Why Board Members Should Attend Meetings
At some point, every nonprofit will have a board member who doesn’t attend meetings regularly. Some board members think being on the board is just an honorary role to lend the weight of their name or their company to the organization. For others, life happens, and they may need to step back a bit.
It’s important to realize there are fiduciary duties and responsibilities that apply to serving on a nonprofit board. The board member faithfully carrying out these duties is vital both to the organization and for the legal protection of the board member. If boards allow members to regularly skip meetings, they could be creating legal risk for the organization and for the members who don’t regularly attend. In recent years, we have seen more issues related to nonprofits and the failure of board members to fulfill their fiduciary responsibilities.
What are the board’s duties?
There are three main fiduciary duties that apply to nonprofit board members: the duties of care, loyalty, and obedience.
Duty of obedience
The duty of obedience requires board members to ensure faithfulness to the organization’s mission, as stated when it received its tax-exempt status. The board’s function is to guide the organization within the framework of that mission. The duty of obedience also helps keep the organization on track for complying with laws pertaining to nonprofits, meeting the requirements for tax reporting and maintaining tax-exempt status, and following the organization’s own bylaws.
Duty of care
The duty of care relates to the board pursuing what is best for the organization. It includes asking the necessary questions to ensure everything done within the organization is in its best interest, like deciding when to take on projects, determining the fair market value of contracts awarded, and assessing conflicts of interest.
Duty of loyalty
The duty of loyalty requires that the best interest of the organization is above the best interest of the individual board member. When there is a conflict of interest between the organization and a board member, the organization must come first. Following conflict of interest policies is important in the duty of loyalty. When business is done with a board member or their family members, the conflict must be acknowledged and policy must be followed. That includes having the board member with the conflict leave the room during discussion and voting in order to protect themselves and the organization.
“When there is a conflict of interest between the organization and a board member, the organization must come first.”
Why are meetings important to attend?
The business of nonprofits happens during board meetings, and board members need to attend in order to fulfill their duties. Regular attendance can also help protect the board member from legal liability in the case of legal action against the nonprofit entity. There are state statutes in Oklahoma (and in other states) that protect board members from personal liability, but there are limitations to these protections. (See 18 O.S. 866 and 18 O.S. 867.)
Case law in this area is still evolving, but recent cases have shown that immunity for board members comes into question if they have not fulfilled their fiduciary duties, have not acted in the best interest of the organization, or have violated the organization’s conflict of interest policy. Most existing case law centers on the duty of loyalty, but it could expand into other duties as well.
One stipulation on immunity that has not yet been fully articulated is what is considered a “gross omission.” If board meetings are the place where most of the director’s duties are enacted, does missing multiple meetings count as a gross omission that could lead to a loss of immunity? If board members are not present, they cannot ask questions and be sure that decisions are in the best interest of the organization, which results in violating the duty of care.
As case law surrounding these matters grows, there will be precedent for more legal action. One of the best ways to protect board members and the organization is to be sure board members attend board meetings and follow all policies that are in place. Litigation is expensive, and director’s and officer’s insurance may not cover everything, especially if policy violations have occurred. One proactive way to avoid this issue is to include meeting attendance guidelines in the bylaws and hold all board members accountable to that standard. That way, if a board member fails to attend meetings regularly, there is a clear process in place to remove them from the board and mitigate that risk.
