As a board / committee member on a not-for-profit organisation you have a great capacity to do some good for the organisation and the community at large.

Your main focus will be on the objectives of the organisation.

This article seeks to outline your legal obligations which govern how you go about doing great work in your capacity as a board or committee member.

You have a fiduciary relationship with the organisation – what does this mean?

 The organisation has put special trust in you. You have a duty to always act in the organisation’s best interest. This is regardless of your own or other’s interests.

This is regardless of whether:

  • you are a volunteer or are paid;
  • attended the meeting where the decision was made or not; or
  • you have now left the organisation.

What are your obligations?

This may seem like common sense but the following should be at the back of your mind when making any decision on behalf of the organisation:

  • You have a duty to act in good faith and in the best interest of the organisation - any personal interests or alliances should be put to one side.
  • You have to act for a proper purpose - this is the case even where it means a decision is not in the best interest of you or those close to you.
  • You have a duty to act with reasonable care, skill and diligence – this includes being informed before making a decision, understanding the organisation’s financial position and seeking external advice where appropriate.
  • You have a duty to not misuse your position or the information provided to you – conflict of interests may arise and must be managed properly.

Conclusion

Most of the duties imposed on board and committee members of not-for-profit organisations are common sense. Notwithstanding this, you should always keep the best interest of the organisation at the heart of everything you do and ensure that you are fully informed in any decision you make.

Sometimes your duty can conflict with your obligations to third parties and it is important to seek legal advice to ensure that you do not fall short with your obligations.

About the Author

Catherine Ballantyne

Partner
A business disputes specialist, Catherine is a trusted advisor to businesses and individuals in obtaining successful outcomes. Businesses rely on Catherine as a trusted advisor as well as lawyer in guiding them through complex litigation and disputes.

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