Category: Fiduciary Duties

Fiduciary Responsibility of Nonprofit Boards

Posted on by Ellis Carter

The recent high-profile ouster of Southern Poverty Law Center CEO and Founder Morris Dees, and the resignation of Board Chair Richard Cohen, show how things can go awry when a board does not provide appropriate oversight.

The board collectively, and directors/trustees individually, owe fiduciary duties to the nonprofit organization they serve. In essence, exercising fiduciary duties means that board members have a duty to act with care and in the best interest of the organization and remain loyal to its mission, as opposed to acting in their own interest or the interest of the CEO/Executive Director they supervise.

Nonprofit Board Oversight

Posted on by Ellis Carter

A nonprofit’s board of directors is legally responsible for exercising the care an ordinarily prudent person in a like position would exercise in overseeing the organization’s operations. This includes the organization’s finances and legal compliance.

IRS Guidance Breathes New Life Into Mission-Related Investing

Posted on by Ellis Carter

Foundations are required to expend approximately 5% of their assets for charitable purposes each year. The other 95% is invested to generate distributable income for future years. Historically, foundations have struggled with the idea of making riskier investments that further their charitable purposes, but do not qualify as a PRI because a significant purpose of the investment is the production of income or the appreciation of property.

Here Comes the Arizona Benefit Corporation

Posted on by Ellis Carter

Going into effect January 1, 2015, the Arizona benefit corporation statute will enable entrepreneurs to form a corporation unlike anything Arizona has seen before. Benefit corporations enable social entrepreneurs to create a corporate structure requiring the corporation to create a general public benefit. As with anything new, its details are untested and some confusion surrounds it. Below we dig into the statute and detail what you will and will not be able to do in 2015.

Reporting Diversions of Nonprofit Assets

Posted on by Ellis Carter

The Washington Post has identified over 1,000 nonprofit organizations that have reported a “significant diversion” of assets. Its important to note that there are over 1,616,000 tax-exempt nonprofits in the U.S. today; thus, these filings represent less than 1% of tax-exempt nonprofits. It’s also interesting to note that a quick review of Arizona’s list includes only 21 organizations – most of which reported the diversions in a clear, transparent, and confidence inspiring manner.