Punctilios and Nonprofit Corporate Governance - A Comprehensive Look at Nonprofit Directors’ Fiduciary Duties
Thomas Lee Hazen
University of North Carolina (UNC) at Chapel Hill - School of Law
Lisa Love Hazen
affiliation not provided to SSRN
February 20, 2012
University of Pennsylvania Journal of Business Law, Forthcoming
UNC Legal Studies Research Paper No. 1920467
The law on nonprofit directors’ obligations is sparse and fragmented. Most of the discussion over the years is lore rather than law based on commentators’ suggestions for best practices. This article attempts a comprehensive and systematic analysis of the law relating to nonprofit directors’ obligations. On the one hand, there is a basis for suggesting that since nonprofits implicate public trust issues, nonprofit directors should be held to standards higher than those imposed on for-profit directors. On the other hand, in order to attract people to serve on nonprofit boards, states generally offer more insulation from director liability than is found in the for-profit world. How can this apparent contradiction be reconciled? Perhaps the solution lies in recognizing that truly altruistic motivations for serving on nonprofit boards will result in directors having their own internal incentive to do the right thing and put in the time and effort necessary for effective nonprofit monitoring. To the extent that it is too Pollyannaish to expect the best from people, this article explores nonprofit directors’ responsibilities and how they relate to the law limiting directors’ accountability.
Number of Pages in PDF File: 68
Keywords: corporate governance, nonprofit organizations, fiduciary duties
JEL Classification: G30, L30, L31Accepted Paper Series
Date posted: August 31, 2011 ; Last revised: February 20, 2012
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