Whether you are in the business of making money, or are on the board of an Ohio charity, it is vital to understand your fiduciary obligations. Put simply, a fiduciary duty is one of trust. When companies or nonprofits organize for a certain purpose, relationships are established that require all parties involved to be able to rely upon one another. Whatever your role in such an enterprise, failure to faithfully discharge your duties could expose you or your business to a lawsuit for breach of fiduciary duty.
In discussing the legal expectations for principals of charitable organizations, there are four main categories of fiduciary responsibility. However, it should be noted that the requirements of nonprofit entities may apply to a wide variety of businesses. The four primary kinds of fiduciary duty are as follows:
- Duty to manage accounts — creating sound policies concerning finances, and taking care to make good financial choices for the organization
- Duty of loyalty — preventing conflicts of interest, and strenuously promoting the organization’s goals and interests
- Duty of compliance — ensuring adherence with all applicable laws, including timely and accurate tax filing, and completion of registration requirements
- Duty of care — staying involved in the organization’s activities and mission, and engaged in oversight and management
An example of a responsibility an Ohio charity would have would be the requirement to register with the Ohio Attorney General. Principals in the organization would be bound under their duty of compliance to make certain that the charity satisfied the filing requirement in a timely fashion.
Source: Ohio State Bar Association, “Ohio Charitable Trust Act Authorizes Ohio Attorney General to Oversee Charities,” accessed June 23, 2016