Nonprofit organizations are required to have a board of directors. When the application for nonprofit corporation status is submitted to the appropriate state department, the names and addresses of the founding directors must be included. States require varying numbers of directors: some require only one, others require three or more. Usually the state will note whether specific positions are also required, i.e. treasurer, secretary, president or chair, etc.

The legal duties of the board are also defined under state law. The Administrative Code in many states lists the responsibilities of board members. These generally include the duties of care, loyalty and obedience. In some states the nonprofit organization must entrust at least one director with the fiduciary responsibilities and all duties and obligations associated with it. These responsibilities include all legal and monetary issues of the organization. The director will meet all standards of good faith and honest business practices—the same principles that any other corporation must uphold. This director will be responsible to meet all standards required of him or her by law or be subject to personal liability. A director cannot avoid his or her responsibilities through non-management, by not attending meetings and by ignoring the affairs of the organization.

A director who acts in good faith cannot incur personal liability even if poor judgment causes loss or injury to the organization. The individual of a "charitable organization" who does not receive compensation for his or her services will not be held personally liable in damages for actions or omissions in connection with any supervisory or corporate services that he or she performs for the charitable organization unless (i) the act or omission of the trustee constitutes willful or wanton misconduct or intentionally tortious conduct, or (ii) with the prior knowledge of a wrongful act or omission by an officer, employee or other trustee of the corporation, the director authorizes, approves or otherwise actively participates in that action or omission.

Corporations may agree to cover a director that is made party to a lawsuit if the trustee acted in good faith. The corporation must relieve the trustee of all expenses and liabilities associated with the lawsuit if he or she successfully defends himself or herself in court.