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May the president of a nonprofit change the signatories on the bank accounts without getting a new board resolution?

It probably depends on the reason for the change.  Most bank resolutions provide that certain officers have authority to sign checks and take other actions on behalf of the organization.  Therefore, if the treasurer is authorized to sign and the old treasurer is replaced by a new individual, the president can change the signatory as a ministerial matter because it is in keeping with the original resolution.

On the other hand, if the president decides that it would be nice to have an assistant treasurer also empowered to sign, but that was not included within the original resolution, the board would have to agree on a new resolution to authorize the change.

It would be very unusual for a board to give the president blanket authority to determine the individuals who could sign on behalf of the organization, and it wouldn’t be a good idea.  The board is ultimately responsible for the finances and ought to keep control over the identity of the individuals who can spend the organization’s money.

Comments from our Readers

Regarding resolutions for signatures on bank accounts: every bank we deal with these days REQUIRES a copy of the Minutes/Resolution to change the signatures. Even for the smallest of accounts! --K.S. via email

Have you heard of a situation where all board members must be present to open a bank account? I had a terrible time getting a bank account opened for our non profit organization. No banking institution would tell me what I needed to open a bank account. I kept being told we needed "a letter" authorizing me to open a bank account. Years later I found out that the "letter" was really a RESOLUTION authorizing the opening of the bank account. Even then, the bank wanted every board member to be present to open the account which was insane. Each bank and credit union wanted everyone present to sign to open the account. Our board members live in different cities so it was impossible to have a document with everyone's signature on one page and notarized. In the end the board president was the only one who could open the account and sign documents related to the account. We took our articles of incorporation, by-laws, letter from the State Comptroller's office saying we were in good standing and not owing taxes, and the resolution allowing us to open the account. With two people present, we were able to open the account. I was told by other non profits that they never had such trouble. I was told by other non profits that the Executive Director took all the paperwork to the bank and opened bank accounts on behalf of the organization without any trouble at all. We thought we were doing right to have all the board sign the resolution to open the account and have two signers. Instead it turned into a nightmare. We resolved the matter by taking the resolution with only the president's signature on it to the bank and then we were able to open the account. This system seems flawed. --J.T. via email

5/7/2013

Article Archives >> To the Point

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