8 - 2025 - Law Garden

Duty of Obedience and Corresponding Legal Formalities

August 7, 2025

The Duty of Obedience: Staying Rooted in Law and Mission While much attention is paid to a board member’s duties of care and loyalty, the duty of obedience is equally essential to good nonprofit governance. This duty ensures that board members stay true to the organization’s mission and comply with its governing documents and applicable laws. In short, it means staying grounded, legally and ethically. A board that overlooks the duty of obedience risks not only reputational harm, but also loss of tax-exempt status, legal liability, or internal dysfunction. Fortunately, this duty is straightforward to uphold with consistent attention to a few key practices. Follow the Organization’s Governing Documents Every Oregon nonprofit is legally formed through its Articles of Incorporation and operates under its Bylaws, both of which are binding on the board. The duty of obedience requires that board members act within the scope of authority defined in these documents. This includes: Complying with decision-making processes, officer roles, and term limits; Holding regular meetings as required; and Ensuring the organization’s activities remain aligned with its stated mission and charitable purpose. Amending the Bylaws or Articles may be appropriate as the organization evolves. However, they must be followed until they

Duty of Loyalty and Avoiding Conflicts of Interest

August 7, 2025

Nurturing Integrity: The Duty of Loyalty for Board Members In the garden of governance, the Duty of Loyalty is the bedrock that ensures the flourishing of trust and integrity within an organization. Board members must steer clear of invasive conflicts of interest and conflicts of loyalty to protect and nurture their organization. Let’s dig into the Duty of Loyalty and uncover the essential practices that will help your organization thrive. Rooting for the Best Interest of the Organization Board members must act and vote in the best interest of the organization. The IRS prohibits board members and other “insiders” from improperly benefiting from the nonprofit’s activities and revenue, ensuring that resources are used solely for the organization’s mission. Avoiding Conflicts of Interest A financial conflict of interest arises when a board member (or their family member or business or romantic partner) stands to benefit personally from a transaction or decision made by the organization. This includes situations where the board member has a direct or indirect financial interest in a contract, grant, sale, or other arrangement involving the nonprofit. The concern is that the board member’s personal financial interests may compromise their ability to act solely in the best interests

Duty of Due Care

August 7, 2025

Tending the Garden: The Duty of Due Care for Board Members Being a board member requires tending to the delicate and intricate ecosystem of your organization. To ensure that it thrives and blossoms, you must invest time, attention, and informed judgment. Let’s dig into the Duty of Due Care and uncover the essential practices that will help your organization grow strong and healthy. Nurturing with Best Judgment Board members must exercise their best judgment when representing the organization. This means actively participating in governance by attending meetings and reviewing relevant information about the organization. The Board of Directors should meet at least quarterly to stay informed on the progress of the organization. Being a board member means you signed up to govern the organization, not just rubber stamp or phone in decisions without adequate information or inquiry. Active Participation Active participation means a director must be involved in the management of the organization, which includes regularly attending board meetings, evaluating reports and finances, reading minutes, and reviewing the performance of the executive director to ensure the organization is being tended to and nurtured. Note: it’s not “mean” to ask a board member to resign, or even voting to remove them

Board Member Duties and Corporate Formalities

August 7, 2025

Cultivating Success: Your Legal Duties as a Board Member As an Oregon nonprofit board member, you hold the key to nurturing the growth and prosperity of your organization. In this post, we will give an overview of the three core duties that will help your organization bloom: the Duty of Due Care, the Duty of Loyalty, and the Duty of Obedience. We will dig into each of those duties separately in the coming posts. Duty of Due Care Just as a gardener uses their best judgment to choose the right plants for their garden, board members must exercise their best judgment and common sense when making decisions for the organization. This includes actively participating in the management of the organization, attending meetings, and reviewing important information. To ensure your organization flourishes, board meetings should be held at least quarterly to review the organization’s financial and programmatic information. By being proactive and engaged, you help lay a solid foundation for the organization’s success. Duty of Loyalty A loyal gardener knows that every plant deserves their unwavering attention. Similarly, board members must act in the best interest of the organization, avoiding any conflicts of interest or conflicts of loyalty (such as serving

Day: August 7, 2025

Duty of Obedience and Corresponding Legal Formalities

Duty of Loyalty and Avoiding Conflicts of Interest

Duty of Due Care

Board Member Duties and Corporate Formalities