A nod to Non-Profit Law Blog for their link to a very extreme situation addressing the question of who owns a non-profit. In a story that appeared in the Star-Tribune (MN) and Non-Profit Quarterly. The founder of a non-profit that works with former inmates was frustrated with what he saw as a lack of responsiveness from his board. He formed a second board with a former member of the first board. This second board voted to dissolve the first board and install themselves as the governing body. According to both articles, the founder ended up fired and being lead away by police in the presence of both board presidents, each claiming they were in charge.
The short answer about who is in charge is always the board. They bear the responsibility of the governance of the organization. But given that organizational founders are generally the ones who institute the formation of a board asking the initial members to serve, does a founder have an ability to choose his/her own board? There is a point where the ability to select board members passes from the founder’s hands. My suspicion is that absent a provision giving the founder or executive director the power to make appointments, this occurs once bylaws have been completed and properly filed.
The next logical question is, when a board is not living up to its responsibilities, what recourse do people have in replacing them? Presumably the board can be sued for not meeting their responsibilities and a court could dissolve the board and order the formation of a new one. I have never heard of this happening, though I am sure it has, so I can’t be certain. It may not be the board as a whole which is dissolved and only those whom have been proven to be remiss in their duties who are removed from the board. But basis of this would be whether members attended the required meetings and were diligent in their review and handling of organizational matters. If it were not essential or required that the members return calls or attend the organizational events, it might be difficult to have the board dismissed. If they were moving forward with the strategic plan and operating budget at a rate a court found reasonable, again it could be difficult to unseat them.
If the allegations of mismanagement originate from within the organization, as it did in this case, then there is also the stress of having the board and staff in a confrontational stance complicating the situation as well. As I mentioned, I am sure there have been times when boards have been dissolved because they failed in their duties, but I wonder how many of those instigated by staff. If anyone on staff is going to do it, it would be the founder given how much they have invested in the organization. Staff members may have provided materials to support the case against the board, but it has to take a lot of moxie for a staff to declare a company is ill-served by its board and initiate legal proceedings.