Duty of Care
In many states, nonprofit board members are bound, at minimum, by a duty of care. Some state statues go further to require a fiduciary duty.
Ken Harer's Condo Law Handbook provides an thorough introduction with multiple legal references:
Board Members and officers of Common Interest Communities owe a duty of care to their Associations and to individual Owners. They owe a lesser duty of care to members of the public. An Association can be held liable if its Board Members breach their duty, but courts avoid holding a Board Member personally liable unless the member engages in intentional misconduct, self-dealing, or otherwise operates in bad faith.
If you'd like to know more about duty of care, you might enjoy reading the landmark court case Riss v. Angel which was ultimately decided by the Washington State Supreme Court, as well as the 2020 WA appellate court and 2022 WA supreme court decisions in Bangerter v. Hat Island Community Association.
Riss suggests that when a [CIC] makes a discretionary decision in a procedurally valid way, courts will not substitute their judgment for that of the association absent a showing of "fraud, dishonesty, or incompetence (i.e., failure to exercise proper care, skill, and diligence). Reasonable care is required."
In Washington State, the Nonprofit Corporations Act (RCW 24.03A) includes the certain standards of conduct that exceed the obligation of good faith required by RCW 64.34.090 and 64.34.308 and WUCIOA statutes 64.90.055 and 64.90.410. These nonprofit corporation standards are also known colloquially as the "business judgement rule."
The supreme court said that the scope of the business judgment rule in Washington was somewhat unclear, and the supreme court declined to rule on whether the business judgment rule applied to corporations or only individuals.
If you'd like to know more about duty of care, you might enjoy: