To Exercise the Proper Duty of Care

1.  Active Participation.
 A director must actively participate in the management of the organization including attending meetings of the board, evaluating reports, reading minutes, reviewing the performance and compensation of the Executive Director and so on.  Persons who do not have the time to participate as required should not agree to be on the board.
2.  Committees.
  Directors may establish committees having the authority of the board and may rely on information, opinions or reports of these committees.  Committees operate subject to the direction and control of the board.  As a result, directors are still responsible for the committees and should periodically scrutinize their work.
3.  Board Actions.
  A director who is present at a meeting when an action is approved by the entire board is presumed to have agreed to the action unless the director objects to the meeting because it was not lawfully called or convened and doesn’t participate in the meeting, or unless the director votes against the action or the director is prohibited from voting on the action because of a conflict of interest.
4.  Minutes of Meetings.
  Written minutes should be taken at every board meeting.  The minutes should accurately reflect board discussions as well as actions taken at meetings.
5.  Books and Records.
  A director should have general knowledge of the books and records of the organization as well as its general operation.  The organization’s articles, bylaws, accounting records, voting agreements and minutes must be made available to members and directors who wish to inspect them for a proper purpose.
6.  Accurate Record Keeping.
  A director should not only be familiar with the content of the books and records, but should also assure that the organization’s records and accounts are accurate.  This may mean the director must take steps to require regular audits by an independent certified public accountant.  At the very least, the director should be aware of what the financial records disclose and take appropriate action to make sure there are proper internal controls.
7.  Trust Property.
  A director has the duty to protect, preserve, invest and manage the corporation’s property and to do so consistent with donor restrictions and legal requirements.  Instituting proper internal controls will aid in the protection of assets.
8.  Resources. 
  A director must assist the organization in obtaining adequate resources to enable it to further its charitable mission.
9.  Charitable Trusts.
  A trustee of a charitable trust has a higher standard of care than a director of a nonprofit corporation.  A trustee has the duty to exercise the care an ordinary person would employ in dealing with that person’s own property.  A trustee with a greater level of skill must use that higher skill in carrying out the trustee’s duties.
10.  Investigations.
  A director has a duty to investigate warnings or reports of officer or employee theft or mismanagement.  In some situations a director may have to report misconduct to the appropriate authorities, such as the police or the Attorney General.  Where appropriate, a director should consult an attorney or other professional for assistance.
Traditionally, directors have an absolute duty of complete, undivided loyalty to the organization.  This means that directors should avoid using their position or the organization’s assets in a way which would result in pecuniary or monetary gain for them or for any member of their family.  A director should put the good of the organization first and avoid engaging in transactions with the organization from which the director will benefit.