Punctilios and Nonprofit Corporate Governance - A Comprehensive Look at Nonprofit Directors’ Fiduciary Duties

University of Pennsylvania Journal of Business Law, Forthcoming

UNC Legal Studies Research Paper No. 1920467

68 Pages Posted: 31 Aug 2011 Last revised: 20 Feb 2012

Thomas Lee Hazen

University of North Carolina (UNC) at Chapel Hill - School of Law

Lisa Love Hazen

affiliation not provided to SSRN

Date Written: February 20, 2012

Abstract

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.

Keywords: corporate governance, nonprofit organizations, fiduciary duties

JEL Classification: G30, L30, L31

Suggested Citation

Hazen, Thomas Lee and Hazen, Lisa Love, Punctilios and Nonprofit Corporate Governance - A Comprehensive Look at Nonprofit Directors’ Fiduciary Duties (February 20, 2012). University of Pennsylvania Journal of Business Law, Forthcoming; UNC Legal Studies Research Paper No. 1920467. Available at SSRN: https://ssrn.com/abstract=1920467

Thomas Lee Hazen (Contact Author)

University of North Carolina (UNC) at Chapel Hill - School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919--962-8504 (Phone)

Lisa Love Hazen

affiliation not provided to SSRN ( email )

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