Should directors and officers of nonprofit organizations be concerned about personal liability?
(By Brooke A. Johnson. February 2008) Newspapers these days are rife with stories of nonprofit organizations gone awry. While some of the stories involve clear excesses (such as a director using the organization’s funds for his own personal expenses), others involve conduct that, while lawful, does not coincide with the public’s idea of how a nonprofit organization should operate. While the public generally expects that both for-profit and nonprofit business entities will obey the law, there seems to be the additional expectation that nonprofit organizations will adhere to higher moral, ethical, and legal standards. This public perception may be due to the fact that the concept of the nonprofit entity originated in trust law; that is, directors and officers of a nonprofit organization were expected to “exercise such care and skill as a person of ordinary prudence would exercise,” and would be personally liable for any actions in which they failed “to comply with this standard,” regardl
