The Executive Committee of our nonprofit corporation is violating one bylaw after another. Other directors are also pointing it out but nothing stops. Their conduct has cost the organization a lot of money. Should I just walk away or is there a legal way to stop them?
This is one of the most difficult questions a nonprofit director at odds with the majority on the Board has to face. At least you appear to have a few allies among the other directors if you can mobilize them to oppose the actions.
A majority of the directors can normally remove some of the officers, which would probably also remove them from the Executive Committee. Check your bylaws. If the corporation has members who vote for directors, you might instigate other members to remove some of the current directors, or at least to elect replacements when their current terms expire.
If their violations have cost a lot of money, you might be able to bring a suit on behalf of the corporation for breach of fiduciary duty. Check with an attorney about that question, but it is likely to cost a lot of money or may be otherwise impractical.
If their conduct is illegal or criminal, the attorney general might be interested, but that runs the risk of really adverse publicity and additional harm to the organization.
If you can’t make any progress with any of these steps, you may want to walk away. If you stay in hopes of better days, be sure you are recorded in the minutes as voting against any action you think is improper. If you are not recorded as being against, you will probably be presumed to have been in support.
Monday, March 23, 2009
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