Part 2:Duty of Loyalty

In Board Development, Evaluations, Strategic Planning by Geoff Burns

Duty of Loyalty

This is part 2 of a three part series on the duties of board members.

Continuing on from Part 1: Duty of Care, lets now look at the Duty of Loyalty. Board members have a responsibility to put the interests of the organization and its objectives ahead of any personal or professional interests. This includes the interest of family or friends or another entity.

Duty of loyalty deals mostly with conflict of interest. Board members need to be aware of the conflict of interest policy. If the organization doesn’t have a conflict of interest policy….GET ONE NOW! See below for an example of a conflict of interest policy. Conflict of interest policies need to address how board members should act if they wish to engage in business dealings with the organization. This situation should be avoided unless the board decides that it is in the best interest of the organization.

Competition is also an area of concern for a board member honoring the duty of Loyalty. If a board member is also a member of another organization that has similar interests, mission, supporters, etc. it is prudent of the board member to continue in service to only one such organization. Being on the board of two organizations that have the same potential funding source is a serious conflict of interest and must be avoided. Board members must never engage in any action that hurts the organization or competes with the interests of the organization.

Board members must also not disclose any confidential information about the organization. Anything proprietary in nature, or is not meant for public consumption must remain as such. Duty of loyalty is upheld when a board member adheres to the conflict of interest policy, exercises independent judgement, and acts in the best interest of the organization over personal and professional interests.

Sample Conflict of Interest Policy

Ohio Attorney General Guide for Charity Board Members

Three D’s of Board Governance

Legal Responsibilities of Nonprofit Trustees