A board of directors is an institution composed of individuals who are accountable for the management, control, and direction of that organisation. They are accountable for the legal obligations and accountability of a company. If they fail in their obligations to their fiduciary duties and obligations, they could be personally accountable.

An advisory board however is a group of individuals who offer guidance and mentorship on how a business should be run. The advice they provide is more direct and their focus tends to be on development, growth and strategy, not reporting and governance, managing risk and avoiding risk of downside.

In the ideal scenario, an organization should lay out specific guidelines for the duties of their advisory committee – not only in official documentation such as meeting minutes but also in all communication with the Board Member board to avoid confusion. This will ensure that they don’t accidentally get into the realm of a board of directors which could result in grave legal consequences should they fail to comply with their fiduciary duty.

In reality, this distinction may be blurred and organisations may refer to their advisory board as “the Board.” It is recommended creating a formal statement to avoid any confusion or accidental mistakes. A formal written declaration that defines the role of an advisory committee can help to minimise confusion among the people involved. This is particularly helpful when board members have previously been part of a board or are new to the organisation.