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R - Principles and Practices for Nonprofit Excellence in Connecticut

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PRINCIPLES AND PRACTICES FOR NONPROFIT EXCELLENCE IN CONNECTICUTPr<strong>in</strong>ciple 4: GovernanceNOTE TO READERS:The follow<strong>in</strong>g two sections are repr<strong>in</strong>ted with permission fromBoardSource. For more <strong>in</strong><strong>for</strong>mation about BoardSource, please visitwww.boardsource.org or call 800.883.6262.*Legal Responsibilities of <strong>Nonprofit</strong>Boards (BoardSource)*Duty of Care: The duty of care describes the level of competencethat is expected of a board member, <strong>and</strong> is commonly expressedas the duty of “care that an ord<strong>in</strong>arily prudent person wouldexercise <strong>in</strong> a like position <strong>and</strong> under similar circumstances.” Thismeans that a board member owes the duty to exercise reasonablecare when he or she makes a decision as a steward of theorganization.Duty of Loyalty: The duty of loyalty is a st<strong>and</strong>ard offaithfulness; a board member should give undivided allegiancewhen mak<strong>in</strong>g decisions affect<strong>in</strong>g the organization. This meansthat a board member can never use <strong>in</strong><strong>for</strong>mation obta<strong>in</strong>ed as amember <strong>for</strong> personal ga<strong>in</strong>, but should act <strong>in</strong> the best <strong>in</strong>terests ofthe organization.Duty of Obedience: The duty of obedience requires boardmembers to be faithful to the organization’s mission. They are notpermitted to act <strong>in</strong> a way that is <strong>in</strong>consistent with the central goalsof the organization. A basis <strong>for</strong> this rule lies <strong>in</strong> the public’s trustthat the organization will manage donated funds to fulfill theorganization’s mission.Ten Basic Responsibilities of <strong>Nonprofit</strong>Boards (BoardSource)*1. Determ<strong>in</strong>e the organization’s mission <strong>and</strong> purpose: It is theboard’s responsibility to create <strong>and</strong> review a statement ofmission <strong>and</strong> purpose that articulates the organization’s goals,means <strong>and</strong> primary constituents served.2. Select the chief executive: Boards should reach consensus onthe chief executive’s responsibilities <strong>and</strong> undertake a carefulsearch to f<strong>in</strong>d the most qualified <strong>in</strong>dividual <strong>for</strong> the position.3. Provide proper f<strong>in</strong>ancial oversight: The board should ensurethat proper f<strong>in</strong>ancial controls are <strong>in</strong> place.* BoardSource © 2002. Text may not be reproduced without written permission from BoardSource.<strong>Connecticut</strong> Association of <strong>Nonprofit</strong>s13

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