I've previously blogged about some general fiduciary duties. At this point I want to point out some additional legal issues which any volunteer board member should be aware.
Perhaps the most important issue for trade and professional associations is the need to avoid antitrust liability. The antitrust laws were created to promote fair competition. They specifically prevent businesses or professions from getting together to set pricing or divide markets. This means that there should really be no discussions of pricing or comparison of prices. There should be no discussions about refusing to use certain vendors or refusing to do business with specific individuals or groups. There are serious consequences to violating the antitrust laws.
Another potential issue for board members is that their actions may be attributed to their organization even when acting as an individual. If individuals "appear" to be acting with the authority of the organization the organization may be legally responsible for the actions. This can be tricky because as individuals we have freedom of speech but we need to consider when we are speaking whether people may assume that what we are saying is being said on behalf of the organization. We often see statements like “the views expressed here are my own and or not those of XYZ.”Having legal counsel to review these issues and advise the board should it start to go astray is essential to avoid legal liability. Organizations can purchase and you have the right to know whether there is a policy that covers officers and directors so ask. Many organizations whether by resolution or bylaw have indemnification provisions that will protect volunteer board members. You should check on this as well.
Please keep volunteering.
Many professionals serve on volunteer boards. Without these volunteers the work of so many organizations would never be accomplished. But do the volunteers know and understand their duties when they agree to volunteer?
The primary duties that must be considered by any volunteer are as follows: 1) the duty to act in the best interest of the organization, 2) the duty to keep confidential information confidential and 3) the duty to avoid conflicts. In subsequent posts I may address these duties with more specificity, as well as additional duties, however, these three duties should be fairly obvious. Unfortunately, they are not always easy to follow.
Hopefully, volunteer board members are volunteering for the "right" reasons and are there to act in the best interest of the organization. However, what one board member believes is in the best interest of the organization will not necessarily align with what another member believes is in the best interest. There can be differences of opinion. A board member must use reasonable and ordinary care in performing their duties. They must put the interests of the organization before any other interests.
Unless give permission to disclose, confidential information should never be disclosed. This can include discussions in executive session. However, as we volunteer for boards we sometimes have access to so much information it is difficult to know or remember what information has not been made public. When in doubt don't disclose and refer the matter to the Executive Director or legal counsel.
A board member must avoid conflicts of interest. (A similar duty is to disclose conflicts when they arise.) Avoiding a conflict can simply mean abstaining from a vote. However, it may mean not participating in any discussion and it can mean that a board member might have to abstain from a business opportunity of their own if it is in direct competition with the organization. This does not mean that a board member can never compete with the organization. In any conflict situation, disclosure is necessary and a discussion with legal counsel and/or the Executive Director will help resolve the situation.
Although I focused on volunteer board members for this blog the same duties will apply in a paid situation as well. Don't let these fiduciary duties prevent you from serving as a volunteer. We need your service.
It is January 20th 2012. I started at Cipriani & Werner last week after 14 years at Caldwell & Kearns. This first blog won't have much information as I'm just trying to learn about blogging and my new computer doesn't work. In the future I will post information about licensing and association matters here that I hope you will find helpful if you are a professional with a licensing issue or if you serve on an association board and need to understand your fiduciary duties and responsibilities. Thanks for reading.