• Rich Haglund

Are (nonprofit) board members responsible for organizational culture?

Reading this post highlighting the fiduciary duty of nonprofit board members prompted me to blow the dust off my hardbound Black’s Law Dictionary to read about fiduciary duties.

Nonprofit board members may not compare their duties to the students they serve or the employees they or the CEO hire. Fiduciary duty seems like something owed by for profit corporate directors to their shareholders, or for brokers and agents to their clients.

But a fiduciary duty doesn't only arise when the agent is being compensated for acting on behalf of or for the benefit of the principal.

The National Council of Nonprofits states that nonprofit board members have the these standard fiduciary duties:

  1. Duty of Care: Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will;

  2. Duty of Loyalty: Ensure that the nonprofit's activities and transactions are, first and foremost, advancing its mission; Recognize and disclose conflicts of interest; Make decisions that are in the best interest of the nonprofit corporation; not in the best interest of the individual board member (or any other individual or for-profit entity).

  3. Duty of Obedience: Ensure that the nonprofit obeys applicable laws and regulations; follows its own bylaws; and that the nonprofit adheres to its stated corporate purposes/mission.

Ignoring damaging behavior is surely not a "prudent use of . . . assets, including . . . people." Not asking about and fostering equitable recruiting, compensation, and performance management policies and practices isn't "advancing [the nonprofit's] mission" or "in the best interest of the nonprofit corporation." And, of course, allowing noncompliance with laws and regulations to go unaddressed violates the duty of obedience.

As one person put it, an organization's culture is comprised of the behaviors, tools, and systems used in the organization.

Just as a for profit director should be aware of and ensuring that behaviors, tools, and systems lead to strong products and therefore revenue and profits, a nonprofit board member has a clear fiduciary duty to ensure a healthy culture that most effectively advances the organization's mission and serves its intended beneficiaries.

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