In Legal 500, Andrew Steinberg explores today’s heightened demands on nonprofit boards in his article, “The Art of Good Governance: Effective Nonprofit Leadership in Uncertain Times,” offering practical guidance on accountability, resilience, and effective oversight. The following is an excerpt:
It is a precarious time for the nonprofit sector. Economic uncertainty, political polarization, and growing public skepticism of institutions have created an atmosphere in which nonprofit organizations must operate under intensifying scrutiny and cynicism. Across the country, nonprofits are being asked to do more with less, to meet rising community needs while contending with dwindling funding sources, increasingly complex compliance obligations, and heightened expectations for transparency. The need for rigorous, responsible governance by nonprofit boards and their leaders has never been more acute.
Venable’s Nonprofit Organizations Practice advises nonprofit boards of every size and type through this evolving landscape. In our experience, effective governance depends on a board’s ability to remain attentive to a few critical areas: understanding fiduciary duties, maintaining mission integrity, exercising appropriate oversight without stepping too far into micromanagement, and ensuring sound financial stewardship. In this article, we explore common challenges that nonprofit boards face today and offer examples of how Venable attorneys work with boards to strengthen compliance, clarify responsibilities, and build resilient governance frameworks.
The Weight of Responsibility: What It Means to Govern Well
Boards and nonprofit officers carry legal obligations, expressed most plainly in the familiar triad of fiduciary duties: care, loyalty, and obedience. The duty of care asks directors to approach their role with diligence and employ sound decision-making principles. The duty of loyalty requires vigilance for managing conflicts and putting the interests of the nonprofit first. The duty of obedience binds the organization to its mission and to law: the board must ensure that programs, policies, and partnerships do not veer into prohibited activity or undermine the nonprofit’s established purpose.
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