StarGift Project Minutes – May 20th, 2015 Discussion/Decisions re: By-laws [part 1]

Present:
Pam Hieser
Jodi Lancaster
Chad Emmett
D. J. Anderson

These minutes cover the first discussion of by-laws and decisions reached via vote.

We are leveraging these example by-laws Bylaws of the National RSD Assistance Center and referencing information on by-laws contained in the following two books:

  • How to Form a Nonprofit Corporation by Attorney Anthony Mancuso
  • Starting and Runing a Nonprofit Organization by Joan M. Hummel
  1.  We agreed to bypass Article I and Article II at this time.  We will address name and location of organization as a final step.  We believe the objectives have already been defined in the Articles of Incorporation and only need to be cut and pasted here.
  2. Article III, Membership:  We discussed the pros and cons of having participating nonprofit organizations as members vs. non-member status.  As a small organization it is simpler to establish and operate a non-member organization.   At this time we have agreed by unanimous vote [four ayes] that the organization structure will have no members.  The Board of Directors will be the guiding agency.
  3. Article IV, Officers:

Section 1.  Election and term.  There was a great deal of discussion around this topic as we veered into the scope of responsibilities of each officer.

  • We agreed to the following four officers as a starting point:  Chairman, Vice-Chair, Secretary and Treasurer.  It is possible that one person may fulfill responsibilities of Vice-Chair and Secretary.  We agreed by unanimous vote to use the terms Chair and Vice-Chair as opposed to President and Vice-President.
  • We recognize that the Board may in the future determine a need for additional officers.
  • We agreed the officers would be elected by the Board of Directors at the last meeting of each fiscal year.
  • We agreed that each officer will serve a term of one year.
  • We agreed that it is a good practice to retain the Past President as a board member and will work on wording that makes this clear.

Section 2.  Successive Terms.  We agreed that an officer may be elected to successive terms of office.

Section 3.  Vacancies.  We agreed by unanimous vote that the Board of Directors could fill a vacancy of office by vote.  We agreed by unanimous vote the Board of Directors could remove an officer from office “for cause” by a 2/3 vote of it’s members.

  1. The discussion about ‘Officers’ led us to discussion about the Directors in General:
  2. We pended further discussion of the example by-laws for the next meeting.

Article 6, Board of Directors.  Section 8.  We discussed the difference between removing a Director who is not an officer and removing an Officer as discussed above.  Section 8 of the example states:  “A Director may be removed with or without cause by a 2/3 vote of the Board of Directors.  The discussion helped us to understand the difference between removing a member of the board and removing an officer of the board.  We will revisit this section as we proceed through the example text.

6.  We pended further discussion of the example by-laws for the next meeting

7.  Other discussion and questions which arose during the meeting.

We spent some time discussing the roles of Chair, Vice-Chair, Treasurer and Secretary.   We felt we needed some clarification on the role of Directors of the Board versus people we may need to hire to perform activities on behalf of the organization.  We felt we might need some legal advice on the topic.  However I have been doing some research in the two books and I think reviewing some of the points can be helpful.  Please see the section of text below these minutes, titled RESEARCH.

8.  Our next meeting is Wednesday, May 27th at the Lancaster home.  We will work on Article V, Duties of Officers.  Please review the content I scan and email on this topic before the meeting.

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 RESEARCH

 

The following quotes come from:  How to Form a Nonprofit.

  • “Directors meet collectively as the board of directors, and are responsible—legally, financially, and morally—for the management and operation of your non-profit corp.”
  • “Nonprofit directors usually serve without compensation.”
  • “Compensation of Officers”

“Officers can receive reasonable compensation for services they perform for a non-profit corporation.  It is appropriate to pay officers who have day-to-day operational authority, and not to pay the officers who limit themselves to presiding over the board of directors or making overall nonprofit policy decisions.  In smaller nonprofits, it is more common for officers and directors to also assume staff positions and be paid for performing these operational tasks.”

  •  “Employee Compensation”

“Salaries paid to officers or regular employees should be reasonable and given in return for services actually performed.  A reasonable salary is one roughly equal to that received by employees rendering similar services elsewhere.”

Does this seem to be conflicting info?  I believe the distinction is that if you are an officer/board member and actually performing a service within the day-to-day operations, you are compensated for that service. . .but not for your role as a board member or officer.  I believe,  your compensation for service is a cost of doing business and not paid out of profits.

The following quotes come from:  Starting and Running a Nonprofit Organization

  • “. . .the board is charged with a ‘governing’ role.  Boards are fiduciaries of nonprofit corporations. . .Fiduciaries stand is a special relation of legal trust to others.  Thus the board of a nonprofit is answerable to the agencies members, if any, and to government agencies that regulate and monitor nonprofit corporations on behalf of the community for at least two duties:

o   Duty of Care:  Being diligent and acting prudently as a director overseeing the affairs of the nonprofit.  This doesn’t mean a director is expected to forsee every potential problem or prevent any wrongdoing that could occur, although in some states, the duty is that of a trustee, a very high standard requiring a duty of utmost care.  In other states, the duty is that which a person of ordinary prudence would reasonably by expected to act under similar circumstances.

o   Duty of loyalty:  Acting in good faith and not allowing personal interests to override responsibility as a director.”

  • “The board generally assumes specific responsibilities in the areas described below.
o   Budget and Finance
o   Strategic and Annual Plans
o   Fund Raising
o   Policy
o   Human Resources
o   Community Relationships
o   Program Evaluation
o   Board Development
o   Advising Staff”

Since our discussion centered around the role of the board versus people we may need to hire, here is additional clarification:

“Human Resources”

“The board hires the executive director (or chief staff person, whatever the title), evaluates his or her effectiveness, and removes him or her when performance is unsatisfactory.  The board may determine the salary scales and benefits for the staff, especially if they have professional expertise that the staff does not, and may approve staff-developed personnel policies.  (However, staff members who report to the executive director should be hired, fired, and evaluated by the executive director, who should also determine their individual compensation within the overall compensation policy approved by the board.)”

I will scan and send each of you content from the pages of both books that discuss Officers, Board Members, Employees and Compensation.