Legal Minute: Non-Profit Board of Directors FAQs
Legal minute with Wilkinson Mazzeo
Welcome back to another installment of the Legal Minute with your favorite lawyer duo, Wilkinson Mazzeo. For this edition, we’ve compiled a few Frequently Asked Questions regarding the non-profit organization’s mystical board of directors. Don’t worry, building and maintaining a Board is easier than you think with the right help.
Unlike private businesses, nonprofit organizations are not “owned” by anyone. Instead they are “owned” by the community, chartered by the government to serve a public purpose, and the board of directors is responsible for pursuing that public purpose. In other words, the board acts as governors or trustees to protect the nonprofit’s public purpose. Nonprofit boards and boards of private corporations are similar in that both are responsible for the organization’s success.
01 | How does a board function?
By law, the board of a nonprofit organization must act as a group. Boards generally make decisions using a majority vote or consensus. The organization’s bylaws should state the vote required for formal board action. This can be tricky if your organization’s bylaws were not drafted well.
02 | What is the required number of board members?
California law states that a California nonprofit must have directors and officers. Legally, a California nonprofit corporation can operate with one director, and two officers: a president or board chair, secretary, and chief financial officer. Two of these can be combined, e.g. president/secretary or secretary/CFO, but president and CFO cannot be combined. Meeting these legal minimums makes you legal, but probably not efficient. While there is no agreement on the perfect size for a board, nine to 15 members are often quoted numbers, but some boards are much larger.
03 | Can board members be employees?
Under California law, no more than 49% (in plain language, less than half) of the board of directors of a nonprofit public benefit corporation can be employees. While this is legally permissible, it is a rare practice to have employees serve on the board of directors, with the possible exception of the executive director.
04 |What about all-volunteer organization boards?
In an all-volunteer organization, there is no paid executive director or other staff. The board is responsible for the organization’s legal, financial and community obligations, and for managing the organization's day-to-day activities, leading other volunteers and getting the work done.
As always, we hope that you found the information in this article helpful and it has eased your concerns. Remember that this is based on California law, however, and the laws in your state may be different. Another important thing to remember, Wilkinson Mazzeo is here to take these worrisome legalities off of your plate so you are free to champion your cause.
Disclaimer: The information in this article is presented for informational purposes only, and should not be taken as legal advice. Before acting on any information presented in this article, you should consult an attorney regarding the facts of your specific situation. We would love to hear from you, so please feel free to contact Wilkinson Mazzeo for a consultation.
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