Serving on the board of trustees or board of directors for a museum is a wonderful thing to do. It allows people to give back to their community, support a mission they are passionate about, and learn a lot about a specific or variety of interesting topics.

However, museum board positions also carry very important legal responsibilities. Board members face financial, employment, and collection duties, as well legal liability for failure to do their jobs properly. It is important for museum professionals and board members to know and understand these obligations, to avoid liability and ensure that museums have effective and productive board members.

Beyond the specific duties imposed by their museum’s articles of organization and bylaws, board members must be aware of the duties imposed on them by the law: the duty of care and the duty of loyalty.

The duty of care requires museum board members to stay actively involved and informed in the museum’s governance, and to use their discretion to make reasonable, prudent decisions.

More technically, the duty of care requires board members to act in good faith and in a manner they reasonably believe to be in the best interests of their museum. Courts apply the following standard to determine whether board members have fulfilled this duty: has the board member acted as an ordinarily prudent person would in a like position, in a similar organization, facing similar circumstances? 

While, in many contexts, it is debatable whether a museum board member has met this standard, there are some specific obligations that are clearly required.

A unique yet absolutely vital duty of care imposed on museum board members is the care of the museum’s collections. As this is generally considered the core function of museums, museum board members must take this responsibility very seriously. Museum boards are responsible for creating and implementing reasonable collection policies. To that end, museum boards should establish acceptable policies concerning the acquisition of collection items, the maintenance and protection of their collection, and the disposal of items in the collection. These policies should, at the minimum, include the development of a collection committee, the requirement of a board vote for the acquisition or disposal of collection items, and strict record-keeping requirements that clearly memorialize all transactions regarding collection items. The board should also take steps to ensure that the museum is maintaining the collection in proper condition and appropriately displaying its collection to allow sufficient public access.

Museum board members are also subject to the same duties that apply generally to other boards. First and foremost, board members must make sure they are fully informed on important issues affecting the museum, especially those requiring a vote. It is extremely important that board members are fully informed, so that they may use their own judgment, as opposed to simply taking the word of their fellow board members or the museum’s director or CEO.

The duty of care therefore requires board members to take time to read and review the pertinent information they receive and attend board meetings and meetings of committees on which they serve. Board members also must ask questions about anything they do not understand. In order to ensure that board members have the ability to fulfill their obligation to become fully informed, they have the right to information. Board members are thus legally entitled to ask for and, if reasonable, rely on information from the museum’s staff, lawyers, auditors, board committees, and other outside advisors.

Other important obligations imposed by the duty of care include developing a nominating process to ensure the board is diverse, vigorous, and responsive to the museum’s mission; developing a process for hiring and evaluating the museum’s director or CEO; and setting the compensation of the museum’s director or CEO.

Another important obligation of board members is to pay close attention to financial matters. Board members must make sure their museum has adequate internal accounting systems and controls, and that the museum’s management regularly produces timely and accurate income and expense statements, balance sheets, and budget status reports in advance of board meetings. Additionally, the board should require periodic confirmation from management that all required filings, such as tax returns, are up-to-date and that employee withholding taxes and insurance premiums are paid when due.

The board also should discuss and approve all delegations of its signatory authority, put these delegations in writing, and review them annually. That being said, museum boards should not simply delegate all of its power to one individual. For large or especially significant contracts or grants, and on all transactions involving real estate, borrowing, or the sale/disposal of large assets, the board should consider requiring action by the entire board, as opposed to a designated signatory.

The board should also review the museum’s financial information make sure that a realistic annual budget is developed early enough so the entire board can be involved in reviewing and approving the budget before the beginning of the fiscal year.

Finally, it is important to note that courts recognize that what is prudent for a board member depends on the individual, the organization, and the point in time. In other words, context must be considered in determining what is reasonable. For example, the size, complexity, location, and mission of the museum must be taken into account when evaluating a board member’s decision.

Perhaps most significantly, board members' actions will not be judged based on the success of their decisions using the benefit of hindsight. Rather, the only question is whether board members acted prudently based on the information they had, or should have had, when they made their decision. Board members are allowed to use their discretion and will not be held liable for mere mistakes or errors of judgment, so long as their decisions were honest and reasonable at the time they were made.

In addition to the duty of care, museum board members are also subject to the duty of loyalty. Essentially, this duty requires board members to not use their position for personal benefit, at the cost of the museum. Specific obligations arising in the context of the duty of loyalty include dealing with conflicts of interest, avoiding self-dealing, and maintaining confidentiality.

A conflict of interest arises when a board member has a personal interest in a transaction to which the museum is a party. Any transaction between the museum and the board member or a business controlled by a board member, or a transaction that would financially benefit a board member, is a conflict of interest.

All museum boards should develop and implement a strict conflict of interest policy. The policy should require that board members fully disclose the existence of his or her interest and its nature to the full board before any action is taken by the museum. The board member at issue should then be excused from the discussions and vote concerning the matter. The museum may still enter into the transaction, but only after a full discussion of the potential conflict and a determination that the transaction is nevertheless clearly in the best interests of the museum.

The policy also must include a procedure for the annual written disclosure by all board members and senior managers of their business involvements with the museum, as well as other board memberships and business interests that may give rise to a conflict. The information disclosed should be circulated to all board members and updated as necessary.

The duty of loyalty also requires board members not to engage in self-dealing. This means that when an opportunity arises to acquire property or seize another business advantage relevant to the museum’s mission, board members must present it to the museum before taking any action. This issue is most likely to come up for museums in the context of the purchase of collection items. Board members should only purchase items that may be relevant to their museum’s collection after full disclosure to the entire board, and an informed evaluation and determination by the entire board (without the involvement of the interested board member), that the museum should not purchase the item.

Finally, the duty of loyalty requires board members to keep museum information confidential until there has been a general public disclosure or the board member knows that the particular information is a matter of public record or common knowledge.

The above is merely a summary of some of the specific obligations faced by museum board members arising out of their duties of care and loyalty. In general, the key for board members is to be fully informed and to make independent decisions based on their best judgment. Board members also must be certain to put their own interests secondary to that of the museum they are serving. By following these rules, board members will not only avoid liability for themselves and their museums, but will also be excellent board members able to make significant contributions to their museums and their communities.