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| Re: Board officers board membership
Posted by cvr   on 9/10/2011, 1:14 pm, in reply to "Re: Board officers board membership"
Hi Julie!
Good to see you're still on the board.
In the eyes of the Secretary of State, there can never be a case where a corporation has no officers. Articles of Incorporation specifically give names and addresses of incorporators and according to the laws of whatever state, one of those incorporators is the President and at least one other officer (the Clerk) must be named. Incorporation papers also require an organization to name its governing board, but according to papers I've seen approved by the IRS recently, one person can be the single member of an entire board. (Of course the will not pass muster with grant-making entities nor is the condition politically correct, but it is legal.)
The IRS will scrutinize a one-member board organization to be sure the org isn't really just a charitable trust trying to pass itself off as a charity. On the other hand, I know of one operating foundation with a 501(c)(3) that has only one board member.
It is a misconceived notion that officers are ipso facto board members. They are actually stronger than board members. Officers are officers of the corporation and answer for the Corporation to the IRS. If the IRS serves papers on a Corporation, it will do it through the Officers or a Registered Agent. If worse comes to worse, officers and board members alike are held responsible for the acts of the Corporation.
In the eyes of almost everyone involved, officers and board members sit as the governance of the corporation. Officers, however, may also hold management positions. I know of one Managing Director who sat on his board as Treasurer of the Corporation until he got fired.
Board members are not considered officers until they are named as such. Elections are not legally mandatory. However, most by-laws set up an apparatus for officers and board members to gracefully leave the service of the Corporation. This device are usually the elections held at the one General or Public Meeting of the nonprofit.
Most people think they are being elected at "President of the Board," like the board is a club of some kind. The board is not such a thing. The board is the body politic (in the event there is no membership) of a nonprofit. The board holds in the public trust the assets and resources of the organization.
Officers on the other hand act or cause to be acted the actions of the Corporation. A President, not the Board Chair, enters into contracts (legally). The board chair unless specifically stated in the by-laws, is never empowered to manage an organization (i.e. contracts, hiring, firing, etc.) Those actions belong to executive management, whatever such people are called.
So, how is that board chairs sign contracts and we think Harry was elected Secretary of the Board? Because organizations are founded by individuals who have a personal and emotional stake in its success. They want to be called the Chair because they think it's more important than anyone else and they want to ensure that all actions are handled properly so they do them themselves. Eventually culture and history take over and the nonprofit works under the system until its extinction. Most people rarely see a need for change.
Well, I think I've given you much more than you wanted. I'm not sure I've answered the question, but there it is.
Let me know if there is anything else.
Carl
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