Understanding Board Member Duties: What Every Governing Board Needs

Serving on a board can be one of the most rewarding ways to support a cause or organization you care about. But if you’re considering a board role, you should know there’s much more to it than showing up for meetings. Board members hold powerful legal and ethical responsibilities to look after the organizations they serve. The heart of these obligations boils down to three key fiduciary duties: Duty of Care, Duty of Loyalty and Duty of Obedience.

Many board members don’t understand these duties until after they join and that can lead to stress or even legal risk when decisions get tough. This post explains what each fiduciary duty means, gives examples and guides you through key things to ask before accepting a board seat. You’ll finish with a strong sense of how to protect yourself, your organization and its mission. If you'd rather watch than read, you can learn about this topic through my Youtube video: "What is a governing board and what does it do?"

What are fiduciary responsibilities on a governing board?

Every nonprofit or corporate board member carries fiduciary responsibilities. That’s a fancy way of saying you have to act with care, loyalty and honesty when making decisions for your organization. These aren’t just nice ideas—they’re duties with legal weight. Courts and regulators expect you to follow them, and failing to do so can bring headaches (or worse) for both you and the group you support.

Why do these duties matter so much? Most nonprofit and governing boards hold substantial power over money, assets and mission. Donors, funders and the public trust you to make thoughtful decisions and to put the organization ahead of everything else. That’s why, long before you sign up, it pays to know the core of what’s expected:

• Duty of Care: Take reasonable care with resources, assets and decision-making to help your organization thrive in the long term.

• Duty of Loyalty: Always put the interests of the organization above your own. Say no to conflicts or anything that puts your interests ahead of the board’s work.

• Duty of Obedience: Follow the law. Stick to the organization’s regulations, bylaws and mission statements, as well as all required policies.

  
  

Other roles and tasks do exist—such as fundraising, strategic planning and advocacy. But these three fiduciary duties are at the heart of what being a board member means. They guide your decisions and define your relationship with the group you serve.

Deep dive into the three fiduciary duties

Duty of Care

Duty of Care means you agree to act the way any responsible person would in the same position. You’re expected to pay attention, use good judgment and protect the organization’s future. This duty also covers how you handle the board’s financial and human resources, as well as its reputation.

Caring for an organization isn’t only about showing up. It’s about taking the organization’s long-term health seriously. For example:

• Review financial statements and budgets regularly.

• Attend board meetings and participate in decision-making.

• Ask questions before voting and seek expert help when needed.

• Check that policies, procedures and systems are in place.

• Monitor the performance of staff or other board members, as appropriate.

  
  

When you’re fulfilling the Duty of Care, you keep one eye on the present and another on the group’s future. If a decision affects the group’s reputation, spending or ability to stick around, you’re expected to understand the risks and benefits before saying yes.

Duty of Loyalty

The Duty of Loyalty requires that you put your board’s interests first—even ahead of your own business or causes. If you belong to more than one organization or serve on several boards, it may feel tempting to mix roles but you can’t give one group an unfair edge or divert resources just because it may benefit you or another interest.

Examples of conflicts of interest might include:

• Voting on a contract that would benefit your own company.

• Steering donors toward another charity because you’re on that board too.

• Using board information for personal profit or to help friends.

  
  

Not putting your own business or other organizations first is a firm rule. If something comes up that could cause a conflict, you must disclose it to the board and remove yourself from related conversations or votes. Transparency isn’t just polite—it’s expected.

Boards should have written policies for conflicts of interest. These policies help everyone know what to do if a tricky situation arises. Serving on a board means always choosing the organization’s best interest, even if that creates tough choices for you personally.

Duty of Obedience

Duty of Obedience means you must obey the law, follow your board’s own rules and stick to the agreed-upon mission. Boards get into trouble when they ignore this duty, even unintentionally. It covers more than just big-picture laws—the duty stretches across daily operations, compliance and the fine print.

Here’s what you need to pay attention to:

• File accurate taxes and reports with the IRS or your local government

• Honor all organizational bylaws and policies

• Respect any state, federal or local laws tied to your mission

• In health care, obey HIPAA privacy laws and regulations

• In education, follow FERPA regulations for student data

  
  

For example, a board serving a school must keep student records private under FERPA. Healthcare boards must follow HIPAA guidelines to protect personal health information. Even if you aren’t managing these areas directly, you’re responsible for making sure compliance is on everyone’s radar.

Board members need to know what their organization is legally required to do and help set a culture that values rules and ethical conduct.

How to evaluate board member duties before joining

Thinking about joining a board or being recruited to serve? Pause and consider whether the group has strong practices for handling these three fiduciary duties. You have a right, and a responsibility, to check before you say yes. Here’s how to assess if the board is prepared and if it’s the right fit for you:

Assessing fiduciary readiness of the board

Ask yourself: Will I be able to uphold the Duty of Care, Duty of Loyalty and Duty of Obedience here? Are the systems and culture supportive? Before taking a seat, talk openly about these questions with current board members and leadership.

Key questions to consider:

• Does the organization have liability insurance for board members?

• Are the financial records up to date and reviewed regularly?

• What processes are in place to review budgets, major decisions and risks?

• Are the roles and responsibilities clearly outlined for each board member?

• Is there a history of open communication and transparency among leadership?

  
  

If the board can’t answer these questions clearly, take that as a sign to dig deeper. Some boards may truly need your help, but protect yourself by getting honest answers before you commit.

Researching financials and public information

You don’t have to accept someone’s word for it. Nonprofits are required to make their financials public, usually by filing IRS Form 990. These records lay out how money flows in and out of the organization.

Websites like Guidestar make it simple to look up almost any registered nonprofit in the United States. You just need to sign up for a free account and search for the organization’s name. There, you’ll find years of 990 forms and other data to review.

What should you be on the lookout for?

• Consistent financial losses year after year

• Signs of rapid staff turnover or missing leadership positions

• Unusually high expenses in certain categories compared to similar organizations

  
  

The most recent records may be 18 months or longer out of date, but they still offer valuable insight. If you see a trend of financial trouble, ask leadership for an honest explanation of what’s going on and what is being done about it.

Interviewing leadership and board members

Taking on a board role is as serious as accepting a job. Just as an employer interviews you, you should interview them. Good boards welcome these conversations because it shows you’re ready to serve well.

Sample questions to ask before joining:

• What are the biggest challenges facing the board right now?

• How does the board make difficult decisions around ethics or finances?

• Can I see board meeting minutes and recent budgets?

• How does the board handle disagreements or tough votes?

• Are there written policies for conflicts of interest and board conduct?

• Is there an orientation or training for new members?

  
  

You’re not just getting “hired,” you’re choosing whether this organization is right for your skills and values. Great boards will be proud to answer tough questions with honesty and welcome your due diligence.

Final thoughts on the importance of fiduciary duties in board governance

Serving on a board brings real satisfaction, but also real consequences. By fully understanding your Duty of Care, Duty of Loyalty and Duty of Obedience, you put yourself and your organization in the strongest possible position. These core responsibilities are your daily guide. They clear up how you make decisions, how you prioritize the mission and what questions you ask when things aren’t clear.

Fiduciary duties aren’t technicalities. They’re how organizations survive hard times, keep the trust of donors and clients, and carry their missions forward. Whether you’re new to board service or a seasoned leader, keep these ideas front and center as you navigate board life.

Want more insights on board roles and responsibilities? Explore more in-depth guidance and tips by following the video series on Schmucker Advising’s YouTube channel. Stay curious and make every board minute count.

No organization is perfect, and the work is ongoing. Stay engaged, keep asking questions and never lose sight of why you serve. Leadership, at its best, starts with care, loyalty and a deep respect for the rules that protect everyone involved.