Q: We’re a relatively young organization with an important mission and a founder that is moving things along to the degree she can, virtually by herself. The problem is that the majority of board members she pulled together to file for nonprofit status and to register with the state – mostly friends of hers – aren’t really around anymore, if they ever were. That includes a couple listed as officers who are also signatories with the founder on the bank account. Even the few “’board members” that still come to an occasional meeting aren’t doing anything. There are just two of us trying to do the work of the board, and we’re overwhelmed.
We know we have to recruit new people to the board, but we are not sure how to handle the deadwood. Can we pretend they never existed and just replace them or is there a process we should follow? And how do we deal with the bank? We don’t believe there is anything wrong going on, but knowing we have a fiduciary responsibility we’re uncomfortable sitting on the board when people who aren’t and who have a personal relationship with the founder have access to the organization’s funds.
A: Ah…When people pick a board for expediency-sake rather than skills and passion you tend to get the fall-off you describe. It’s why I like to suggest to those starting a new nonprofit that they not be in a rush to file – that they take the time to recruit their ideal board first. But, that’s water under the dam in this case. So let’s take your two issues: removing the deadwood and changing signatories at the bank.
What do your bylaws say about removing board members and officers? Most likely, even if you have generic bylaws, they will say something like “anyone who has missed three meetings will be assumed to have resigned” and “any board member/officer can be removed with or without cause by a vote of two-thirds of the board at a meeting where the purpose of the meeting has been sent out ahead.” If you have such an attendance clause, that will be the easiest way to go. Merely note in the minutes that the automatic resignations of John Jones, Mary Smith and Roger Brown have been accepted per the bylaws, Article X, Section Y. Voting people off the board is more difficult because you will undoubtedly require a quorum and it sounds like you can’t get one. If that is the case and/or your bylaws are silent on this issue you can try two other approaches.
The first is to contact those board members missing in action and ask them to send in a letter of resignation. Begin by thanking them for being founding board members. You might mention that you are sure that they wish the best for the organization and that requires board members who can do the work of the board, which you realize that because of their competing responsibilities is not possible for them at this time. You can come out and say you need the seat for someone who can give the time. Or, you can be more subtle and say you would like to protect them from any liability they might incur while remaining a board member on paper. In most cases people will respond with their resignation letter pretty quickly.
The second approach is to rely on the nonprofit corporation laws in your state. Most, if not all, provide for the removal of board members and officers if the organization’s own bylaws do not speak to this concern.
While I began my answer by responding to your first question, the second is perhaps more critical. You are right to be concerned about inactive members having signing rights. I would contact the bank immediately about these signatures. Since each bank has its own protocol, ask your relationship manager what documentation you need to bring in so that someone there can void the old signature cards and validate new ones. At a minimum, they will probably want a copy of the minutes from the meeting at which a vote was taken to change the individuals who will have the right to sign checks. I’d also make sure that you put a request in writing to each of the old signatories that they immediately return any of the organization’s financial materials that they may still have in their possession. I would send that request certified mail with a return receipt.
Of course, the big task – recruiting – remains. You might want to check out a series of articles on recruitment that I wrote for Philanthropy Journal. Effective Board Recruitment – Part I (January 20, 2012) lays out a recruitment plan that ensures a strategic search. Effective Board Recruitment – Part II (February 10, 2012) offers a number of tips for making sure that the search is successful.