Local Lessons from Nvidia: Fiduciary Responsibility Knows No Size

The unfolding controversy at Nvidia, one of the world's most valuable companies, may seem far removed from the boardrooms of New Hampshire's nonprofits and trade associations. But the lessons in corporate governance, accountability and fiduciary responsibility could not be more relevant to even the smallest organizations in the Granite State.

New Hampshire takes great pride in its culture of volunteerism. With more than 9,500 nonprofit organizations, thousands of Granite Staters generously volunteer their time serving on boards of directors. But accepting a position on a board is more than an act of community service, it comes with significant legal, ethical and fiduciary responsibilities.

Serving on a board of directors is not an honorary position. It is a fiduciary responsibility.

At Dennehy & Bouley, we work with numerous nonprofits and professional associations governed by volunteer boards. These organizations depend on their directors to provide oversight, exercise independent judgment and protect the organization's financial health, reputation and mission.

Every board member should understand three fundamental fiduciary duties:

• Duty of Care: Be informed, ask questions, review financial statements and actively participate in organizational decisions.

• Duty of Loyalty: Put the organization's interests ahead of personal interests, relationships or loyalties.

• Duty of Obedience: Ensure the organization operates in accordance with its mission, bylaws and applicable laws.

No executive director, CEO, founder or board president should be considered indispensable or beyond accountability.

These governance challenges are not confined to large corporations. They occur in small nonprofits and associations right here in New Hampshire. Significant financial commitments, changes in organizational direction and expansion into new areas of operation should never occur without proper board authorization, thorough due diligence and an understanding of the potential risks.

A board's responsibility is to govern, not simply to rubber-stamp decisions made by others.

Too often, volunteer board members assume that someone else is responsible for oversight or are reluctant to challenge decisions out of personal loyalty or a desire to avoid conflict. In reality, fiduciary responsibility belongs to every director. Sometimes, fulfilling that responsibility means being the lone dissenting voice in the room.

Whether it is a small New Hampshire nonprofit with a $50,000 annual budget or a global corporation with a multitrillion-dollar market valuation, the principles of good governance remain the same.

The time to establish strong governance practices is not when a scandal erupts. It is long before one ever occurs.