A board of directors is a set of people who are accountable for supervision, governance, and control of an organization. They oversee the legal responsibilities of a business and are held to a high standard of accountability. This means that if they don’t fulfill their fiduciary obligation, they can be personally held accountable.
A group of individuals who mentor and advise companies is known as an advisory board. They provide more direct and practical guidance and tend to concentrate on strategy, growth and development, rather than reporting or reporting on risk management, governance and avoiding risks that could be detrimental to the business.
Idealy, an organization should clearly define the role of its advisory board in all official documentation like meeting minutes, as well as in verbal communication in order to avoid confusion. This will ensure that they do not accidentally cross into the realm of a board of directors, which can have serious legal implications for members if they are not meeting their fiduciary duties.
This distinction is a bit blurred in practice, with organisations sometimes referring to their advisory boards as “the board.” It’s a good idea to put this in writing to ensure of clarity and to avoid mistaken assumptions. A formal written declaration that defines the role of an advisory board will reduce confusion among those involved. This is especially useful when members of the board have been previously on the board or are new to the organization.