[Owasp-board] More info on board ethics

Jim Manico jim.manico at owasp.org
Mon Feb 25 09:07:24 UTC 2013

See below from "Idealist.org", a popular resource on non-profit governance,
referenced by Apache. Please note the "duty of loyalty" below.


In addition to the board's responsibility for the overall wellbeing of the
organization, there are some specific standards that apply to the way the
board itself operates. A very general discussion of these standards is
contained in the publications of the Panel on the Nonprofit Sector convened
by Independent Sector, especially in "Principles for Good Governance and
Ethical Practice" <http://www.nonprofitpanel.org/Report/index.html> (available
as a free download from the website).

Legal studies distill this topic down to two (sometimes three) "fiduciary
duties" of board members. The essence of these duties is that board members
work exclusively for the benefit of the organization and its mission,
consistently excluding any and all other considerations. (The word
"fiduciary" signals a responsibility to care for the possessions of someone
else—a person or an organization—under a strict requirement to focus
exclusively on the interests of the other.)

   - *The Duty of Care* — Board members are expected to *pay attention*. To
   pay attention to the materials that are put before them in preparation for
   meetings, of course, but also to what is said at meetings, what they see
   and hear about the way the organization is working, and to the broader
   context, the way the organization serves the best interests of the
   community through its work.
   - *The Duty of Loyalty* — Board members are expected to consider *only*the
   interests of the organization on whose board they are serving. This topic
   is often discussed in the context of avoiding conflicts of interest,
   meaning steering clear of any transaction in which the board member might
   "profit" at the organization's expense. (Another page provides some
sample conflict
   of interest <http://www.idealist.org/info/Nonprofits/Gov5> policies.)
   This idea of loyalty has a much broader reach, though. For example, a board
   member may not exploit an opportunity revealed as part of board
   deliberations. (Imagine making a offer on some real estate before the board
   had decided whether or not to try to buy it.)

Note that avoiding conflicts of interest doesn't mean that board members
cannot sell things to or provide services for an organization, only that
the *other* board members must assure themselves that the deal is the best
the organization could get anyplace. So, for example, if a board member is
willing to sell supplies to the organization at lower than retail prices,
the rest of the board needs to be sure that the proffered discount leads to
a lower price than can be obtained from a different vendor.

   - Some observers add a *Duty of Obedience* that focuses on complying
   with the law and other external requirements that may apply. Others say
   there's nothing special about living up to that responsibility and no need
   to call it out separately. Whether or not this third "duty" is listed is a
   matter of taste. Living up to it, on the other hand, is clearly a

These duties have been articulated over the years in countless statutes,
legal decisions, and commentaries. A little searching online will yield
many more discussions, with layers of complexity and interpretation.

Because they have their roots in the law, sometimes people make the mistake
of thinking the question to be asked is something like "will we get sued if
we do that?" The real focus would better be on doing the right thing. Board
members need to hold themselves, and each other, to high standards of
ethics and stewardship. Doing that is more a matter of careful thought than
subtleties of interpretation.

Jim Manico
(808) 652-3805
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