Governance Articles

Role Playing: When Do Board Members Step Over The Line?


You might expect that most assns. would agree on the proper role of a board of directors. Surprisingly, I have found in working with many assns. that they do not. Although most volunteers come to the board filled with a desire to do good, many don't know what the rules are. Some board members see themselves as representing all the members of the assn. while others see themselves as protecting the interests of their particular state or chapter. Some feel free to use their votes to further their personal interests while others are horrified at the thought. These are but two of many areas of confusion. Are there any guidelines for boards that are universal?

The answer is that association boards have certain fiduciary responsibilities that are common to all. These are called 1) The duty of care 2) The duty of loyalty and 3) The duty of obedience.

The Duty of Care

The duty of care requires the director to do what would be expected of any prudent person: read relevant documents, prepare carefully for board meetings, pay attention to what is going on, and ask questions to clarify actions that are being taken. The duty of care permits the delegation of certain responsibilities to staff, consultants, committees and task forces, but requires the director to stay informed of their activities and take appropriate action when indicated. (Most directors don't have any problem with this requirement.)

The Duty of Loyalty

The duty of loyalty requires the director to give undivided allegiance to the assn. without regard to personal interest, business interest, or the interest of any other region or organization. It is a breach of the duty of loyalty for a director to use inside information for personal benefit, or to benefit his region, chapter, business or any other organization. This constitutes conflict of interest and is cause for removal from office. I have run into many instances where the duty of loyalty is flagrantly violated, causing much grief for the assn. and its members.

The Duty of Obedience

The duty of obedience requires the director to act within the scope of legal authority, including the assn.'s articles of incorporation, by-laws and mission. Directors are often tempted to bend the duty of obedience to get pet projects adopted. Much board conflict arises as a result.

Implications

What if a director violates one or all three fiduciary duties? An assn. can generally hold its directors harmless from lawsuits only so long as they operate within the legal bounds of their fiduciary responsibilities, e.g., the duty of care, the duty of loyalty and the duty of obedience. Directors may be held personally liable and subject to lawsuits if they fail to observe their fiduciary responsibilities.

Properly training both board members and staff in fiduciary responsibilities can remove many recurring roadblocks to the smooth functioning of your assn., as well as many inappropriate pressures on directors and on staff.

(Note: This column does not purport to provide legal advice. Consult your own attorney for the specific application of the laws of fiduciary responsibility in your own state.)



Back to Articles