Participation on a nonprofit board is important and it can certainly support worthwhile charitable causes.

In deciding whether to join a nonprofit board, one must consider the issue of personal liability.

Ohio Law Protects Board Members

Fortunately, Ohio law offers some protection. State law protects nonprofit directors who act in good faith and in a manner they believe to be in the best interest of the entity and with the care of a “prudent person.” Under the law, a prudent person is wise, careful, discreet and sensible.

Ohio has also adopted a business judgment rule for nonprofit board members. It provides that in performing his or her duties, a board member is entitled to rely on information, opinions, reports or statements (including financial statements) that are prepared or presented by officers, employees, counsel or accountants and committees.

The strong protections of Ohio law notwithstanding, here are six practical steps to minimize personal liability from board involvement.

1. Attend meetings faithfully and participate diligently. Be informed and ask questions. Be aware of the “prudent person” standard, and never ignore problems or act as a “rubber stamp” for management.

Ignorance of a problem is no defense, unless the board has been duly diligent and was still unaware of the problem.

2. Work with competent advisors. Make sure those giving the board advice are experienced and qualified — particularly auditors.

3. Avoid self-dealing. Fully disclose any potential conflicts, and abstain from participation in any decisions that have any hint of conflict.

4. Respect and follow the board process. Do not engage in any unauthorized representation of the board or the nonprofit corporation.

The corporation should operate and speak through its board and authorized officers only, and confidentiality should be respected as to discussions and deliberations of the board.

5. Get insured. Consider directors and officers liability insurance, if that is feasible.

6. Follow all policies carefully. This is particularly important with respect to fiscal matters. Be careful to follow any recommendations of the corporation’s auditors as to handling the corporation’s funds.

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Shawna L. L’Italien, a lawyer in the Salem office of Harrington, Hoppe & Mitchell, focuses on business organization, commercial and real estate transactions, succession planning, elder law and estate planning. She can be reached at slitalien@hhmlaw.com or at (330) 337-6586.