Duty of Obedience. This means that the board member must promote actions consistent with the organization's stated mission. Risk Management and Insurance. Risk Management for board members of a nonprofit organization is best accomplished through avoidance or reduction of risk, and insurance against risk. Risk is avoided or reduced through careful adherence by board members to their standards of conduct as outlined above.
Responsible governance is always the first line of defense.
The Bylaws of the nonprofit should provide an indemnification of officers and directors for the legal costs, judgments and settlements of suits against board members. Board members should be comfortable, however, that the nonprofit will have sufficient funds to fulfill its indemnity obligations. Immunity Under State Law. State law also provides broad protection for officers and directors of nonprofit organizations. Note that in defining officer, this only means a person who serves as an officer without compensation, except to reimbursement for actual expenses incurred or to be incurred.