Tuesday, September 6, 2011
Thomas Lee Hazen (North Carolina) and Lisa Love Hazen have posted Punctilios and Nonprofit Corporate Governance - A Comprehensive Look at Nonprofit Directors' Fiduciary Duties(forthcoming Univ. of Penn. Journal of Business Law). Here is the abstract:
The law on nonprofit directors’ obligations is sparse and fragmented. Most of the discussion over the years is lore rather than law based on commentators’ suggestions for best practices. This article attempts a comprehensive and systematic analysis of the law relating to nonprofit directors’ obligations. On the one hand, there is a basis for suggesting that since nonprofits implicate public trust issues, nonprofit directors should be held to standards higher than those imposed on for-profit directors. On the other hand, in order to attract people to serve on nonprofit boards, states generally offer more insulation from director liability than is found in the for-profit world. How can this apparent contradict be reconciled? Perhaps the solution lies in recognizing that truly altruistic motivations for serving on nonprofit boards will result in directors having their own internal incentive to do the right thing and put in the time and effort necessary for effective nonprofit monitoring. To the extent that it is too much to expect the best from people, this article explores nonprofit directors’ responsibilities and how they relate to the law limiting directors’ accountabilit.