Rosenberg Martin Greenberg, LLP Top Ten Things Every Nonprofit Organization Director Should Know About: Fiduciary Duties, Board Responsibilities and Good Governance Seth Groman Rosenberg Martin Greenberg, LLP

10. Fiduciary duties of directors serving on boards of nonprofit organizations: General: Act in good faith Act in manner reasonably believed to be in the organization’s best interest Specific: Care Loyalty Obedience

9. The Duty of Care Prudent person standard What would such person do in similar circumstances? How to comply? Do the “work” Participation Informed and reasoned decisions

8. How to fulfill your “Duty of Care” as a nonprofit organization director – some practical considerations Be prepared Give the necessary time Consider relevant information Consider short, mid and long-term impacts Set sound policies Be creative and open minded Make time for periodic compliance reviews Have an “organization and mission first” mindset

7. The Duty of Loyalty Undivided allegiance to the organization Confidentiality

6. The Duty of Obedience Adherence to the organization’s mission Adherence to applicable laws

5. Understand your organization’s legal and regulatory landscape State laws (such as): Corporate governance Charitable solicitation registration and fundraising Charitable assets protection Licensing of applicable operations and activities Tax (and tax-exemption) laws Federal laws (such as): Federal tax statutes, regulations and forms (IRC 501(c)(3), Form 990 etc.) Sarbanes Oxley Act (Whistleblower Protections and Document Retention)

4. IRS Form 990 – Fun with Taxes! “New” Form 990 (rev. 2008) – What does a director need to know? It’s a “public document” Financial, operational, & legal information required Mission and activities descriptions – an opportunity! Governance and policy questions Compensation questions Related parties and associated transactions Lobbying Unrelated business income Schedule O – an opportunity! What is the Board’s role and responsibility regarding the Form 990?

3. Am I at risk, personally, if something goes wrong? Liability limitations Indemnification D&O Insurance

2. Protection of Charitable Assets Acts Relates to “charitable assets” held for a “charitable purpose” Problem to be addressed is the misapplication, diversion or waste of a “charitable asset” Breach of fiduciary duty can be a cause AG has investigatory powers Subpoena power AG has enforcement powers: Restraining orders Restitution Transfers of assets to another charitable organization

1. Before you say “yes” (or even if you already have) … Review: Charter, Bylaws, and Policies Form 990s and Financial Statements Insurance Organization's website Check out the organization on GuideStar and Google “Interview” the CEO/ED and board members Get familiar with organization's “legal landscape” Do you have adequate time and resources to commit?

Questions? Seth Groman Rosenberg Martin Greenberg, LLP 25 South Charles Street, 21st Floor Baltimore, Maryland 21201 Phone: (410) 649-1244 sgroman@rosenbergmartin.com

Thank you! Seth Groman Rosenberg Martin Greenberg, LLP 25 South Charles Street, 21st Floor Baltimore, Maryland 21201 Phone: (410) 649-1244 sgroman@rosenbergmartin.com