A board of directors is a group of individuals responsible for management, control and direction of an organization. They are accountable for the legal obligations of a company and are held to a high standard of accountability. This means that if they fail to meet their fiduciary duty, they can be personally accountable.
An advisory board is, in contrast is a group of people who offer guidance and mentorship on how a business should run. They offer more direct advice and tend to focus on strategy, growth and development, rather than www.theirboard.com/whats-the-difference-between-the-board-of-directors-and-an-advisory-board/ reporting or reporting on risk management, governance and avoiding downside risks.
Ideally, a company should lay out clear guidelines for the role of their advisory boards – not just in official documents such as meeting minutes but also in daily communication to avoid confusion. This will ensure that they don’t accidentally cross over into the territory of being a board of directors, which can have serious legal consequences for members if they are not meeting their fiduciary duties.
In the real world, this distinction may be blurred and organizations may refer to their advisory board as “the Board.” It is recommended having it written down to avoid confusion or accidental mistakes. A formal statement of the nature of the purpose of an advisory board will help to minimize the risk of confusion for those involved. This is particularly helpful when members of the advisory board might have been previously part of a board of directors, or are new to the company.
