What does “fiduciary duty” mean for a nonprofit board member?

A fiduciary duty refers to a legal and ethical obligation that a board member has to act in the best interests of the nonprofit organization and its stakeholders. This means that board members must prioritize the welfare of the organization above their personal interests and must make decisions that benefit the organization as a whole, taking into consideration the impact on its stakeholders, such as employees, volunteers, donors, and the community it serves.

Board members are expected to exercise care, loyalty, and good faith in their decision-making processes. This involves being well-informed about the organization’s activities and ensuring that resources are managed wisely. By fulfilling their fiduciary duty, board members help build trust and maintain the integrity of the organization, which is essential for its long-term sustainability and success.

In contrast, the responsibilities that emphasize legal compliance or visibility, while important, do not encapsulate the broader obligation that fiduciary duty represents. Similarly, the focus on minimizing costs is a financial strategy that might not align with the core principle of prioritizing the organization's mission and stakeholders' best interests.