Join Carter Ledyard and management consultants Plan A Advisors on a lively exploration of nonprofit boards and bylaws. This multi-part series will help nonprofit executives and board members consider revisions and amendments to make your bylaws more congruent with the way your nonprofit actually operates, improve governance, and ensure compliance with current law.
This series is designed to offer principles of broad applicability, but laws vary by state, and what is best for your organization will depend on your unique circumstances. We encourage you to consult with an attorney who practices law in the state of your organization’s incorporation. This series is not legal advice.
NOTE: Some portions of this series may not apply or may apply differently to a membership organization, meaning one with both a board of directors and a separate class or classes of voting “members.” In a membership organization, the members have certain governance rights, such as the right to elect directors and officers or to amend the bylaws. If yours is a membership organization, feel free to contact us to discuss those differences.
Make meetings count. No board member should mind going to board meetings if they are lively, engaging and productive. Effective nonprofit boards can operate with as few as three to four regular meetings per year (or even fewer for certain organizations, such as some small family foundations), particularly if committees are active in between. Special meetings of the board may be called at other times when pressing decisions need to be made or actions taken between regularly scheduled meetings. (Actions can also be taken by unanimous written consent in lieu of a meeting, if permitted by law and your bylaws.) Particularly where management is thin in lean-running nonprofits, fewer board meetings allows professional leadership to spend less time on meeting preparation, organization and follow up, and more time leading. Key updates can always be emailed to board members between meetings to keep them apprised of material developments.
Why an annual meeting? Some states’ laws require or imply that there must be one meeting each year designated as the “annual meeting.” Typically, at the annual meeting, board members and officers are elected or re-elected, and some states also require – and good practice dictates – that a financial report be circulated or presented to the board. The annual meeting is also a good time to discuss goals and budget for the upcoming year, and for each board member to sign and submit their annual statement acknowledging receipt of the organization’s Conflict of Interest Policy and disclosing any potential conflicts of interest.
In-person vs. video. In general, most states permit some or all board members to participate in meetings by electronic means (e.g., videoconference), so long as everyone can hear each other and participate in real time, including the ability to propose, object to, and vote upon any actions. So long as permitted by your state’s law, we generally recommend that bylaws explicitly reflect this option for board meetings. A good practice is to require that all cameras be “on” so that facial expressions can be read and presence is assured. Make sure a board or staff member assisting with the meeting understands the security, hosting, voting, and chat features of your video conferencing software; and make thoughtful decisions about the list of individuals (if any) other than board members who will receive the meeting link, whether to require that the host admit each attendee, and whether to record meetings (and obtaining consent to do so).
e-Mailing it in. Boards may take formal actions in one of just two ways: either at a meeting (whether held in-person or by electronic means) by voting to adopt a resolution, or outside of a meeting by unanimous written consent to the adoption of a resolution. Unanimous written consent means that every member must vote affirmatively in writing. Why unanimous? Because the board is taking action without live discussion and debate. Some states permit unanimous “written” consent by email but specify exactly how that email vote must be done in order to be valid (e.g., the proposed resolution must be circulated to all board members in the body of an email, each board member must reply to that same email with their vote, and the resolution and all consents thereto must be filed with the corporate records). If getting everyone to agree or respond in a timely manner is unlikely, it may be preferable to call a brief special meeting by phone or videoconference and take a vote rather than to ask for votes by unanimous written consent. Contrary to a common misperception, board members may not vote by proxy.
Minutes vs. minutiae. Bylaws don’t typically specify the meeting agendas, or the contents of the meeting minutes that a board must approve as a record. Moreover, outside of a few specific scenarios (e.g., conflicts of interest), state laws don’t typically prescribe how detailed minutes must be or what information they must contain. As a result, many organizations are unsure of how much detail to include. We typically advise clients that, at a minimum, minutes must reflect:
- the board members who were present during the meeting, to establish that a quorum was present;
- the vote tally for each resolution voted upon by the board, or that the vote was unanimous, to establish that the required voting threshold was met;
- the specific resolution voted upon, to document the specific action taken; and
- any recusals on account of conflicts of interest (and any other procedures or actions taken to comply with applicable conflict of interest laws or policies).
A dissenting board member should also ensure that the minutes reflect their vote against the measure, particularly on matters that have possible legal or financial consequences for the organization.
Beyond these basic rules, recording minutes tends to be more of an art than a science. The level of detail will depend on the facts and circumstances, and can vary widely across organizations, or even within the same organization at different times. Many organizations take the approach that meeting minutes should reflect any material matters covered, so that an absent board member can get up to speed on what they missed. In any case, well-crafted minutes can be brief while highlighting the most important points in a debate and statements or comments that materially changed the tenor of a conversation without extraneous detail. In certain scenarios or transactions, the information and level of detail to include in minutes may be a decision with legal implications, which warrants a conversation with your counsel or inviting your counsel to join the meeting to record the minutes. Following each board meeting, minutes should be circulated in draft form to the board for review and approval at the outset of the next board meeting (or sooner if necessary).
Parts 5-8 of our Boards & Bylaws series will continue in Spring 2023
Other publications in this series: