by Richard R. Hammar, J.D., LL.M., CPA

Breach of the Fiduciary Duty of Care

§ 6.07.03
Key point 6-07.03. Church board members have a fiduciary duty to use reasonable care in the discharge of their duties, and they may be personally liable for damages resulting from their failure to do so.

One of the most misunderstood legal principles in nonprofit corporate governance is the origin, definition, and application of "fiduciary duties" to the officers and directors of churches and other nonprofit organizations. The word "fiduciary" derives from the Latin word fīdūciārius relating to something held in trust. As one court explained:

The term "fiduciary" … is derived from Roman law, and means "a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires." Moreover, one is acting in a "fiduciary capacity" when the business which he ...

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