Q: As a sitting board member of an organization, can I be personally liable for the actions of the entity?
In a word, yes.
As a member of the board of directors, you assume certain fiduciary responsibilities.
Every state has its own definition of fiduciary responsibility, but generally they consist of:
- Duty of care – The Duty of Care means that board members and officers act with diligence and in good faith. In other words, they do what any ordinary, prudent person would do.
- Duty of loyalty – Loyalty means that board members must act in good faith and in the best interests of the organization, and placing the organization’s interests above their own; avoiding conflicts of interest and with full transparency.
- Duty of obedience – Board members and officers must work consistently towards the goals and mission of the organization, fully complying with the law at all times.
Have questions about your position as a board member or officer and your role and responsibilities? Contact a Zinner audit and assurance professional.
