Sunday, August 10, 2008

Nonprofit Law Podcast #42: Double Duty

Double Duty

Download: Nonprofit Law Podcast #42 (mp3, 9:50)



Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
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I'll be at the Craigslist Foundation Nonprofit Bootcamp in NYC on August 16th - if you attend and see me, feel free to say hello!
Thanks to Texas Nonprofits for featuring the show on their homepage! It sparks my craving for Ironworks BBQ in Austin...

Can a staff member also serve on the board of directors?

  • From a listener email: keep the suggestions coming!
  • Some people are absolutists about this - it's an unworkable conflict of interest. Early in my career I was confronted with an ED who was convinced it was actually illegal.
  • In some circumstances, this may be true - check your state laws regarding conflicts of interest, but also your bylaws and conflict of interest policies
  • Assuming none of these things block it, serving on the board as a staff member IS possible
  • It's more of an issue for small, but growing nonprofits
  • Why? It's a route to compensate a person for their work - paid as a staff member, but still present as an unpaid board member. (wearing two hats)
  • Pitfall: Conflict of interest - breach of duty of loyalty (for more, go back to NLP #35)
  • From BoardSource: "It is probably impossible to find a board member who will never have any conflicts of interest... if these associations develop into conflicts of interest and become a major obstacle to fulfilling the duty of loyalty — one of the main legal obligations of board members — it may be necessary to re-evaluate the board member's suitability for current board service."
  • If it makes sense for your organization to have a person serve as a board member, have a very strict policy regarding breach of loyalty. Best practice would be an abstention policy where the board member recuses him or herself from any votes that impact staff. Another (perhaps better) policy would be to have the board member serve in an ex officio capacity (i.e. no voting power on the board, but has full authority to be present and debate all decisions).

How many nonprofits compensate their board members?
Is it acceptable for a board member to have a personal relationship with a staff member?
Can conflict of interest be an obstacle to board service?
How does a nonprofit safeguard against organizational conflict of interest?

Email me with questions and suggested topics
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This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

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