The Directors' Dozen: Prudent Activities for Governing Boards of Nonprofit Corporations

January 11, 2011

Directors of nonprofit corporations owe fiduciary obligations to the corporation. They are bound by Massachusetts law to perform their duties as directors in good faith, in a manner reasonably believed to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a similar position would exercise under similar circumstances. As stewards of the nonprofit corporation, directors are required (1) to act with care in their oversight and, (2) to keep the interests of the corporation paramount above their own personal interests when acting for, or on behalf of the corporation. These legal duties are known as the duty of care and the duty of loyalty.

The following guidelines describe some actions directors should take to fulfill their legal duties.

  1. Be Engaged
  2. Implement the Mission
  3. Put the Nonprofit Corporation First; Address Conflicts of Interest
  4. Approve and Manage the Budget
  5. Approve Compensation
  6. Oversee the Investment Assets
  7. Review the Financial Statements and Meet with the Auditors; Review IRS Form 990
  8. Cause the Corporation to Make Government Filings and Pay Any Government Fees and Taxes Due
  9. Keep Good Minutes
  10. Comply with Fundraising Rules
  11. Adopt and Implement Operational Policies
  12. Monitor Political Activities and Lobbying

Download the Foley Hoag The Directors’ Dozen: Prudent Activities for Governing Boards of Nonprofit Corporations eBook (pdf).