Nonprofit Executives have Fiduciary Duties

Recently, in Florida, a nonprofit organization, its former CEO and its board of directors were sued for breach of contract, “breach of implied duty of good faith,” and breach of fiduciary duty. Who brought the lawsuit? The State of Florida Department of Children and Families. The nonprofit that was sued? Florida Coalition Against Domestic Violence.

For almost two decades, the nonprofit had contracted with the state to serve as the single state clearinghouse for 42 domestic violence centers that received funding, training and advocacy from the Florida Coalition Against Domestic Violence. The contract was $52 million annually.

In the last three years, the CEO, Tiffany Carr, took $7.5 million for herself, it is alleged. And the board let her, primarily since the board consisted of people appointed by Carr, according to the lawsuit.

Above and beyond the obvious — that stealing money is bad — this case is a worthwhile reminder to all people affiliated with nonprofits, either as a leader or a director, owe certain and specific duties to the nonprofit. Failure to maintain those fiduciary duties can and will result in personal liability.