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Nonprofit Boards: Difference Between Trustees and Directors

board of directors hands in

If you’re thinking of forming a nonprofit organization, joining a board, or being a regular donor you may be confused by the differences between a “board of trustees” versus “board of directors.” It almost seems like they’re used interchangeably, and does it really matter? Isn’t a director a trustee, and vice versa?

In nonprofit practice and law today, both a “trustee” and a “director” describe an individual in a position of governance. But traditionally the term trustee was only used to refer to board members of a charitable foundation or trust. These days, generally, the name of a board of directors versus trustees mean the same thing and largely indicate syntactic differences.

Be a Better Board: Training on 10 Basic Responsibilities of Nonprofit Boards

Charitable Trust Laws

That said, some states have charitable trust acts (which are different from nonprofit corporation laws) and the term “trustee” can have a distinct meaning under such laws. In such cases, trustees are held to a higher fiduciary duty than directors, meaning trustees may be held liable for acts related to simple negligence. This means that a trustee could be held personally liable for certain acts even made in good faith.

As you might have presumed, trustees of a charitable trust have a duty to the beneficiaries of that trust.

The role of trustee can also come with an “absolute” duty of loyalty to the trust and a charge to the beneficiaries of the trust. Plus, even if approved by co-trustees, any personal transactions with the trust are prohibited.

Best Board Ever: Your Nonprofit Needs this Free Guide

What’s in a Name

If a nonprofit’s board members are referred to as trustees instead of directors, it doesn’t magically transform duties to those under the higher standard indicated in trust laws. But, there is a risk that in referencing board members as trustees in lieu of directors may inadvertently increase the governing board’s exposure to arguments that trust law and their associated standards applied.

Make Your Smart Start

When forming an organization or joining a nonprofit’s board, you want to be certain that the governing term—directors, trustees, or even governors—chosen is defined clearly and appropriately in governing documents. This helps ensure that everyone is on the same page regarding obligations, expectation, and legal standing. I highly recommend consulting with an attorney to make certain the officer terminology used with your organization is the best possible fit. It’s also important that the parameters of operation per that term are defined.

Questions? Concerns about your defining your board one way or another? Don’t hesitate to contact me for a free consultation. I can also assist with governing document drafting and review, as well as board training so that members know precisely their roles.

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What Nonprofit Pros Can Learn From Fiji Water Girl

red carpet up stairs

For every Golden Globes show, a consensus emerges as to who The Big Winner was, the Biggest Winner of all the Big Winners. And, without any doubt, the most favored of the star-studded night (beyond the impressive Sandra Oh)…was “Fiji Water Girl.”

In case you haven’t heard, Fiji Water Girl (AKA model Kelleth Cuthbert) traversed the pre-show carpet in a bold blue dress and had a knack for finding the perfect camera angles while carrying a tray of Fiji Water. Her immediate job was to hydrate the stars on the red carpet, but, she went above and beyond. By working strategically, she made it into the background of photo after photo of high profile stars. Fiji Water Girl was so noticeable she soon became a meme-worthy “celebrity” herself, and her employer undoubtedly appreciated the free/extra publicity.

Fiji Water Girl’s moment of fame is also a moment for nonprofit pros to learn three important lessons.

Everything you do, do well

There’s an old saying in Hollywood regarding bit parts, “there are no small roles, only small actors.”

I don’t have to tell you not every job in the nonprofit world is glamorous. Sure, sometimes you’re receiving accolades from your peers, scoring that massive grant, or your board is celebrating a particularly successful program you started. But, often your day is taken up by gobs of paperwork, stay atop of fundraising, field messages from donors and potential donors, and handling a veritable ocean of other administrative tasks. But, when you do have to do mundane tasks, do them unceasingly well! When you keep up an enthusiasm for tasks, no matter how seemingly small, your reputation for being dependable will bode well with colleagues, donors, and board officers.

Stay Current With Your Calendar

There are certain community events that nonprofit leaders must attend. You likely know what they are in your situation, for example, the grand opening of a donor or potential donor’s business or the big annual gala in your town. Make certain that you, or representatives from your nonprofit, are properly seen at these must-attend events. The vast majority of such events will be publicized well in advance, so it might be good to do a little brainstorming at a board meeting, to identify must-attend events and decide who’ll attend on your nonprofit’s behalf. Before anyone does attend on the nonprofit’s behalf it’s a good idea to be sure they are well versed on talking points, and fully understand the connection the nonprofit has with the event.

Build an Even Better Nonprofit in Iowa

Go Ahead and Rock the Boat

Think about doing conventional things in unconventional ways. As many have written before, sending a receipt to a donor is mandatory – but that doesn’t mean it can’t be fun, imaginative, or convey a meaningful message in a memorable way. Make waves! Or, let’s say your fellow board members or staff are hesitant to invest in a set of influential, important policies. Maybe they’re dragging their feet on updating a set of outdated formational documents. Make your mark by explaining the many benefits and how it will further the organization’s mission. Or, bring in a speaker (like me!) to explain the legal consequences of NOT having quality policies and procedures in place.

Smart Employment Policies for Nonprofits

In short, when you’re working with a nonprofit, you could just keep to the status quo. Or, you can seize this moment, your moment, to find your light and shine. Sure, the Internet may not make a meme of you, but you can smile knowing you’re making a difference where it matters. Want to strategize? Don’t hesitate to contact me or to read more information useful for nonprofit pros.

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