Q&A #164 – What happens if all Board member terms have expired?

Question: I work with a nonprofit organization whose Board of Directors has not held a Board election for over 10 years, even though the Bylaws say Board members serve for 3-year terms. If every Board member’s term has expired, does the organization still have a Board of Directors at all? How can the Board take action to fix this situation or appoint new Board member if their terms have expired?

Answer: It is unlikely that a nonprofit organization’s entire Board of Directors would be nullified due to a failure to hold elections, since most state nonprofit corporation statutes provide that Board service generally continues past the expiration of the Board member’s term until the Board member’s successor is elected and takes office. In the unlikely event that an organization truly has few or no Board members left to take action, there are often other mechanisms available under state law to reconstitute the Board or petition a court to appoint a legal representative.

As discussed in in Q&A #90, the status of Board members whose terms have expired depends on the organization’s Bylaws and the applicable state nonprofit corporation statute. It is very likely that the law in your state has a provision for Board service to continue past the expiration of the Board member’s term until the Board member’s successor is elected and takes office, or at least until the Board otherwise takes action to clarify the status of this person’s service on the Board, such as by reducing the number of Directors, removing the person from the Board, or declaring their seat on the Board to be vacant. 

Consequently, the failure to hold timely elections, even though a serious breach of an organization’s Bylaws that should not be taken lightly, rarely has the effect of voiding a Board member’s service or nullifying the actions or authority of the Board (especially if this failure affects the entire Board of Directors).

In most cases, once a lapse like this has been discovered, the last serving Board members should simply convene to elect new Board members and/or renew their own terms on the Board. In general, solutions like this will usually be respected, since courts generally prefer not to intervene in the internal affairs of a nonprofit organization unless necessary. However, it is possible that a Board that has neglected its fiduciary duties to this degree could be subject to lawsuits or investigation by the state Attorney General or other interested parties.

Planning Tip – Make sure your organization is keeping accurate and up-to-date records of the terms of all Board members and officers, showing exactly when their terms started and are scheduled to expire, and distributing this list to the Board at least annually. This is critical not only to avoid inadvertently failing to hold timely elections, but also to ensure accurate reporting of Board and officer lists for the Form 990, state filings and registrations, and bank and insurance documents.

In the relatively rare situation that an organization finds itself with no Board members, or too few Board members to take action, there are often other mechanisms available under state law to restore order.

For example, state nonprofit corporation statutes sometimes have “emergency powers” provisions that allow a single Board member or officer to take necessary actions in certain situations when a quorum of Board members cannot be reached.

And, if all else fails, courts usually have the power to appoint a fiduciary, receiver, trustee, or other legal representative to temporarily administer a nonprofit organization’s programs and/or liquidate its assets.

If you have a question you would like to submit to SE4N, send it to us using the contact form and we will consider answering it in a future post. Please do not send confidential information.

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Five Nonprofit Bylaws Issues That Are Often Overlooked

Q&A #114 – What happens if a nonprofit fails to hold regular Board meetings?