Blurring, Not Fading: Looking at the Duties of Care and Loyalty as Nonprofits Move into Commercialism
Transactions: The Tennessee Journal of Business Law, Vol. 12, p. 37, Spring, 2011
28 Pages Posted: 26 Aug 2012
Date Written: 2011
The traditional distinction, however, between for-profits and Nonprofit Organizations have increasingly become blurred as Nonprofit Organizations, in an effort to achieve the mission, continue to pursue increased commercial activity in response to economic challenges. To accomplish legal, ethical, and effective implementation and continuation of a commercial venture, the members of the governing board of the Nonprofit Organization (the “Board”) and other individuals with similar responsibilities and influence to the Nonprofit Organization (together, the “Board and Others”) should be aware of the roles of the duties of loyalty and care when deciding whether to enter into a commercial venture and when managing the subsequent ongoing operations of the organization. Too frequently, management marginalizes legal issues in favor of business issues. Yet, the legalities can affect the business' viability and productivity depending on the information known and decisions made and, therefore, should be an integral part of management's decisions to enter into and continuing to engage in a commercial venture as a Nonprofit Organization.
Keywords: nonprofit, commercialism, fiduciary, duty of care, duty of loyalty
JEL Classification: K2
Suggested Citation: Suggested Citation