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Can the Executive Director of a nonprofit corporation fire a director for not agreeing with him?

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Can the Executive Director of a nonprofit corporation fire a director for not agreeing with him?

Can the Executive Director of a nonprofit corporation fire a director for not agreeing with him?

Generally, no, but there may be a few rare circumstances in which it might be possible. Check the bylaws for removal provisions. Generally directors may not be removed by the staff. But it might be possible if the Executive Director is the sole member of the corporation with the power to appoint and remove directors. That might be the case if the E.D. is the founder. (See Ready Reference Page: “The Key Question; Whose Organization Is It?”) We ran a story on a court’s removing most of the board for breach of fiduciary duty after the CEO commenced the suit. (See Nonprofit Issues®, September 1-15, 2006.)
 
If the Executive Director has problems with a director who is seriously undermining the programs of the organization, he or she may want to talk with the Chair of the Board and other directors about the possibility of removal. If the Executive Director merely doesn’t like disagreement and wants only praise from the Board and ratification of his or her proposals, the Board may want to consider a new Executive Director.
Friday, January 26, 2007
Keywords: 
director
Removal

Comments

I was a little surprised that your answer to this query didn't suggest any of the worries that legitimately arise around the idea of a single-member nonprofit corporation. I have trouble seeing how such an organization could meet the cultural norms -- and maybe even the legal standards -- for assuring independence in meeting the duties of the board and in setting the compensation of the ED.
 
More generally, the desire of people to have their cake and eat it too in this realm needs to be discouraged (I believe). The privileges and exemptions NPCs enjoy are half of the bargain. The other half is a commitment to community benefit. It may be an imperfect mechanism (I certainly have seen many examples of imperfection), but an independent board is one of the devices by which that commitment to community benefit is maintained. Devices, such as the single member NPC, that undermine the independence of the board should be deprecated (when permitted at all).
Submitted by: 
Putnam Barber, Washington State
I appreciate your concern about the public purpose of a single member nonprofit, but we have seen too many social entrepreneurs sacrifice years of their lives creating a new entity to pursue their ideal for a better world, only to have a board of their "friends" kick them out of office because the friends didn't share the view or wanted to go in another direction. That has always struck me as a great shame and a real loss for the community. Since it is perfectly legal to protect the founder with a single member corporation, we have often recommended and done it.
 
There are obviously some risks, but there is also something of a self-correcting mechanism because if the founder acts arbitrarily in ousting directors, the founder will find it hard to attract new directors and hard to expand the operations. I recognize that the form also creates issues of founder-transition that may be a little more difficult. But where the entire effort depends on the energy and vision of the founder, it has seemed to me appropriate to reflect that fact in the governing documents.
Submitted by: 
Don Kramer

In a two member non-profit entity, can the Executive Director, who is also a founder member, fire the other founder member and director for not agreeing with him?

Submitted by: 
Fanny Adams

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