The Importance of Board Meeting Attendance

How often have I seen this? Organizations unable to properly function because Board Members don't attend meetings. Gene Takagi provides some terrific insight into the responsibility of Board Members to attend meetings and what can (and should) be done to ensure attendance. Bunnie

The Importance of Board Attendance

by Gene Takagi, The Law Office of Gene Takagi

A board of directors is charged with providing ultimate oversight over the activities and affairs of its organization. Each director must discharge such duties in good faith, in a manner the director believes to be in the best interests of the organization, and with due care. Failure to regularly attend board meetings likely signals a director's inability or unwillingness to meet the director's fiduciary duties to the organization and its mission.

The most important factor in encouraging board attendance is to ensure that meetings are productive and valuable to the organization. Directors are more likely to attend meetings at which they believe their participation will be constructive. While I save a more comprehensive discussion of holding effective meetings for another post, here are some keys:

• Have a capable chair who can effectively preside over the meeting and elicit the participation of the directors.
• Have basic rules in place that are consistent with the organization's core values (but be careful of adopting formalized procedures like Robert's Rules without a full understanding of all of the procedures).
• Predetermine the goals of the meeting (and be mission-focused).
• Develop and distribute at least several days in advance a detailed agenda for the meeting, including the actions required to be taken, and supporting materials.
• Provide opportunities for each director to contribute relevant information to the organization and the board with respect to major issues, opportunities and threats (this may be collected and distributed in advance of the meeting -- the chair may then choose to focus on important and/or recurring issues at the meeting).
• Manage time appropriately and respectfully.
• Evaluate the effectiveness of meetings.

A nonprofit's bylaws may contain provisions to encourage board attendance. Quorum requirements may be established to ensure that board meetings can only take place with the participation of a majority or supermajority of directors. If the quorum requirements are set too low, a small percentage of directors may be able to take important actions without the input and vote of a majority of the directors. For example, in the case of a board with 12 directors and a quorum requirement of 40%, five directors may hold a meeting, and an affirmative vote of three may constitute a board action. By increasing the quorum requirement to a simple majority (i.e., >50%), seven directors would be required to hold a meeting, and four votes for an action. If a quorum is defined as 60%, eight directors would be required for a meeting, and five votes for an action. The higher quorum requirements would (1) send a signal to directors, prospective directors, and others that regular board attendance is expected; and (2) ensure that a very small percentage of the board could not pass actions that impact the organization. However, boards must be careful not to set its quorum requirements so high as to jeopardize the board's ability to take important actions in a timely manner.

The bylaws may also provide for the automatic removal (or deemed resignation) of directors who either miss a specified number of meetings or fail to attend a specified number of meetings. A board may have the right to remove a director with or without cause under state law and the organization's bylaws, but such actions may be highly sensitive, politically charged, and not seen as a viable option except in extreme circumstances of director misconduct. An automatic removal provision linked to attendance may allow for the pruning of absentee directors without an affirmative board action for removal and loss of face of the removed director. However, as nonprofit attorney Don Kramer points out in Nonprofit Issues, such provisions may not be enforceable, particularly if poorly drafted. One key to a valid automatic removal provision is not to tie the removal to a number of "unexcused" absences because without written evidence to the contrary, it may be argued that the board excuses every absence. Instead, the removal provision can provide for board discretion to waive the automatic removal provision under certain defined circumstances.

A nonprofit may also adopt a board attendance policy outside of its bylaws which explicitly defines the organization's expectations of its directors. Such policy may be included in the director's job description and given to each director and prospective director. Carter McNamara provides a sample board attendance policy in the Free Management Library.

Board attendance is directly correlated to board participation and thereby to the success of the organization in furthering its mission. Creating and maintaining a board culture that expects the participation of its directors in productive meetings will increase the engagement of the board. And an engaged board is one of a nonprofit's most valuable assets.

Contact Gene at http://www.attorneyfornonprofits.com/

Bylaws Checklist and Checkup

by Bunnie Riedel, Host of Nonprofit Conversation

There’s a great deal of organizational introspection going on right now. Yesterday, I had that conversation with a nonprofit executive who discussed the drop in revenue due to the economy. How many of those conversations have I had in the last few months?

While many organizations are examining their revenues, staffing and how the organization could run better, it might also be a good time to examine the Bylaws. Are your organization’s Bylaws good enough to really serve the organization? Or are you creating a new organization and you’re wondering what needs to be in the Bylaws?

I’ve created a sample checklist of components of Bylaws, things to consider when forming a new nonprofit or evaluating an existing one.

Size of Board

The size of your Board requires a great deal of consideration. Make it too large and nothing gets done, make it too small and you don’t have enough board members to get anything done. I know of a national organization that has 65 Board members! The largest for profit board of a Fortune 500 company has 33 Board members, so why would a nonprofit even think it needed 65 Board members?

My preference is somewhere between 9 to 11 Board members. Large enough to take on projects and small enough not to become unwieldy. Remember if you really feel you need more hands you can form committees of members, you don’t have to have Board members as sole staff of working committees.

Requirements of Board Members

Clearly state in your Bylaws what the requirements are for being a Board member. Is there an organizational membership requirement? Is there a residency requirement? Is there a professional requirement (must be practicing a certain trade or profession)? Is there an age requirement (must be at least 18 years old)?

What disqualifies someone from being on the Board? I had a nonprofit Board applicant send me his application. I called to tell him there was a residency requirement; that he had to live inside the city. The next day he re-sent his application with an in-city address and said that he had moved into the city in the last 24 hours. Mmmm.

Are there special requirements for recruiting Board members? Do you want to enshrine in your Bylaws certain types of people? For instance, do you want to designate certain seats for someone from the religious community, the legal community, the educational community, etc.? These “special talent” seats may help your organization ensure diversity in Board membership and ensure you have a variety of talent around the table.

How are Board members seated? Is it by majority vote or is it by two-thirds of the vote? What will be the Board members’ terms of service? Are the seats for two years with renewal up to a six year maximum? And do include term limits, there is nothing worse than perpetual Board members, like bread, they do go stale.

How will you remove “bad” or unethical Board members from the Board? What is the procedure? One of my favorite Bylaws is automatic removal if someone has missed two meetings in a row and requiring the absent Board member to be affirmatively voted back on the Board.

How are vacancies filled? How are meetings conducted? What is the process for calling an Executive Session and what kinds of things can be discussed during Executive Session? Typically, because of open meeting or “sunshine” laws in various states, Executive Sessions really can only be called to discuss a personnel matter.

Is the Executive Director or Chief Officer an ex-officio member of the Board? Will there be any compensation to Board members, such as a stipend or the reimbursement of travel expenses?

Who Are the Officers?

Typically most organizations have a President (or Chair); Vice-President (or Vice Chair); Secretary and Treasurer. Officers beyond those are up to the organization and should be based on need. Sometimes expanding the Executive Committee can be helpful. Remember an Executive Committee can be empowered to make decisions between Board meetings, so the makeup of the Executive Committee is important. Perhaps the Membership Chair should be part of the Executive Committee or the legal appointee should sit on the committee.

How are these Officers elected and how long is their term? How are they removed from office without removing them from the Board?

Is There a Membership Provision?

If you are starting or have a membership organization, what is your membership provision? What are the requirements for becoming a member and do you want a provision that revokes membership, and if so, what is the procedure for that? Do members have voting rights?

How Do You Make Bylaws Changes?

You want to make sure you can change the Bylaws if necessary. However, you want to make it difficult enough that the Bylaws aren’t constantly changing to suit Board member whims, yet doable enough that they can be changed when needed. Is there a notification requirement? Is it 30 or 60 days? What is the notification requirement? Must it be in person at the Board meeting or should it be by certified mail? Who can propose a Bylaws change and how do they propose one? Does it require a majority or two-thirds vote of the membership?

Some states or countries require that certain things be included in Bylaws in order to get or maintain nonprofit status, check with your state or country for its requirements.

The primary function of Bylaws is to serve the organization. If your Bylaws are interfering with that goal, it might be time to examine them and make necessary changes.