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How can an unethical president be removed from a nonprofit board?

Your Legal Questions Answered

How can an unethical president be removed from a nonprofit board?

Our board president bought our thrift store manager a new car and paid for it with money donated to our shelter. He also owns a printing firm which charges thousands to the shelter, yet all our documents that go out to the public say the printing is donated. What can be done to get this unethical man off of our board?

You have a number of apparent violations that could cause serious problems for your thrift store manager and the organization as well as the president. Your manager may have an automatic excess benefit if the car is used for personal purposes and the value has not been declared as compensation. (See Ready Reference Page: “IRS Issues Tips on Collecting Automatic Excess Benefits.”) An officer or director who knowingly approves an excess benefit can also face a penalty tax. Your organization may be violating charitable solicitation rules by misrepresentation about the printing services, which could cause your organization to be fined, or even enjoined from soliciting. You may also be filing a false Form 990 tax information return if the purchase of printing from an officer’s organization has not been declared.
But the main question is: where is the rest of the Board? Check the bylaws for the authority to remove officers and directors. Normally, Board members may remove an officer for any reason they believe is in the best interests of the organization. It may be more difficult to remove a director, but if they take action on the presidency, the ex-president may get the message.
Thursday, April 26, 2007


Your Attorney General's Office or whoever regulates nonprofits would be glad to help. But use that as a threat first; going public will damage the agency, so tell the Pres that he owes it to the agency to disappear before reporting is necessary. 

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