Boards of directors and advisory boards aid in helping organizations reach new heights. However, their primary distinction lies in the legal responsibilities they have. An advisory board can be a useful way for nonprofits to interact to the community and offer their perspective and ideas.
A advisory board is not subject to the legal duties or fiduciary obligations of an ordinary board, and therefore they cannot make financial decisions for an organisation. This is why it’s essential to ensure that both the advisory board as well as the board of directors understand the role of an advisory board, as well as the limitations of its duties.
This is particularly crucial when an organization refers to both groups as the “board.” By creating a written explanation of what an advisory board’s role is – through a board resolution, for example – you can make sure that the members of the advisory board don’t accidentally start acting like a board directors. This is a problem that’s not just because of liability issues, but also because it could cause confusion and frustration to both the advisory board and the board of directors.
A well-run advisory board is an excellent resource for a nonprofit, and it is important that everyone involved knows what their role within the organization is. By ensuring there is a clear distinction between an advisory board and a regular Board Organizations can avoid confusion, avoid mistakes and retain the best talent.
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