In a non-profit corporation, there are no shareholders, and so directors are typically chosen by the existing directors. Directors of both for-profit and non-profit corporations are held to stringent fiduciary duties. They need to put the interests of the corporation ahead of the interests of their own. Self-dealing on the part of directors of non-profit corporations, just as with for-profit corporations, is forbidden. Directors of both for-profit corporations and non-profit corporations have strict duties of care and loyalty. Directors of non-profit corporations often have an additional duty, the so-called duty of obedience, obedience to the non-profit corporation's mission, which is typically a charitable one. The duty of obedience means that it is harder, often, for non-profit corporations to change their mission, to go into another line of operation, than it is for their for-profit counterparts. I do stress that not everyone recognizes the duty of obedience in this sense. The duty of obedience is a bit controversial. Not everyone would characterize non-profit directors as having a duty of obedience. Nevertheless, there are enough cases on the duty of obedience that it's very important for those who are studying non-profit organizations to understand that the duty of obedience exists, and that they are likely to come across it in the course of their study. One aspect of the duty of obedience might be that the fiduciaries of a hospital wouldn't be able to sell the hospital to go into another line of operation, even another line of operation that is similar to having a hospital. Imagine a board of directors of a non-profit hospital that wants to sell that hospital and invest the money in some walk-in clinics. Can they do that? Under the duty of obedience, possibly not. The mission is set by the board of directors. When it comes to enforcement of fiduciary duties of members of the board of directors of a non-profit corporation or enforcement of the fiduciary duties of the managers of a non-profit corporation, the attorney general of each state has a very important role to play. In large measure, because non-profit corporations don't have shareholders, you will often see the state attorney general stepping forward in order to investigate and, if necessary, engage in legal action to ensure that non-profit fiduciaries are not in violation of their duties. Other stakeholders of non-profit organizations may also be granted standing to undertake legal action in the circumstances where there has been alleged a violation of fiduciary duties. That there is a formal mission statement unlike for-profit corporations, which are now chartered to undertake all lawful activity. You will sometimes see specific mission statements. With charitable trusts, another form of non-profit firm, the terms of the trust, that is, who is supposed to benefit from the charitable trust, will typically be set out in the instrument that creates the charitable trust. Again, state attorneys general have very important roles to play in terms of enforcing fiduciary duties on the part of those who have responsibility for charitable trusts. Because so many non-profit organizations have applied for and been granted special tax status, the federal government also has a very important role when it comes to overseeing non-profit firms. Charitable organizations are typically so-called 501(c)(3) organizations. 501(c)(3) refers to a specific section of the Internal Revenue code. 501(c)(3) organizations do not pay tax on their income, and, importantly, 501(c)(3) organizations are able to collect donations, which are deductible, up to a point, on the taxes of the donors. The fact that so many non-profit firms enjoy special status means that the Internal Revenue Service monitors them carefully. Does that mean that the Internal Revenue Service has power to enforce the fiduciary duties? No, it doesn't quite work that way. But the same conduct that violates fiduciary duties on the part of non-profit directors, trustees, and managers will very often also be in contravention of Internal Revenue Service regulations.