A board of directors is an institution of individuals who are responsible for the governance, control, and direction of that organization. They are accountable for the legal obligations of a company and are held to a strict level of accountability. If they fail in their obligations to their fiduciary duties and obligations, they could be personally responsible.
A group of people who advise and coach companies is known as an advisory board. The advice they provide is more practical, and their focus tends to be on development, growth and strategy, as opposed to reporting and governance, managing risk and avoiding risk of downside.
Ideally, a company should clearly define the role of its advisory board in all official documentation like meeting minutes and in verbal communication in order to avoid confusion. This will help ensure that they do not accidentally cross into the realm of a board of directors, which could be a serious legal issue for members if they’re not meeting their fiduciary obligations.
This distinction can be somewhat unclear in practice as some companies refer to their advisory boards as “the board.” It’s worth putting this in writing in order to have a sense of clarity and to avoid mistakes that could be made. A formal statement of the nature of the role of an advisory board will help to reduce the chance of confusion for those involved and is particularly helpful when members of the advisory board may be a part of an executive board or are new to the organization.