Anchorage Daily News

Q. I recently joined the board of a small nonprofit in Anchorage. It was a thrill to be asked to join this board. I really care about the organization's mission. I understood I'd attend a meeting a month, help with fundraising and didn't need any prior experience to serve on the board. So I came with eagerness and an open mind.

Because many of the other board members live out of town, in my first meeting I was asked to sign a signature card so that I could be one of two board members available for check-signing when the board president and treasurer couldn't be reached.

A few side-bar discussions during the first meeting somewhat scared me. The executive director clearly ran the board and two board members seemed to have a problem with that. When they asked questions, they got shot down. I thought it rude but also realized that the executive director really knows what he's doing.

Then I received "off-the-record" calls from two former staff members who'd learned I'd joined the board and told me information they thought I ought to know. They said the executive director creates a hostile environment, fraudulently mismanages money and forces staff members who protest her micro-managing style to resign.

The second board meeting was a total shock. The unhappy board members lambasted the executive director, who argued with them. As I sat there in shock, both board members resigned on the spot and walked out.

Clearly, something is wrong and I don't know what's going on. How much liability do I have? Should I quit and get out before things get worse? If I stay, how do I protect myself?

A. If you leave, who fixes this potential mess? This organization clearly needs competent, committed board members willing to ask hard questions.

Here's what you need to know.

Whenever you serve on a board and sign checks, add the words "by board member" before your name. This clarifies that you haven't personally guaranteed the money, but signed the check in your capacity as board member.

You can learn more about your legal liability by reading Alaska Statutes Section 10.20.151 on nonprofit boards.

Board members do take on liability; however, they protect themselves by acting in good faith and insisting they have all the information they need prior to making decisions.

Good faith means acting with integrity at all times. It also requires that you attend board meetings regularly, read all board correspondence carefully and stay fully informed concerning all board policies and obligations. If you choose to stay on this board, you need to review your organization's articles of incorporation, by-laws and other governing documents, including periodic financial reports.

In the coming months, if you need to make decisions with legal consequences, request legal advice first. If you disagree with the majority of your board concerning a key decision, request that your formal dissent be noted in the meeting minutes.

Board members expose themselves to liability when they knowingly violate laws, act in bad faith, breach their fiduciary duty of loyalty, act with intentional misconduct or derive improper benefit from their board service.

Other examples of fiduciary duty breach include serving on a board but never showing up for meetings and hiding a conflict of interest to personally profit from a corporate action.

While many nonprofits protect their board members with directors' insurance, this insurance doesn't protect against fraud, criminal acts and gross negligence.

Although you need to take with a grain of salt those who make "off-the-record" calls concerning a former boss, the calls you received indicate you and other board members need to assess what's going on and right any wrongs you uncover.

I find equally as troubling your executive director's treatment of board members. No organization can long afford an executive director who shuts down board members asking honest questions.

The response you receive from the rest of the board and the executive director when you say "let's take a look at what's going on" may help you make your stay or resign decision. If you get shot down, you resign.

Hopefully the board members may view the two recent resignations and the allegations you've heard as the tip of the iceberg and decide they need to hire a third party to investigate. If so, stay for the good of your nonprofit and the people you serve.

Lynne Curry is a local management trainer, consultant and syndicated columnist. Her advice and opinion column appears Mondays. Questions for her column may be faxed to her at 258-2157 or mailed to her c/o Anchorage Daily News, P.O. Box 149001, Anchorage 99514-9001. Her e-mail address is lynne@thegrowthcompany.net.

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