Page 33 - Leisure Living Magazine May 2019

Board Members For Charities Should Know Legal Responsibilities
By Beth Short, Ohio Attorney General Charitable Law Section
“Law You Can Use” Courtesy of the Ohio State Bar Association
Serving on the board of a charita- ble organization is a demanding and rewarding job. It is a vital function, as charities work to enhance the quality of life in our communities.
But becoming a board member for a charitable organization means more than merely accepting an hon- orary title or helping a charity that contributes positively to the lives of people in the community. When you become a board member, you take on an important job with specific legal responsibilities.
The legal obligations of board members
Board members of nonprofit organizations have four basic obligations to the charities they serve: duty of care, duty of loyalty, duty of compli- ance and duty to maintain accounts and records. Observing these duties requires board members to pay attention, ask questions and take the role seriously. The top priority as a board member is to keep faith with donors and stakeholders, ensuring that the organization is able to honor and perform its mission now and in the future.
Board members are the first line of defense for ensuring the integrity of charitable organiza- tions and the entire philanthropic sector. They are legally bound to make certain all designated resources are used effectively and efficiently for the implementation of an organization’s mission and not for anyone’s personal benefit. Only an active board that routinely develops and eval- uates programs and policies having to do with day-to-day operations in the organization can successfully meet that obligation.
Before agreeing to serve on a board, you should ask how the board operates, whether job descrip- tions are available and what you will be expected to do. Examine past board meeting minutes, financial reports, by-laws and policies. Find out whether the charity carries liability insurance for its directors and board members. Ask to see the
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organization’s annual filings with the IRS and the Ohio Attorney General’s Office. The contents of these documents — or the lack of documentation — could signal potential problems or indicate how much work must be undertaken to properly establish and operate a governance structure for the organization.
Charitable organization oversight
The Ohio Attorney General’s Office regu- lates charitable organizations and assists board members with meeting their responsibilities. Board governance training and related materi- als are among the resources available at www. OhioAttorneyGeneral.gov to help new lead- ers of charities. Also, questions about train- ing and resources for charitable board service and charitable fundraising can be emailed to CharitableLaw@OhioAttorneyGeneral.gov.
Publicized incidents of theft, embezzlement and other fraudulent activities have damaged the reputations — sometimes permanently — of a number of charitable organizations. Many such incidents could have been avoided had board members put in place policies and processes that uncovered wrongdoing more quickly or prevented it altogether. Donors and stakeholders deserve the assurance that their gifts and provid- ed resources are properly protected and utilized.
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