A board of directors is a set of individuals responsible for oversight, control and governance of an organization. They are accountable for the legal obligations of a company and are held to a strict standard of accountability. If they fail in their obligations to their fiduciary duties they could be personally liable.
A group of people who advise and mentor a company is an advisory board. They provide more hands-on guidance and tend to concentrate on growth, strategy and development, not reporting or reporting on risk management, governance and avoiding downside risks.
Idealy, an organization should clearly define the role of its advisory board in all official documentation like meeting minutes and in oral communications to avoid confusion. This will ensure that they don’t accidentally cross-check into the jurisdiction of a board of director, which could have serious legal consequences in the event that they fail to fulfill their fiduciary duty.
The distinction between advisory boards and board members can be somewhat blurred in the real world in some instances, where organizations refer to their advisory boards as “the board.” It’s important to write this in writing in order to have a sense of clarity and to avoid accidental missteps. A formal statement of the nature of the purpose of an advisory committee helps to reduce www.theirboard.com/what-it-takes-to-be-an-effective-board-member/ the chance of confusion for those involved. This is particularly useful when members of the advisory board may be a part of an executive board or are new to the organization.