Legal Question in Business Law in California
Non-profit board members' responsibilities
Community theaters have the perennial challenge of offering programs that are either ''commercial'' or ''artistic.'' Do board members have any obligation to run a non-profit organization in a ''businesslike'' manner, in which there is a major focus on what experience dictates the community will pay to see, thereby allowing the theater to meet its expenses?
Are board members in any way derelict if they consistently offer the types of programs they know (from previous experience) will not attract a sufficient audience from the community, thereby resulting in a failure of the theater to meet its financial responsibilities?
Thank you for considering our question. The answer(s) could help a number of non-profit organizations as they plan their activities.
2 Answers from Attorneys
Re: Non-profit board members' responsibilities
This really depends on the organization's mission. If the mission is the advancement of an art form, the Board may be satisfying its responsibilities by supporting the presentation of material that wouldn't otherwise be 'commercially viable'.
NonProfits can look to donations to make up budget deficits. In fact MOST Non Profit Theatres don't expect to turn a profit from ticket sales... the donors know that they're contributing to the advancement of the arts.
Re: Non-profit board members' responsibilities
Board members of a non-profit do not have, by definition, the same duties as do directors of a for-profit corporation. At the same time, they have duties to perform responsibly with respect to creditors of the organization as well as to work toward its longevity and stability.
I believe that a director who was fiscally irresponsible runs some risk of personal liability either (1) to the non-profit itself for breach of fiduciary duty, or (2) to creditor(s) for negligence or fraud.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
