Board of Directors Vs Advisory Board

A board of directors is an organisation of individuals who are responsible for the governance, control, and direction of that organisation. They oversee the legal responsibilities of a business and are held to a high level of accountability. This means that if they don’t meet their fiduciary duty they could be personally accountable.

A group of people who advise and coach a company is an advisory board. They provide more practical guidance and tend to concentrate on growth, strategy and development rather than reporting and reporting, risk management, governance and avoiding risks that could be detrimental to the business.

Ideally, an organization should clearly define the purpose of its advisory board in all official documentation such as meeting minutes and communications via verbal to avoid confusion. This will help ensure that they don’t accidentally stray into the territory of being a board of directors, which could have serious legal implications for members if they’re not meeting their fiduciary obligations.

In practice, this distinction may be blurred and organizations may refer to their advisory board as “the Board.” It is worth putting it in writing to avoid confusion or accidental mistakes. A formal written statement that defines the function of an advisory committee helps to avoid confusion for those involved. This is particularly useful when members of the advisory board might be members of a board of directors or have just joined read the article an organization for the first time.