• Latest
  • Trending
  • All
  • Management
  • Give & Care
  • Marketing
Duty of Loyalty – Nonprofit Law Blog

Duty of Loyalty – Nonprofit Law Blog

November 9, 2022
Celebration of Ellen Aprill – Nonprofit Law Blog

Celebration of Ellen Aprill – Nonprofit Law Blog

March 26, 2023
Digital Maturity Checklist For Nonprofit Organizations

Digital Maturity Checklist For Nonprofit Organizations

March 25, 2023
Advertisement
Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

March 25, 2023
Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

March 24, 2023
The Power of One Vs. Collective – Agitator

The Power of One Vs. Collective – Agitator

March 24, 2023
Five More Boundary-Busting Patterns That Make Saying No Hard

Five More Boundary-Busting Patterns That Make Saying No Hard

March 23, 2023
Repeat Giving Gamified – Agitator

Repeat Giving Gamified – Agitator

March 22, 2023
Nonprofit Social Media and Newsletter Ideas for April 2023

Nonprofit Social Media and Newsletter Ideas for April 2023

March 21, 2023
The Three Layers of A Person and Your Fundraising Story – Agitator

The Three Layers of A Person and Your Fundraising Story – Agitator

March 20, 2023
Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

March 18, 2023
Monday, March 27, 2023
  • Home
  • Charity News
  • Give & Care
    Digital Maturity Checklist For Nonprofit Organizations

    Digital Maturity Checklist For Nonprofit Organizations

    The 5 Best Fundraising Ideas for Your School’s PTA

    The 5 Best Fundraising Ideas for Your School’s PTA

    Lenten Pastoral Notes For Better Engagement

    Lenten Pastoral Notes For Better Engagement

    Appuntamento Evaluation

    Top Fundraising Platforms for Catholic Organizations

    Top Fundraising Platforms for Catholic Organizations

    10 Unique Nonprofit Fundraising Ideas for a Productive 2023

    10 Unique Nonprofit Fundraising Ideas for a Productive 2023

    How to Create Successful Nonprofit Fundraising Videos

    How to Create Successful Nonprofit Fundraising Videos

    Taking Nonprofit Email Marketing a Step Further: 6 Tips

    Taking Nonprofit Email Marketing a Step Further: 6 Tips

    4 Fundraising Delusions That Nonprofits Go Through

    4 Fundraising Delusions That Nonprofits Go Through

    3 Ways You’re Holding Your Campaign Back Without Knowing It

    Trending Tags

    • Golden Globes
    • Mr. Robot
    • MotoGP 2017
    • Climate Change
    • Flat Earth
  • Management
    Celebration of Ellen Aprill – Nonprofit Law Blog

    Celebration of Ellen Aprill – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

    Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

    Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/17/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/17/23 – Nonprofit Law Blog

    Nonprofit Law 201 for Journalists – Nonprofit Law Blog

    Nonprofit Law 201 for Journalists – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/10/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/10/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/3/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/3/23 – Nonprofit Law Blog

    Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters. – Nonprofit Law Blog

    Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters. – Nonprofit Law Blog

    Scholarships to NCPGC 30th Annual Planned Giving Conference – Nonprofit Law Blog

    Scholarships to NCPGC 30th Annual Planned Giving Conference – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 2/24/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 2/24/23 – Nonprofit Law Blog

    Trending Tags

    • Donald Trump
    • Future of News
    • Climate Change
    • Market Stories
    • Election Results
    • Flat Earth
  • Marketing
    Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

    Five More Boundary-Busting Patterns That Make Saying No Hard

    Five More Boundary-Busting Patterns That Make Saying No Hard

    Nonprofit Social Media and Newsletter Ideas for April 2023

    Nonprofit Social Media and Newsletter Ideas for April 2023

    Workaholic and Caretaker: Two Patterns That Make Saying No Hard

    Workaholic and Caretaker: Two Patterns That Make Saying No Hard

    How to Make Your Social Media Updates (Among Other Things) More Relevant

    How to Make Your Social Media Updates (Among Other Things) More Relevant

    Mixed Links: News and Tips for Nonprofit Marketers – March 10, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 10, 2023

    Unlocking the Power of AI for Nonprofit Communications

    Unlocking the Power of AI for Nonprofit Communications

    Why Saying No at Work is Hard for Nonprofit Communicators

    Why Saying No at Work is Hard for Nonprofit Communicators

    Social Media Demographics Nonprofit Communicators Need to Know in 2023

    Social Media Demographics Nonprofit Communicators Need to Know in 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 3, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 3, 2023

    Trending Tags

    • Flat Earth
    • Sillicon Valley
    • Mr. Robot
    • MotoGP 2017
    • Golden Globes
    • Future of News
  • Organization & Strategy
  • Resources
No Result
View All Result
Charity Racers
Advertisement
  • Home
  • Charity News
  • Give & Care
    Digital Maturity Checklist For Nonprofit Organizations

    Digital Maturity Checklist For Nonprofit Organizations

    The 5 Best Fundraising Ideas for Your School’s PTA

    The 5 Best Fundraising Ideas for Your School’s PTA

    Lenten Pastoral Notes For Better Engagement

    Lenten Pastoral Notes For Better Engagement

    Appuntamento Evaluation

    Top Fundraising Platforms for Catholic Organizations

    Top Fundraising Platforms for Catholic Organizations

    10 Unique Nonprofit Fundraising Ideas for a Productive 2023

    10 Unique Nonprofit Fundraising Ideas for a Productive 2023

    How to Create Successful Nonprofit Fundraising Videos

    How to Create Successful Nonprofit Fundraising Videos

    Taking Nonprofit Email Marketing a Step Further: 6 Tips

    Taking Nonprofit Email Marketing a Step Further: 6 Tips

    4 Fundraising Delusions That Nonprofits Go Through

    4 Fundraising Delusions That Nonprofits Go Through

    3 Ways You’re Holding Your Campaign Back Without Knowing It

    Trending Tags

    • Golden Globes
    • Mr. Robot
    • MotoGP 2017
    • Climate Change
    • Flat Earth
  • Management
    Celebration of Ellen Aprill – Nonprofit Law Blog

    Celebration of Ellen Aprill – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

    Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

    Engaging Millennials and Gen Z by ChatGPT – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/17/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/17/23 – Nonprofit Law Blog

    Nonprofit Law 201 for Journalists – Nonprofit Law Blog

    Nonprofit Law 201 for Journalists – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/10/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/10/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/3/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 3/3/23 – Nonprofit Law Blog

    Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters. – Nonprofit Law Blog

    Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters. – Nonprofit Law Blog

    Scholarships to NCPGC 30th Annual Planned Giving Conference – Nonprofit Law Blog

    Scholarships to NCPGC 30th Annual Planned Giving Conference – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 2/24/23 – Nonprofit Law Blog

    Nonprofit Tweets of the Week – 2/24/23 – Nonprofit Law Blog

    Trending Tags

    • Donald Trump
    • Future of News
    • Climate Change
    • Market Stories
    • Election Results
    • Flat Earth
  • Marketing
    Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 24, 2023

    Five More Boundary-Busting Patterns That Make Saying No Hard

    Five More Boundary-Busting Patterns That Make Saying No Hard

    Nonprofit Social Media and Newsletter Ideas for April 2023

    Nonprofit Social Media and Newsletter Ideas for April 2023

    Workaholic and Caretaker: Two Patterns That Make Saying No Hard

    Workaholic and Caretaker: Two Patterns That Make Saying No Hard

    How to Make Your Social Media Updates (Among Other Things) More Relevant

    How to Make Your Social Media Updates (Among Other Things) More Relevant

    Mixed Links: News and Tips for Nonprofit Marketers – March 10, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 10, 2023

    Unlocking the Power of AI for Nonprofit Communications

    Unlocking the Power of AI for Nonprofit Communications

    Why Saying No at Work is Hard for Nonprofit Communicators

    Why Saying No at Work is Hard for Nonprofit Communicators

    Social Media Demographics Nonprofit Communicators Need to Know in 2023

    Social Media Demographics Nonprofit Communicators Need to Know in 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 3, 2023

    Mixed Links: News and Tips for Nonprofit Marketers – March 3, 2023

    Trending Tags

    • Flat Earth
    • Sillicon Valley
    • Mr. Robot
    • MotoGP 2017
    • Golden Globes
    • Future of News
  • Organization & Strategy
  • Resources
No Result
View All Result
Charity Racers
No Result
View All Result
Advertisement Advertisement Advertisement
Home Management

Duty of Loyalty – Nonprofit Law Blog

by brookridgearcadia
November 9, 2022
in Management
0
Duty of Loyalty – Nonprofit Law Blog
491
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter
ADVERTISEMENT


"PURPOSE" Wooden letters on dark background

The ALI Restatement of the Law, Charitable Nonprofit Organizations (the “Restatement”) provides: “A fiduciary of a charity has a duty to: … [a]ct in good faith and in a manner the fiduciary believes to be in the best interests of the charity in light of its purposes ….” The Restatement explains:

[W]ith the exception of charities that are beneficiaries of other charities, there are no identifiable beneficiaries to enforce fiduciary duties. Accordingly, unlike in the case of a private trust in which fiduciary duties are owed to the beneficiaries, in the case of a charity, fiduciary duties are owed to the charity’s purposes rather than to a specific person or persons.

…

A fiduciary’s good faith belief in what is the best interest of the charity must be objectively reasonable in light of the charity’s purposes. Thus, the best interests of a charity may not be in its perpetuation; rather, in some instances, a charity’s purposes may be better carried out by its dissolution and the transfer of its assets to another charity to be used for similar charitable purposes.

Restatement, §2.02 (AM. L. INST. 2021)

The Restatement’s description of the relationship between a board member’s duty of loyalty and a charity’s purpose fits well with Anne Wallestad’s The Four Principles of Purpose-Driven Board Leadership.

The duty of loyalty is one of a board’s three essential legal duties, a legal perspective aimed at avoiding self-dealing and conflicts of interest. In practice, however, the duty of loyalty is often interpreted as the responsibility to think only of the organization when making governing decisions. This interpretation unnecessarily focuses board members on loyalty to the organization as a corporate entity. Instead, boards should focus their loyalty to the organization’s purpose or reason for being, fidelity to the reason that the organization exists and—by extension—to the people and communities its work impacts. What is best for purpose and community is not always synonymous with what’s best for the organization.

https://ssir.org/articles/entry/the_four_principles_of_purpose_driven_board_leadership

In an earlier blog post, Purpose-Driven Board Leadership, Legally Speaking, I also discuss two other key principles of this framework:

  • Respect for ecosystem: acknowledging that the organization’s actions can positively or negatively impact its surrounding ecosystem, and a commitment to being a respectful and responsible ecosystem player.
  • Equity mindset: committing to advancing equitable outcomes, and interrogating and avoiding the ways in which the organization’s strategies and work may reinforce systemic inequities.

A nonprofit can certainly advance its purpose indirectly through other actors in the ecosystem. This includes employees, other nonprofits, for-profits, and governmental bodies. It can also unintentionally set back its purpose through adverse impacts to these other stakeholders.

Many nonprofits advance their purposes by grantmaking to other organizations and lobbying to legislatures and the general public. They may also advance their purposes through their adopted values, including how such values are reflected in their employment policies and practices. If the values of a nonprofit include equity and justice across diverse categories, the nonprofit may advance its purpose more effectively by operating consistent with such values and, conversely, it may diminish its effectiveness at advancing its purpose by operating in a manner that is inconsistent with such values.

For example, a nonprofit whose specific mission is focused on serving food to persons experiencing homelessness in a particular neighborhood may have adopted a value of diversity, equity, and inclusion (“DEI”). The adoption of this value may have brought in greater support and guided the organization to address potential gaps in services to certain racial and ethnic groups. If, however, the board members of this nonprofit solely focused the organization’s program expenditures on the amount of food it served and did not invest organizational resources in its DEI values, such neglect could jeopardize certain groups of the nonprofit’s intended beneficiaries and also the support it receives from the funding community. Similarly, if the board members failed to invest in diversifying the organization’s board composition in an inclusive manner, such failure could weaken the nonprofit’s ability to serve all of its intended beneficiaries in a fair manner and fundraise in support of its purpose. See, e.g., Atinuke O. Adediran, Nonprofit Board Composition, 83 OHIO ST. L.J. 357 (2022).

In the post Governance Documents: Diversity, Equity, and Inclusion for Nonprofits, I made the case that DEI helps nonprofits advance their missions:

Evidence supports the premise that diversity in the workplace drives innovation and makes us smarter. In addition, DEI provisions may help nonprofits better advance their mission. When the composition of a nonprofit’s board goes against its own values, it weakens its credibility. Therefore, by including DEI principles in governance documents, nonprofits may help advance their own mission by clarifying and supporting their values.

https://nonprofitlawblog.com/governance-documents-diversity-equity-inclusion-nonprofits/

Even for organizations whose values do not include DEI, failing to invest in and advance DEI initiatives within these organizations could harm their ability to advance their purposes. Professor Chris Bruner and former Chief Justice and Chancellor of the State of Delaware Leo E. Strine, Jr. stated in a recent law review article:

Indeed, fiduciary duty requires boards to attend to DEI by monitoring company policies and practices that assure the company’s compliance with important laws that focus on the equal treatment of diverse applicants, employees, customers, communities, and business partners. Not only that, the fiduciary duty of loyalty requires affirmative efforts to promote the sustainable success of the corporation, and directors and managers must try to promote the best interests of the company. Substantial evidence exists that companies with good DEI practices will not only be less likely to face adverse legal, regulatory, worker, community, and consumer backlash from their conduct, but that their boards and workforces will be more effective and their reputation with an increasingly diverse customer base and public will grow, as will trust from institutional investors increasingly focused on sustainable profitability and the avoidance of harmful externalities costly to their clients, who have diversified portfolios tracking the entire economy.

Duty and Diversity, 75 VANDERBILT L. REV. 1, 4-5 (2022)

Wallestad agrees, making an equity mindset a fundamental principle of Purpose-Driven Board Leadership. She explains:

Boards play a critical role in helping organizations understand the context in which they work and how best to prioritize resources and strategies based on that reality. Our American system is rife with inequities that are the outcome of intentional and systemic choices designed to advantage some and disadvantage others. An awareness of how systemic inequities have affected our society—and those an organization’s programs seek to serve—creates powerful opportunities to deepen the organization’s impact, relevance, and advancement of the public good. Conversely, a lack of understanding can lead to flawed strategies and a damaging effect on programmatic participants and the community as a whole.

The Four Principles of Purpose-Driven Board Leadership, STANFORD SOCIAL INNOVATION REVIEW, March 10, 2021

Related



Source link

Share196Tweet123Share49
brookridgearcadia

brookridgearcadia

  • Trending
  • Comments
  • Latest
New Members Elected to CalNonprofits Board

New Members Elected to CalNonprofits Board

Update on Sick Leave Relief for Nonprofits

Update on Sick Leave Relief for Nonprofits

Check out these upcoming events

Check out these upcoming events

Celebration of Ellen Aprill – Nonprofit Law Blog

Celebration of Ellen Aprill – Nonprofit Law Blog

March 26, 2023
Digital Maturity Checklist For Nonprofit Organizations

Digital Maturity Checklist For Nonprofit Organizations

March 25, 2023
Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

Nonprofit Tweets of the Week – 3/24/23 – Nonprofit Law Blog

March 25, 2023

Advertisment

Charity Racers

Copyright © 2020 Crarity Racers All Rights Reserved

Navigate Site

  • Home
  • About
  • Disclosure
  • Terms of Use
  • Privacy & Policy
  • Advertise
  • Contact

Follow Us

No Result
View All Result
  • Home
  • Charity News
  • Give & Care
  • Organization & Strategy
  • Marketing
  • Management
  • Resources

Copyright © 2020 Crarity Racers All Rights Reserved

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
Cookie SettingsAccept
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT