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Should founding directors be exempt from new rotation system?

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Should founding directors be exempt from new rotation system?

Our 501(c)(3) organization providing services to Autistic children was founded in 2001 by 10 families who put up $250 each. Six of the founders have left the board of directors but four founding members are still part of the 14-member board.  Our chairman would like to start rotating board members although this has never been done before.  If the chairman wishes to rotate the ten positions of the newer directors I have no problem with that, but I feel that the four founding members (who do not include me) deserve to stay on the board permanently or until they wish to resign.  What do you think?  

You have raised two of my favorite governance issues, protecting the founders and avoiding arbitrary term limits, two issues on which I recognize that I usually hold a minority view. 

I have frequently written about “sole member” corporations to protect the interests of the founders whose energy and vision are crucial for the development and operation of the organization.  (See Ready Reference Page: “Sole Member Bylaws Can Protect Founder of Nonprofit”)  We haven’t used it for a group of ten, but there is no reason that the concept would not be applicable to a group that large.  Particularly with a board this large and a group of founders this small (who apparently have no protection of their status or power to determine who else participates), it makes sense to me that they should not be arbitrarily ousted.  They have a great deal of institutional memory to help inform decisions of the board, and probably have personal family experience with the issues that give them special insights.

I also don’t favor automatic limitation on service for people who are actively participating and making significant contributions to the success of the organization.  (See Ready Reference Page:  “Term Limits Are for Cowards”)  I don’t recommend life terms for all directors and believe that the expiration of multi-year terms gives a good nominating and governance committee a great opportunity to determine who should stay and who should be thanked for their service and not re-elected.  With a good board self-assessment program every year or two, many of the people who aren’t helping may sort themselves out so you don’t have to make the hard decisions.  But losing some of your best people just because they have served a certain number of years has never made sense to me.

It sounds as though your bylaws don’t deal with either of these issues so you have the flexibility to decide what you want to do — in fact, if not in bylaw rules — on both points.  You can decide based on real experience, not just theory.  I hope you will be able to keep the people who are contributing significantly, and not feel obligated to keep those who are not.  I recognize that it may require the board to make some decisions, but that is what good boards do.

Tuesday, July 25, 2017

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