would believe was reasonably appropriate under the circumstances. This is sometimes referred to as the “reasonably prudent person” and requires directors to use their reasonable judgment when considering decisions put before the board.

Duty of Loyalty
The duty of loyalty requires directors to act in the best interests of the nonprofit, rather than in their personal interests or in the interest of any related party or organization.  Included in the duty of loyalty is a requirement to maintain confidentiality of the nonprofit’s internal discussions and ensure that any conflicts of interest are appropriately addressed. You should review your nonprofit’s conflict of interest policy to make sure that you understand what may be considered a conflict of interest and how any conflicts are handled.

Serving on a nonprofit board can be a rewarding experience. If you are serving on a board and have any questions about your legal duties, we’d be happy to assist you.

Kate E. Diehm is a business attorney with Rucci Law Group, LLC.  She has experience with all areas of business law. Kate can be reached at 203-202-9686 or at kdiehm@ruccilawgroup.com