In this blog, we’ll explore the key legal duties of trustees and how to ensure compliance with governance standards.
The Three Core Legal Duties
Trustees are legally bound to copyright three fundamental duties:
- Duty of Care
Trustees must make informed decisions with reasonable diligence. This includes:
- Attending meetings regularly
- Reviewing financials and reports
- Asking questions when uncertain
- Making decisions based on data and due process
Essentially, trustees should act with the same care they would use in managing their own affairs.
- Duty of Loyalty
Trustees must act in the best interests of the organization — not themselves. This includes:
- Avoiding conflicts of interest
- Disclosing any potential conflicts
- Refraining from self-dealing or benefiting personally from board decisions
- Keeping board discussions confidential
Loyalty builds trust and preserves integrity.
- Duty of Obedience
Trustees must ensure that the organization adheres to its mission, bylaws, and the law. They are responsible for:
- Ensuring funds are used for authorized purposes
- Overseeing compliance with IRS and state regulations
- Monitoring alignment with the organization’s mission
- Respecting governing documents and policies
Boards that neglect this duty risk reputational and legal harm.
Additional Legal Responsibilities
- Financial Oversight
Trustees must ensure the organization is financially healthy by:
- Approving budgets
- Monitoring cash flow and reserves
- Reviewing audit reports and Form 990s
- Preventing misuse or fraud
- Policy Enforcement
The board enforces bylaws and other governance policies, including:
- Whistleblower protections
- Conflict of interest policies
- Ethics and conduct codes
Failure to enforce policies can have legal and reputational consequences.
- Employment Oversight
Trustees are responsible for hiring and evaluating the Executive Director/CEO and may be involved in other high-level HR decisions.
They must ensure compliance with employment laws and organizational HR policies.
Protecting Yourself as a Trustee
To reduce personal liability, trustees should:
- Document decisions and meeting minutes
- Purchase Directors and Officers (D&O) insurance
- Avoid decision-making outside of formal board processes
- Stay informed on governance best practices
Education is protection — well-informed trustees are empowered and protected.
Conclusion
Being on a Board of Trustees is a legal commitment as much as a leadership one. By understanding and fulfilling the duties of care, loyalty, and obedience, trustees copyright their responsibility to the organization and to the public. Legal compliance isn’t optional — it’s foundational to ethical, effective governance.