Nonprofits are quite different from for-profit corporations but they still need to comply with corporate law.
In her book “Good Counsel,” Lesley Rosenthal defines anything that ignores this kind of law as ignoring corporate form, blurring the assets, activities, or identity of the organization with those of the individuals within it, undertaking activities outside of the stated corporate purpose, or engaging in self-dealing. If that seems like a mouthful it’s because it is.
Worried about how you’re going to keep track of this? Rosenthal developed a handy checklist to make sure you are following corporate law:
- Does the board have the requisite number of directors called for in the relevant state laws and the organization’s bylaws, and have they been duly appointed?
- Have the officer and leadership posts specified in the bylaws or by the state been filled, and are those persons carrying out the duties prescribed?
- Does the board membership consist of representatives or designees of various interest groups, constituents, community groups, and affiliates if required by the bylaws?
- Do the board members commonly serve for specific periods of time, and if so, has the organization renewed or discharged the members whose terms have expired?
- Does the board meet regularly?
- Is proper notice given of meetings?
- Is the quorum requirement met for business to be conducted?
- Are minutes of the proceedings being kept?
- Are votes taken, and are resolutions moved, seconded, and voted upon for the conduct of important pieces of business, in keeping with state law, bylaws, and good practices?
- Is the corporation up-to-date with its annual filings with the federal and state governments, and does it follow proper procedures in disseminating and reviewing forms before filing?