Faith-based nonprofits, along with other businesses and entities, must act quickly to adjust to the economic and public health impacts of coronavirus. However, with shelter-in-place laws established across the country, holding a board meeting through traditional means is now difficult and even impossible.
Fortunately, most state laws and corporate bylaws allow the board to act through a teleconference or through a unanimous written board action in lieu of meeting in person. Below are some examples of best practices for each method of meeting.
State Law and Corporate Bylaws. Confirm the organization’s bylaws and state nonprofit corporation law permit that board action through teleconferencing. Under Sec. 8(b) of the Model Nonprofit Corporation Act, Third Edition, directors can meet using “any means of communication by which all directors participating may simultaneously hear each other during the meeting.”
Quorum and Manner of Acting Requirements. Verify the quorum (number of directors present necessary to take action on behalf of the organization) and manner of acting (number of favorable votes required to approve the specific course of action) necessary to approve the decision. Most corporate laws and/or bylaws have specific levels for each requirement (e.g, bylaws may have special quorum or supermajority requirements for certain actions to be taken). If your corporate bylaws do not address this, check the state nonprofit corporation law.
Waiver of Notice. Request all directors to waive notice. If any directors aren’t present on the call, it’s important to have their waiver of notice in writing.
Send Preparation Materials. If possible, send the board background information to prepare for the discussion during the meeting. For example, if the organization were applying for a Paycheck Protection Loan, include a draft PPP loan application and relevant calculation in the board materials sent to the board prior to the meeting.
Corporate Minutes. Take corporate minutes during the meeting, indicating key factors in any actions the board determines to take. If the board is approving the organization’s application for a PPP loan, have the board designate authorized representatives who can apply for and sign the loan application, promissory note, and other loan documents. Some banks require a copy of this authorization before they will issue a loan.
Check State Law and Corporate Bylaws. Confirm your organization’s bylaws and the state nonprofit corporation law permit written action. Under Sec. 8.21(a) of the Model Nonprofit Corporation Act, the board can take “without a meeting if each director signs a consent in the form of a record describing the action to be taken and delivers it to the nonprofit corporation.”
Written Resolution. Distribute a written resolution to all directors. Most states allow the written resolutions to be sent through email. If the written resolution includes approval of any specific documents, include the draft documents in the attachments. For example, if the organization’s board is approving a decision to apply for a PPP loan, include a draft PPP loan application in the board materials. Additionally, if the board is approving an application for a PPP loan, include a statement authorizing representatives who can apply for and sign the loan. As stated above, some banks may require this resolution.
Inventory of Approvals. Remember, in most states, for a written action to be valid, written approval from all directors must be received. Many states permit electronic signatures, but be sure to check the laws of your state to ensure that your board is validly acting.
Corporate Records. Preserve copies of the resolution and all approvals in the corporate records.
January 16, 2023 | Faith-based nonprofit organizations should recognize whether they are obligated to follow the requirements under the Fair Labor Standards Act (“FLSA”).
December 13, 2022 | Faith-based nonprofits will likely face more lawsuits and government actions challenging religious freedom after Congress passed the Respect for Marriage Act (RMA) repealing the Defense of Marriage Act of 1996. The RMA impacts faith-based organizations in two specific situations. Both relate to interactions between the faith-based organizations’ work and the state and federal government. The threats to faith-based organizations remain despite language in the RMA purporting to protect religious freedom. Both supporters and skeptics of the RMA agree that the RMA’s religious freedom language has no “meaningful effect.” Below are key questions and “known unknowns” related to the RMA’s impact on faith-based nonprofits.
November 22, 2022 | At first glance, the voting requirements in a nonprofit’s bylaws may not seem an exciting topic. Most nonprofits have not seriously considered their bylaws, perhaps because they have inherited old bylaws, copied the bylaws of another company, or even originated their bylaws from a quick internet search! If any of these scenarios applies to your organization, your organizations’ bylaws may include director voting requirements not tailor-made to your preferences or the specific needs of your organization.