There are almost forty-thousand nonprofit organizations in Massachusetts, and many have volunteer officers and directors who help to manage, guide, and operate them. You may even find yourself volunteering to help lead an organization you support. If so, you should know the people who manage a nonprofit have duties and liabilities they must fulfill, and these responsibilities apply whether the person is a paid employee or a volunteer.
The most basic duties that an officer or director has are the duties of care and loyalty to the nonprofit. These encompass the responsibility to act in an honest manner; to work for the best interests of the nonprofit; to be diligent in preparing for, attending, and participating in meetings; to reasonably consider all relevant factors before making decisions regarding the nonprofit; to remain informed regarding statutory or regulatory compliance; and to carefully monitor delegated responsibilities. Officers and directors must act as fiduciaries and must manage the nonprofit and its property in the strictest good faith.
A nonprofit can limit or eliminate personal liability of its officers and directors in its articles of organization; however, this does not apply when the officer or director has breached their duties to the nonprofit, its members, or its beneficiaries. When a duty of care or loyalty has been breached by an officer or director, enforcement actions can be brought by many different parties, including the nonprofit itself, other directors, members of the nonprofit, beneficiaries of the nonprofit’s services, donors, members of the public, the attorney general, or governmental agencies that assert a violation of law or regulation.
If you serve as a director or officer of a nonprofit, and have any questions about your obligations or the actions of your nonprofit, contact me at email@example.com or 413-570-3170.