Frequently Asked Questions
What are the consequences of a breach of fiduciary duty by a board member?
A breach of fiduciary duty by a board member can have serious consequences for both the individual and the organization. Fiduciary duties, which include the duties of care, loyalty, and obedience, require board members to act in the best interests of the organization, whether it's an educational institution, a corporation, or a non-profit. These duties are designed to ensure that board members make decisions that align with the organization's mission and comply with all relevant laws and regulations. When a board member fails to fulfill these duties, it can result in a variety of negative outcomes. For instance, a breach of the duty of care, which requires board members to act with the diligence and skill of a prudent person, could lead to mismanagement of the organization's affairs. This could potentially result in financial losses for the organization, and the board member could be held liable for these losses. Similarly, a breach of the duty of loyalty, which requires board members to put the organization's interests before their own, could lead to conflicts of interest. This could damage the organization's reputation and potentially lead to legal action against the board member.
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