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How could I have been left out of new nonprofit corp?

Your Legal Questions Answered

How could I have been left out of new nonprofit corp?

In 2017, four of us started a social group. We now have approximately 20 dues-paying ($20 annually) members. I am still on the founding team and was not advised that three months ago, the other three members decided to form a nonprofit corporation. I was not included in that decision. I had fought us going nonprofit since the beginning because of the expense and effort involved and believe that my opposition is what caused me to be left out. One of the founding members announced at our last group meeting that "we" now have a board of directors that does not include me. I was stunned. How could this happen? Is it legal?

Assuming that you are not located in one of the few states that has adopted the Uniform Unincorporated Nonprofit Association Act (See Ready Reference Page: “Revised Uniform Unincorporated Nonprofit Association Act Provides Rules of Conduct”), which might have provided some ground rules for protecting your personal interest in operating the association, you probably don’t have any legal rights in this situation. Any group that wants to can incorporate a nonprofit corporation.  And even if you had some procedural rights in an association, it is hard to imagine what you would accomplish if you decided to pursue those rights.  It is unlikely that you could undo what the others have done.  Even if you could force them to take a new vote, they could outvote you to ratify what they have done.  And would you be willing to pay the costs involved when you were unwilling to use the funds of the group to pay the corporate filing fees?

It isn’t surprising that the other three incorporated the new entity without you if they thought you did not agree with what they were doing.  As the incorporators, they would ordinarily have the authority to name the initial board and would have had the power — and reason — not to name you to that board.  Your question now may be whether you are — or can become — a member of the organization so that you can participate in its activities and, if the group has voting members, vote at the next election for new board members to run the group.

Tuesday, March 17, 2020

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