Q&A #35 – Is proxy voting allowed for nonprofit Board members?

Question: My annual Board meeting is coming up soon and we have a number of important matters to decide. One Board member has said that he is unable to attend the meeting and would like to authorize another Board member to vote on his behalf by proxy. Is this permitted?

Answer: You should check the applicable state nonprofit corporation statute, but proxy voting is generally not permitted for Board members. In many states, it is challenging to find a clear answer to this question in the statute, but proxy voting by Board members of a nonprofit organization is widely considered to be a poor governance practice that should be avoided.

The legal basis for this view generally stems from a couple different principles.

First, most nonprofit corporation statutes provide that nonprofit Boards of Directors take action by the affirmative vote of a majority of Directors present at a meeting with a quorum (unless the Articles of Incorporation or Bylaws require a greater vote for the particular matter). Delegating a vote to another Board member would not satisfy this requirement for Board action.

Second, proxy voting is arguably inconsistent with a Board member’s fiduciary duties and the oversight role of the Board of Directors, which generally requires Board members to be personally involved in the deliberative process.

Planning Tip – The absence of one or two Board members is usually not an impediment to important Board decisions, since all that is needed is the vote of a quorum of Board members (a quorum is usually defined as a majority of Directors then serving on the Board). However, if your Board must take prompt action and is unable to achieve a quorum for a specific meeting date, you can generally take action with the unanimous written consent of all Board members in lieu of a meeting (check the applicable state nonprofit corporation statute and your Bylaws for guidance on the specifics). If the concern is not related to attendance but rather to a conflict of interest or a similar concern about the propriety of voting on a particular matter, it is usually acceptable for the Board member at issue to abstain, or to have the Board delegate the action to a Board committee comprising disinterested Directors.

While proxy voting by Board members is generally not permitted, proxy voting by the “members” of an association or other nonprofit with a membership structure is a different matter. These members are considered analogous to stockholders and are not subject to fiduciary duties when voting in their member capacity, so proxy voting is generally allowed unless it has been prohibited in the Bylaws.

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