legal duties of association board members. members have no management authority, as such authority is held by the board of directors. however, state nonprofit corporation laws generally reserve to members the right to remove officers and directors and to amend the association's articles of incorporation, among other rights.
this level of care and due diligence makes it likely that the organization, and not its individual board members, will be held responsible if a court of law finds that the organization breached its duty to the plaintiff. with rare exceptions, members of a nonprofit board are protected against personal liability due to the following:
in this instance, nonprofit boards may be held liable for the misuse of grant money if they fail to implement proper controls or provide proper oversight to deter fraud.
disclose line. similarly, a board member could be held personally accountable if he or she were to hire a specific contracting firm in which the board member had a financial interest to perform work at the building while intentionally not disclosing that financial interest to the rest of the board. on the other hand,
can hoa board members be personally liable in lawsuits? a common question for new hoa board members or even for board members who have served for years but have never had to deal with a litigation threat is whether a board member can be personally liable in a suit related to his or her role as a board member.
here we explore the critical lessons to be learned from cases in which nonprofit board members and executives have been held liable for a nonprofits failure to remit taxes. if youre a board member or executive with ties to the purse strings, heres how to avoid getting into trouble.
just as in the for-profit world, a board member can indeed be personally liable, but there are a number of legal protections at a board members disposal and strategies to shield liability, although waiting until after a lawsuit has been filed to implement those strategies may be too late.
are nonprofit board members liable? an active board of directors is essential to the success of any nonprofit organization. generally, the members of the board of directors are the governing body of your nonprofit and are legally accountable for its actions. the board has legal and ethical duties that cannot be delegated to others.
importantly, the court further concluded that those individual members of the board who affirmatively participated in the action or inaction which resulted in the personal injury, they too could be held individually liable.
board members may decide to resign from a board for a variety of reasons. some of these reasons may be perfectly benign. it might be a matter of professional preferences e.g., its not a good fit anymore. or perhaps there are personal reasons like family issues or simply being overcommitted.
as long as the board members can show that proper steps were taken to avoid these circumstances, their liability is minimal. like with corporate law, having proper due diligence when it comes to irs regulations will minimize the legal liability of board members. keep more than one eye on the organizations finances.
can board members be personally liable for what happens in their homeschool group? wellthats really a legal question and im an accountant, not a lawyer, but heres a recent news story about board members of a nonprofit nursing home. they were held personally liable for failing to do their fiduciary duties.
board members can be held liable for bad things they didnt take steps to prevent or eliminate. examples include not screening childcare workers or not fixing that faulty handrail on the stairway of your facility.
lastly, directors can be held personally liable for failure to pay federal payroll taxes owed by the organization. while serving on a board of directors carries some risk of personal liability, the risks are minimal for directors who are aware of their legal responsibilities, exercise diligence, and ensure that they are adequately protected by insurance coverage and indemnification clauses.
because service on a condo association board is a thankless, payless position, and if board members can also be sued and held personally liable for money damages because a homeowner is upset, those board members will not serve. many board members have told me that if not for the business judgment rule as well as the officers
other ways a nonprofit board member might be held liable include: when a board member directly injures someone on purpose. when a board member guarantees a loan or other business debt for the nonprofit which then defaults on that loan or debt.
directors and officers may be held personally liable if they do not disclose that their actions are on the organizations behalf. if they disclose that they are acting on the organizations behalf, directors and officers will only be held personally liable if one of the bjrs exceptions applies. the bjr does not protect directors and officers if the director or officer: 1 violates criminal law; 2 willfully fails to deal fairly; 3 gains an improper personal benefit; or 4 engages
board members may be sued individually. since motions to dismiss are filed at the early stages of the complaint, the issue is to whether the ultimate finding of the court would be that the board members are personally liable, and more likely than not the board members will not be held personally liable.