Can a board member be liable for a nonprofit?

Fortunately, it is rare for nonprofit board members to be found liable for a nonprofit’s legal problems. That’s because nonprofits usually are incorporated. Incorporation offers the protection of limited liability to corporate directors and officers.

How are board members protected from personal liability?

With rare exceptions, members of a nonprofit board are protected against personal liability due to the following: An incorporated entity is responsible for its debts. In the vast majority of circumstances, judgments imposed on a nonprofit by a court of law have to be paid by the organization, not individual directors.

Can a board member be held liable for a volunteer action?

Every state in the United States has a volunteer protection statute “…board members who act in good faith and with diligence and care, are unlikely to be held personally responsible for their actions on the nonprofit’s behalf.” that limits in some respect the personal, legal liability of volunteers.

Who is liable if a board member does not exercise reasonable care?

Board members are legally bound to “exercise reasonable care when he or she makes a decision for the organization. Reasonable care is “what an ‘ordinarily prudent’ person in a similar situation would do.” In the business world, some boards have been liable when they did not fulfill this requirement.

Fortunately, it is rare for nonprofit board members to be found liable for a nonprofit’s legal problems. That’s because nonprofits usually are incorporated. Incorporation offers the protection of limited liability to corporate directors and officers.

With rare exceptions, members of a nonprofit board are protected against personal liability due to the following: An incorporated entity is responsible for its debts. In the vast majority of circumstances, judgments imposed on a nonprofit by a court of law have to be paid by the organization, not individual directors.

Why are nonprofit directors worried about personal liability?

Fear of personal liability stops many people from joining boards of directors at all — although the number who have actually been sued is quite small. The news is good for nonprofits, though with certain exceptions.

Every state in the United States has a volunteer protection statute “…board members who act in good faith and with diligence and care, are unlikely to be held personally responsible for their actions on the nonprofit’s behalf.” that limits in some respect the personal, legal liability of volunteers.