"To protect and to serve": the duties and responsibilities of directors of Florida not-for-profit corporations.

• Author: Baskies, Jeffrey A.
• Position: Business Law

As leaders in our communities and as advisors to our clients, many attorneys have had the privilege and opportunity to volunteer or work with Florida not-for-profit corporations (NFP). While every NFP is unique in its mission and organization, the duties and obligations of an individual serving as a director of a Florida NFP are not necessarily novel. The roles of NFP directors are defined by the articles of incorporation, bylaws, and other governing documents of the NFP, by common law, by F.S. Ch. 617 (corporations not-for-profit), and by applicable federal regulations. Briefly, directors of a Florida NFP owe a duty of care, a duty of loyalty, and a duty of obedience.

In General: The Role of the Board of Directors

The role of the board of directors of a Florida NFP will in large part depend on the individual organization --its size, professional staff, mission statement, etc. In the most general terms, a board of directors is the group of people legally charged with the responsibility to govern a corporation whether for-profit or not. While in a for-profit corporation, the board is responsible to the corporation's shareholders, in a not-for-profit corporation, the board may be responsible to various parties, including its donors, its members, its beneficiaries, and the larger community, which the NFP serves (ultimately represented by the attorney general's office). (1)

The function of the board of a Florida NFP is to ensure that the corporation is fulfilling its obligations. This is accomplished through overseeing and evaluating the operations of the organization, particularly including monitoring the officers, executive directors, and staff. In addition, the board's function is to enable the NFP to carry out its mission successfully and achieve its purposes. In both of these primary functions, it is important to recognize that the role of the board and its members is not to operate the organization. Instead, the day-to-day operations of the NFP typically will be the job of the executive director, the other officers, the staff, and/or volunteers.

While the specific responsibilities of the board of directors of a Florida NFP will depend on the particular organization, in fulfilling its primary functions, the work of the board is generally comprised of three activities: 1) strategic planning; 2) oversight of the organization's programs (including fiscal oversight); and 3) fundraising.

To carry out these general primary functions, the board will have certain specific duties. BoardSource is a company that provides tools, research, and information to other NFP organizations to help build better NFP organizations and board leaders. (2) BoardSource regularly produces publications, offers seminars, and provides consultations to board members and NFP leaders. In their booklet, Ten Basic Responsibilities of Nonprofit Boards, BoardSource offers this summary of the 10 duties of a board of directors:

1) Determine the organization's mission and purpose;

2) Select the executive;

3) Support the executive and review his or her performance;

4) Ensure effective organizational planning;

5) Ensure adequate resources;

6) Manage resources effectively;

7) Determine and monitor the organization's programs and services;

8) Enhance the organization's public image;

9) Serve as a court of appeal; and

10) Assess its own performance. (3)

These 10 duties provide an overview and general guidelines for members of a NFP board of directors; however, each NFP may have its own expectations and requirements for its board members. These requirements should be clearly set forth and presented to prospective directors and to the current members of the board. If there are fundraising expectations, these should be clearly communicated, as well. Toward this end, it is highly recommended that every NFP adopt a written mission statement and code of conduct, which sets forth the responsibilities of board members, the goals of the organization, and the means by which they will be achieved.

Common Law Duties

Members of a board of directors of a Florida NFP have three general common law duties to the corporation: 1) duty of care; 2) duty of loyalty; and 3) duty of obedience.

* Duty of Care--The duty of care requires board members of a Florida NFP to exercise reasonable care when they make decisions for the corporation. Florida law generally defines this duty as requiring directors to act in "good faith" and with the level of care expected of an "ordinarily prudent person" acting reasonably for the best interests of the NFP. (4)

In order to fulfill this duty, the directors are expected to perform certain responsibilities and engage in certain practices. Directors must actively participate in the management of the NFP. They must remain informed as to the operations of the NFP. They must be involved in (or at a minimum be aware of) the corporate administration, and they must protect corporate property.

While the specific requirements for fulfilling these responsibilities will vary depending on the corporation and the individual board members, there are certain expectations that should be fulfilled by every member of a NFP board of directors.

1) Attend meetings. Directors must attend board and committee meetings on a regular basis. Boards of directors function as a group and participation of all members of the board is required in order for the board and its committees to function properly. Board...