Boards of directors and advisory boards help organizations reach new levels. However, their primary distinction lies in their legal responsibilities. An advisory board serves an important role in helping a nonprofit to connect with the community, providing insight and ideas.
An advisory board does not have the same legal responsibilities and fiduciary duties as a regular board of directors, implying that they are not able make financial decisions on behalf of an organization. It is crucial that both the advisory board and the board directors understand the purpose and limitations of the advisory board.
It is crucial to clearly define the role of an advisory panel, through the written resolution of the board. This will stop individuals who are on the board from acting like a director. This isn’t only for liability reasons but also because it can cause confusion and frustration for both the advisory board as well as the board of directors.
A well-run advisory board is an excellent resource for a nonprofit, and it is crucial that everyone involved understands what their role within the organization. By ensuring that there is a clear difference between an advisory board and a regular Board Organizations can avoid confusion, avoid missteps and keep talent.