Wednesday, June 25, 2008
Professor Nina J. Crimm Calls for Collaboration in Providing More Accessible Web-Based Training for Nonprofit Board Members
The Chronicle of Philanthropy recently published a letter to the editor written by Professor Nina J. Crimm of St. John's University School of Law. Professor Crimm calls for greater collaboration in the provision of web-based training materials for nonprofit board of directors who in her experience are generally novice, volunteers motivated by a sense of "doing good." Her concern is that too many well-intended, board members run afoul of the laws governing tax-exempt organizations out of ignorance, not flagrant disregard of the law. Below is an excerpt of the letter:
The Chronicle of Philanthropy and other news organizations repeatedly report stories involving conflicts of interest, financial scandals, and other abuses of fiduciary duties by charities' board members. [(for examples of such stories, search this blog for various blog postings).]
My involvement with various nonprofit organizations and their boards — as a consultant, board member, and law professor — convinces me that a considerable proportion of these breaches of fiduciary duties are by inexperienced or untrained board members who have admirable intentions.
Because many charities are small, have little money for legal advice, and often have novice, volunteer board members, their board members are particularly susceptible to inadvertently violating their fiduciary responsibilities. More often than not, those board members lack a comprehensive appreciation of their fiduciary duties, relevant state (nontax and tax) and federal (tax) laws, and these laws' application in the everyday scenarios encountered.
. . .
State attorneys general, knowledgeable charity leaders, academics, and practicing lawyers should join together to develop a Web-based training course providing a comprehensive package of useful lessons that board members of charities need to master to properly fulfill their fiduciary functions throughout charities' life cycles. (Where state laws differ, a portion of the material could be tailored to account for the variation.) Development of the training course might be underwritten financially by insurance companies that provide director and officer liability policies and that stand to benefit economically in the future if more-knowledgeable board members translate into lower payouts.
The training course should be accessible online at the convenience and command of charities' board members. State legislatures should enact laws requiring each new board member to complete the Web-based course within three to four months of appointment to a charity's board. At the end of the lesson series, a prompter should enable each "graduating" board member to complete a form attesting to completion of the entire course. At the click of a "submit" button, the form should be submitted automatically to the office of the state's attorney general (or other appropriate official) that has enforcement jurisdiction over the charity.
For the complete letter, please click here.