DEI and Fiduciary Duties

The board of directors is the ultimate authority of a nonprofit corporation and ultimately responsible for its activities and affairs. Directors must each meet their fiduciary duties of care and loyalty in their actions and decision-making. They should do so with a focus on furthering the nonprofit’s mission in a manner consistent with the organization’s core values. For nonprofits that embrace equity as a core value, directors should carefully consider diversity, equity, and inclusion (DEI) in their governance duties.

Basic Principles

The duty of care requires directors to act with the care that a person in a like position would reasonably believe appropriate under similar circumstances.

The duty of loyalty requires directors to act in good faith and in a manner they reasonably believe to be in the best interests of the nonprofit corporation.

β€œThe mission statement clarifies the essence of organizational existence. It describes the needs the organization was created to fill and answers the basic question of why the organization exists.” – BoardSource

β€œA values statement represents the core beliefs of the organization that inspire and guide its choices in the way it operates and deals with people.” – NH Center for Nonprofits

DEI as Core Values

In determining the nonprofit’s core values, directors should give DEI the highest consideration because racism, sexism, and other forms of discrimination are ingrained and institutionalized in our society and will persist without active intervention. Wealth inequality and the resulting injustices will also continue to grow without intervention. With strong leadership, nonprofits can advance their missions effectively and efficiently in an equitable and inclusive manner that, in the long run, will make them more attractive to donors and funders and relevant in shaping our communities.

Mission and Values

Mission advancement without a values framework may mean that the mission is advanced only with respect to certain communities favored by board members, executives, and major donors, and, sometimes, at the expense of other marginalized communities. Boards that prioritize DEI values in their planning, oversight, and decision-making, can help their organizations avoid such inequitable results.

Connecting Fiduciary Duties to DEI

If nonprofit board members must act in good faith in the best interests of their organizations, they should consider what structures, activities, and policies would most effectively advance their organization’s mission while staying true to the organization’s core values. If, for example, a nonprofit’s mission was to educate children in a particular city through after school programs, and the board identified DEI as core values of the organization, individual board members should consider DEI in making decisions about what areas in the city they should focus their service, how they can facilitate greater access for underserved communities, and how to design their curricula. They would be failing to meet their fiduciary duties if they only focused on mission advancement, which might be more easily accomplished if they focused only on resource-rich areas. On the other hand, if the nonprofit did not have DEI as values or the board failed to consider the organization’s values in its decision-making, the organization could actually deepen the divide and exacerbate the inequities despite advancing its mission.

Resources: DEI and Governance

Nonprofit Radio: Diversity, Equity, and Inclusion and Nonprofit Governance

DEI and Bylaws: Board Composition

Diversity, Equity, and Inclusion in Nonprofit Bylaws

Governance Documents: Diversity, Equity, and Inclusion for Nonprofits