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Board Governance for NGOs

Why is Good Governance crucial for Georgian NGOs seeking funding?

International donors operating in Georgia (such as EU funds or USAID) view Good Governance as a primary indicator of an organization's reliability. A transparent separation between the supervisory board and executive management assures donors that funds will be managed strategically and without conflict of interest. Our service ensures your governance structure aligns with these international standards, significantly increasing your eligibility for grants.

What are the legal liabilities of NGO board members in Georgia?

Board members in Georgia hold fiduciary duties, specifically the duty of care and the duty of loyalty aimed at the organization's best interests. While the Civil Code provides a general framework, specific liabilities should be detailed in the organization's charter and bylaws. We consult on structuring these responsibilities and can advise on liability insurance mechanisms (D&O Insurance) to protect board members, which is especially important when attracting high-profile figures to your board.

How can we resolve conflicts between the founder and the new board?

This is a common issue known as "founder's syndrome," where the original creator struggles to cede strategic control. We mitigate this by drafting clear Board Bylaws that define decision-making powers, rotation rules, and dispute resolution mechanisms. By establishing a legal framework that balances the founder's vision with institutional governance, we act as mediators to professionalize the organization without alienating its leadership.

Do we need a specific Conflict of Interest policy under Georgian law?

While the Georgian Civil Code does not explicitly mandate a standalone document for all NGOs, having a robust Conflict of Interest policy is standard best practice and often a contractual requirement from donors. We draft comprehensive policies that define what constitutes a conflict, how it must be disclosed, and the procedure for recusal from voting, ensuring your organization remains transparent and compliant with ethical standards.

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Managing the board of a Non-Governmental Organization (NGO) and implementing corporate governance standards are critical for an organization's sustainability and credibility. The board is the highest or supervisory body that defines the strategic direction, approves the budget, and oversees the executive director. However, in practice, there is often a confusion of powers between the board and management, leading to conflicts and inefficiency. This service aims to legally regulate the relationship between board members and the executive team, clearly delineate responsibilities, and create transparent decision-making procedures. This is particularly important for organizations funded by international donors, as Good Governance is one of the main prerequisites for funding.

The service includes complex legal and consultative support to improve NGO governance. Specialists offer:

  • Drafting Board Bylaws, outlining rules for election, rotation, and termination of members;
  • Preparing and implementing Conflict of Interest policies;
  • Consulting on the fiduciary duties (duty of care and loyalty) of board members;
  • Legal assurance of meeting procedures (agenda, quorum, voting);
  • Establishing reporting mechanisms between the executive director and the board;
  • Legally structuring risk management and internal control systems.
This service helps the organization avoid "founder's syndrome" and transition to institutional governance.

Board governance service is relevant in many situations. For example, an organization grows, and the founder, who previously made decisions unilaterally, realizes the need for an independent board for strategic advice. Another scenario is when a donor organization requires a conflict of interest policy before issuing a grant. Internal strife among board members due to unclear authority is also common — in such cases, the lawyer acts as a mediator and creates rules to prevent future conflicts. Another case is when an organization wants to attract high-reputation public figures to the board and needs a legal analysis of liability insurance mechanisms (D&O Insurance) for them.

The legal framework is based on the "Civil Code of Georgia," which defines general principles of leadership and representation of a legal entity. It is also important to apply principles from the "Law on Entrepreneurs" by analogy regarding corporate governance principles (Business Judgment Rule). For the non-profit sector, considering principles from the "Law on Conflict of Interest and Corruption" is specific (if the organization exercises public authority). The lawyer ensures that internal documents comply with these laws and best international practices.

The process begins with an audit of the existing governance structure: How are decisions made? Is the board effective? Following this, the lawyer prepares recommendations and a package of documents (bylaws, policies). The next stage is training or a workshop for board members on their rights and duties. If necessary, changes are made to the charter and registered in the Public Registry. Engaging a specialist on Legal.ge transforms a formal board into an effective governing body that adds real value to the organization.

Legal.ge allows you to find corporate law specialists with experience in the non-profit sector. Good governance is not bureaucracy — it is the foundation of organizational growth. Our experts will help you build a system where roles are distributed, risks are mitigated, and decisions are made transparently. Strengthen your organization's governance with Legal.ge.

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Specialists for this service

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