Attorney service on nonprofit boards is advantageous for both the attorneys and nonprofits, but there are important practical and ethical considerations. At the Practising Law Institute‘s seminar “Serving on a Nonprofit Board: Practical & Ethical Considerations for Attorneys” on August 2nd, expert faculty addressed the important considerations for both attorneys thinking about nonprofit board service and attorneys already serving on a nonprofit board.
Program Co-Chairs: Courtney Darts, Director of Education, Pro Bono Partnership; Nancy Eberhardt, Director, New Jersey Program, Pro Bono Partnership
Guest Faculty: Jennifer Chandler, Vice President, National Council of Nonprofits; David G. Samuels, Duval & Stachenfeld LLP
What is a nonprofit?
This seminar addressed serving on boards of public charitable nonprofits that fall under the 501(c)3 IRS classification. These types of organizations have no owners or shareholders, but do have a volunteer board of directors to provide direct oversight. As part of the board, members have a fiduciary duty to the organization as a whole and to ensure the organization is following best practices and the law. The role of a board member is to determine the organization’s mission, strategies and program priorities, ensure the organization uses its resources only in fulfillment of its purposes as laid out in its certificate of incorporation, and ensure compliance with local, state and federal laws and regulations.
What considerations should an attorney think about before joining a board?
Joining a board is a big commitment as board members are crucial to an organization’s success. So why would an attorney want to join a board in the first place? For many, it’s a serious commitment to the cause of that organization itself, or an opportunity to use their perspective and experience as a lawyer for the public benefit. It can also be a way for attorneys to get involved in their local communities and make both personal and professional connections.
Whatever the reason, there are many questions to ask before joining a board. In addition to personal considerations, attorneys should ask what the time and financial commitments are, what deliverables are required of them as a board member, and the expectations as an attorney for serving on the board. They should also be sure to look into their employer’s policies on board service to ensure compliance. The panel provided a list of documents, such as the governing documents or the most recent financials, which should be reviewed before making the commitment as well.
What ethical issues should attorneys be aware of?
First and foremost, attorneys should understand that their responsibility as an attorney and a board member is to be working in the best interest of the organization as a whole, not the Executive Director, individual board members or themselves. Even when the founder of an organization is the Executive Director or on the board, the organization as a whole should always remain the focus.
Since most nonprofits don’t retain regular counsel, it is very common for an attorney on the board to be asked to provide legal advice. This can lead to conflict of interest concerns as well as confusion when speaking with the board or staff. While it isn’t necessarily illegal or wrong to provide legal counsel while serving as a board member, it’s advisable to serve as only one or the other at a time. The panelists even suggested leaving the board if retained as counsel to alleviate any potential conflict of interest.
The panel went on to discuss several hypothetical situations and what the options and responsibilities are for attorneys who are serving on the board. To watch this free program, now available on the Practising Law Institute website, visit www.pli.edu.
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