script async src=httpswww.googletagmanager.comgtagjsid=G-ZGEXBJL4WLscript script window.dataLayer = window.dataLayer []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'G-ZGEXBJL4WL'); A Fiduciary’s Legal Obligation is to Put Purpose Before Organization - Strategic Impact Skip to main content

A Fiduciary’s Legal Obligation is to Put Purpose Before Organization

By January 5, 2023January 17th, 2024No Comments

Board members have three moral, legal, and fiduciary duties that are known as the Duty of Care, Obedience, and Loyalty.

The 2021 American Law Institute’s Restatement of the Law for Charitable Nonprofit Organizations states: “In the case of a charity, fiduciary duties are owed to the charity’s purpose – rather than to the corporate entity.”

This concept is also consistent with Anne Wallestad’s The Four Principles of Strategic Impact Board Leadership

“In practice, the duty of loyalty is often interpreted as the responsibility to think only of the organization when making governing decisions. This interpretation unnecessarily focuses board members on loyalty to the organization as a corporate entity. Instead, boards should focus their loyalty to the organization’s purpose or reason for being, fidelity to the reason that the organization exists and—by extension—to the people and communities its work impacts. What is best for purpose and community is not always synonymous with what’s best for the organization.”

Leave a Reply