Q&A #5 – Is my nonprofit organization allowed to extend Board terms during a crisis?
Question: The terms of some of my organization's current Board members are set to turnover next month, when our annual meeting is scheduled. However, we are nervous about losing current Board members and onboarding new ones during this difficult time. Are we allowed to do a temporary extension of current Board terms, considering this crisis?
Answer: This is a very good question that a lot of nonprofit organizations are facing now or will be facing in the near future. The simple answer is that you cannot violate your Bylaws with a simple Board resolution to extend Board terms (even on a temporary basis and even during a crisis). You should review your Bylaws and the laws of your State of incorporation closely to see what options may be permitted. There may be some flexibility built into your Bylaws that will allow you to retain the desired continuity.
The following are some possible approaches to explore:
Some Bylaws define the “term” of the Board members to coincide with the annual meeting (rather than a set date). If this is the case with your Bylaws, it may be possible to delay the annual meeting for a few months and thereby delay the end of the Board terms that are set to expire.
If your Bylaws have soft term limits as opposed to hard term limits, you may be able to simply re-elect the Board members to an additional term. Hard term limits is where a Board member is limited to a set number of consecutive terms – often 2 consecutive terms. Soft term limits is where the Bylaws are silent to the number of consecutive terms but the organization has unofficially been following a 2 consecutive term limit rule as a matter of practice.
If your Bylaws do not have flexibility with regard to the Board terms, consider asking Board members to stay on the Board as special advisors (perhaps through an “Ambassador” honorary Board where valuable past Board members can continue to work and advocate for your organization). They would not have voting rights but remember that Board members are more valued for their expertise, knowledge and participation then they are for voting on a motion (especially during a crisis). You can also consider making these Board members part of your COVID-19 task force.
You also have the option to consider a quick Bylaws amendment to add any of the above options (but check with legal counsel to be compliant with your applicable State nonprofit corporation law).
Note, if your organization has “staggered” Board terms (which is a common way to avoid having too many Board members retire or term-out at the same time), I would not recommend taking any action that would extend a partial term (unless the extension is 3 months or less), as it will throw-off the staggered term schedule. If your Bylaws do not currently provide for staggered terms, you may want to amend your Bylaws by adjusting current Board terms to start a staggered stepladder schedule.
Lastly, remember that the decision whether to keep current Board members vs. bringing on new Board members should be addressed carefully. Make a list of pros and cons. The list will speak for itself. If mostly pros (the organization will be in a better place with new Board members) let the Board members naturally cycle off. If mostly cons (the organization will not be in a better position and will be hurt by not having continuity and expertise of these specific Board members and they will be greatly missed and hard to replaced), then proceed with exploring the approaches described above.
Planning Tip – Be proactive during this time of crisis and get started now on addressing Board composition and not let the calendar dictate Board turnover. Acquiring the right set of Board members should be a well thought out process with goals and objectives so your organization will be ahead of the curve in obtaining and having a high performing Board of Directors.
When it comes to present and future Board composition, a little extra planning and consideration will go a long way. Stay tuned for additional articles on this website addressing governance tactics and changes that nonprofit organizations should be considering in light of this crisis and period of extreme hyper change.
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