A board of directors is a set of individuals who are responsible for the oversight, control and governance of an organisation. They oversee the legal responsibilities of a company and are held to a strict level of accountability. This means that if they don’t perform their fiduciary duties they could be personally accountable.

A group of people who advise and coach companies is known as an advisory board. Their advice is more direct, and their focus tends to be on growth, development and strategy, rather than reporting and governance, managing risk and avoiding risk of downside.

Idealy, an organization should clearly define the role of its advisory board in all official documentation such as meeting minutes and verbal communication in order to avoid confusion. This will help ensure that they don’t accidentally stray into the territory of being a board of directors, which can have serious legal consequences for members if they are not performing their fiduciary duties.

The distinction can get a bit ambiguous in real life and some organizations refer to their advisory boards as «the board.» It’s important to write this in writing in the interest of clarity and to avoid mistakes that could be made. A formal written statement defining the purpose of an advisory committee helps to reduce the chance of confusion for those involved. It is especially useful when members of the advisory board may have previously been part of an executive board or have just joined an organization for the first time.

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