Q&A #92 – Are nonprofit Boards required to have term limits?

Question: One of the Board members of my nonprofit was recently advised that state law limits individuals from serving a term of more than 5 years. However, some of our Board members have served for well over a decade. Is this a problem under the law? Does this state law require us to impose term limits?

Answer: Generally, there is no legal requirement for a nonprofit Board to have term limits. While it is true that some state nonprofit corporation statutes limit the number of years in a single Board term, there is typically no limit on the number of times a Board member’s term may be renewed through re-election (unless specified in the Articles of Incorporation or Bylaws).

The District of Columbia Nonprofit Corporation Act includes a good example of the type of provision you mentioned in your question. D.C. Code § 29-406.05 states that “the term of a director shall not exceed 5 years” (except for certain circumstances such as where a Board seat is ex officio). However, the statute goes on to clarify that “except as otherwise provided in the articles or bylaws, a director shall be appointed, elected, or otherwise designated for additional terms.”

This means that the length of a single Board term generally needs to be defined and limited to a certain number of years (5 years in this example), but there is no restriction on Board members serving multiple consecutive terms. The policy rationale is likely that Board members would be less accountable if they could be appointed once for a single term that lasts many years or decades. This is less of a concern if Board members go through a formal re-election process that consistently adheres to the rules in the organization’s own governing documents.

Planning Tip – When governance questions arise, such as how terms and/or term limits apply to an organization’s Board, the most important document to consult is the organization’s Bylaws. However, a surprising number of organizations struggle to definitively identify the official version of the Bylaws that are currently in effect. Avoid relying solely on word document copies or editable copies stored on cloud storage services (such as Google Docs). Get in the habit of maintaining dated PDF copies of your organization’s Bylaws that are signed by an officer. Keep this document in a separate official file along with signed and dated copies of the conflict of interest policy, investment policy, committee charters, and other key governing documents. This will ensure that you always know which version of the Bylaws and key governing documents are the current and official versions.

You should check your applicable state nonprofit corporation statute to be sure, but it is probably similar to the D.C. law provision described above. Thus, terms limits are probably not required, and it is probably legal to for Board members to serve for multiple consecutive terms if they have been properly re-elected in accordance with the organization’s Articles of Incorporation and Bylaws.

 Of course, whether this is a good idea for the organization is an entirely different question.

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