A board of directors is a set of individuals who are responsible for the oversight, control and governance of an organization. They are responsible for the legal obligations and accountability of the company. This means that if they don’t comply with their fiduciary obligations, they can be personally held accountable.
An advisory board however is a group of people who offer advice and mentorship on how a business should run. They provide more direct and practical guidance and tend to concentrate on strategy, growth and development, rather than reporting and risk management, governing and avoiding risks that could be detrimental to the business.
Ideally, an organization should outline clear guidelines for the role of https://theirboard.com/what-it-takes-to-be-an-effective-board-member/ their advisory committee – not only in official documentation such as meeting minutes, but also in daily communication to avoid confusion. This will ensure that they don’t accidentally get into the realm of a board of directors and have grave legal consequences if they fail to meet their fiduciary duty.
The distinction between advisory boards and board members can be somewhat unclear in practice in some instances, where organizations refer to their advisory boards as “the board.” It’s a good idea to put this in writing, both for the sake of clarity and to avoid mistaken assumptions. A formal statement of the nature of the role of an advisory board helps to minimise the risk of confusion for those involved. This is particularly helpful when members of the advisory panel may have been previously part of an executive board or have just joined an organization for the first time.