The cat-a-lyst Book

The Responsible Director

A liability avoidance checklist for Director of exempt organizations

1. Be well informed about the institution you serve, the trends in the field that it serves, and the changes and flows in society, which may affect its operations.

2. Always remember that your first duty is to the institution you serve, not to any individual member of the administration or a particular Board colleague or friend.

3. Obtain copies of and study the bylaws and articles of incorporation of your organization. Insist on agendas and copies of reports well in advance - and not just at meetings. Consider whether this should be included in the bylaws.

4. Your attendance is required on a regular basis at all board, committee, orientation, regional and national meetings. Failure to do so may result in a liability. When you can't attend a meeting of your board or a committee session, keep informed about what is to be discussed and what occurred at the meeting. Review your minutes. You have an ongoing obligation to keep informed of developments above and beyond the responsibility to attend meetings. Read professional journals, newspapers, and national publications which serve you.

5. Avoid precipitous action. Don't lose your cool.

6. You should make sure that you have all of the facts. Be sure not to rely on only one version of a disputed issue. Demand sufficient information before voting. Don't be docile.

7. Avoid conflict of interest by disclosing potential conflicts and refusing to debate, discuss or vote on any matter in which you or your family have an interest. Insist that your action be recorded in the minute of the meeting. Your organization should forward periodic conflict of interest questionnaires to members of the Board.

8. Set goals for the board and staff and evaluate the performance of the institution, its administrators, the board as individuals, and as the governing board, with these goals.

9. Select, train, and retain competent directors and develop leadership within your board.

10. Hire and use an independent accountant and have a separate audit committee.

11. Consult your legal counsel.

12. Obtain officers' and directors' liability insurance. This is not a solution to this problem, since policy language is quite different and only applies to certain kinds of activities. Therefore you should consult with your insurance broker at a board meeting and read and analyze carefully any policy before purchasing it.