Running a Nonprofit · Level 3 of 5 · Intermediate

Boards and governance

Fiduciary duties, conflicts of interest, and good board habits.

Study notes

Board members have fiduciary duties: care (pay attention and make informed decisions), loyalty (put the organization first), and obedience (follow the mission and the law).
Adopt a written conflict-of-interest policy. Members with a conflict disclose it and step out of the vote.
Keep minutes of board meetings that record attendance, motions, and votes.
The board hires, supervises, and sets pay for the executive director. Pay should be reasonable and documented.
Private inurement, meaning insiders improperly benefiting from the charity's money, can cost a 501(c)(3) its exemption.

Quiz: 6 questions

Choose one answer for each question, then check your answers. Score 5 of 6 to pass. Then enter your name and email to download a PDF certificate and have a copy emailed to you. Answers are graded in your browser.

1. The duty of loyalty means a board member:

Puts the organization's interests ahead of their own Attends every party Donates the most money Never votes

2. A board member's company bids on a contract. The member should:

Disclose the conflict and not vote on it Vote yes Keep it secret Run the vote

3. Board minutes should record:

Attendance, motions, and votes Only jokes Members' home addresses Nothing; minutes are optional notes

4. Who usually hires and evaluates the executive director?

The board The volunteers The IRS The donors

5. Private inurement means:

Insiders improperly benefiting from the charity's resources Paying fair market rent Paying reasonable salaries Buying office supplies

6. The duty of care requires board members to:

Stay informed and make careful decisions Never ask questions Sign checks without reading Skip meetings

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