What is a proxy vote? Understanding nonprofit board meeting proxies
Ever found yourself in a bind because a key board member couldn’t make it to the meeting? You’re not alone. Health issues, family emergencies or last-minute work travel are part of life’s unpredictable reasons that can throw a wrench in your carefully planned board meeting, especially when it comes to maintaining quorum or making critical decisions.
When this happens, proxy voting steps in as a lifeline, ensuring your board can still operate smoothly. But proxy voting isn’t as simple as handing over your vote. There are specific rules laid out by state laws and your organization’s bylaws that must be followed to the letter. Mess this up, and you could face invalidated votes and a host of other issues.
We cut through the red tape and give you the lowdown on how proxy voting can keep your nonprofit’s governance shipshape, even when life throws a curveball.
What is a board meeting proxy vote?
There are many unavoidable reasons why a board member may be unable to attend a meeting in person or even virtually. An absence at a meeting can cause issues, especially if it affects the ability of the board to meet a quorum. It also can impact votes on crucial matters. When these situations occur, board members may authorize a proxy to speak or vote on their behalf. Proxies can vote by a show of hands or on an official ballot.
State laws and the corporation’s bylaws outline the rules for proxy voting, including how to authorize and revoke proxy votes. The rules vary a little between for-profit corporations and nonprofit organizations. Members and proxies need to follow all the rules for proxy voting to ensure that votes get counted as valid.
Definitions of a board meeting proxy
In a corporate board setting, a proxy is a written statement by a shareholder (or unit owner, in the case of a homeowner association) that authorizes a specific other person to vote the shareholder’s shares or common interests at a shareholder or special interest meeting. A general proxy means that the voting member leaves the vote to the discretion of the proxy voter. A specific proxy or limited proxy means that the voting member gives the proxy voter specific instructions on how to place the member’s vote.
Proxy voting for nonprofit organizations
The rules for proxy voting at a nonprofit organization are slightly different than for a for-profit corporate entity. It’s generally advised that board members of nonprofit organizations do their best to attend meetings and vote on their own behalf.
Robert’s Rules doesn’t allow for proxy voting for nonprofit organizations. Robert’s Rules states, “…proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable….”
Nonprofits that want to allow proxy voting need to overrule Robert’s Rules by writing the exception into their bylaws. Proxy voting for nonprofit organizations is legislated by each state. The nonprofit’s bylaws will spell out any other rules for using proxies.
For example, many nonprofit organizations’ bylaws require that board members must choose other board members as proxies because they would likely have the best interests of the organization at heart. If nonmember proxies were voting at their own discretion, it could interfere with the mission and vision of the organization.
J.D. Supra’s guide “Nonprofit law jargon buster: What is proxy voting” sets out these key principles:
- Proxy voting allows a member of a voting body to delegate their voting right to another member, known as the “proxy” while the delegating individual is the “principal”.
- Many state nonprofit corporation statutes permit proxy voting, but the rules can vary. Some states limit proxy voting to member votes, while others, like Arizona, allow it for both directors and members.
- The principal grants the proxy by signing an appointment form, which becomes effective when received by the secretary. This appointment is typically valid for a specific time unless stated otherwise.
- The appointment of a proxy is revocable by the principal at any time.
- The death or incapacity of the principal does not affect the proxy’s authority unless a written notice is received before the proxy exercises its authority.
Nonprofit organizations must check their state statutes, governing documents, and any adopted parliamentary procedures to ensure they comply with laws governing proxy use.
As Ellis Carter, nonprofit lawyer points out, “Proxy voting can benefit organizations by allowing absent members to vote and help nonprofits to reach quorum. However, it can also lead to problems, including limiting discussion of topics and negatively impacting attendance.”
“Proxy voting can benefit organizations by allowing absent members to vote and help nonprofits to reach quorum. However, it can also lead to problems, including limiting discussion of topics and negatively impacting attendance.” – Ellis Carter, nonprofit lawyer, Caritas Law Group. P.C.
Meeting facilitators and chairs may find it helpful to keep a cheat sheet on Robert’s Rules parliamentary procedure at their fingertips during a meeting. Download our free printable cheat sheet now and make your nonprofit board meetings run even more smoothly and effectively.
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Using proxies
The bylaws of some boards don’t allow members to use proxies for regular or special board meetings, but the bylaws may allow members to use them at the annual meeting. Most boards require a quorum to conduct voting and proxies can be useful in establishing a quorum.
Some boards ask member prior to the annual meeting to send in proxy notices if they will not be present, so their presence will be included in the quorum count. If a member does not want to vote on a particular issue, they can use their right to not designate a proxy and not attend the meeting.
An organization’s bylaws may allow for a member’s proxy to be counted only for the purpose of establishing a quorum, but not as a vote for or against an issue.
Revoking Proxies
Members have the right to revoke proxies, but they cannot revoke votes already cast on a ballot by a proxy. It’s important that all instructions for giving authorization or taking it away be done in writing.
A member who gives their right to vote to a proxy may give written notice to the board secretary or other Inspector of Election revoking the proxy vote prior to the meeting or prior to the vote.
A member may also revoke a proxy by appearing at the meeting in person and exercising his or her right to vote.
The proxy voting form
It’s important to heed all the special rules for the proxy voting form so that votes will be properly counted and not be subject to challenge. The most important rule is that the proxy permission must be in writing.
This sample of an annual meeting proxy card is pretty simple and straightforward. The proxy form is clear and simple so that the intent of the owner is clear.
The member must sign the proxy form.
If a member has more than one proxy, the later proxy is the one whose vote should be counted. Proxy forms are typically valid for 11 months.
Technology that supports proxy voting
Proxy voting was designed to allow every voting member a fair chance to have their say, but it can also lead to problems with voting. Some problems can have legal ramifications, so it’s best for members to vote for themselves whenever possible. It’s also vitally important for voting members to know, understand and abide by all the rules for proxy voting to prevent any problems with the outcome of a vote.
Following effective, fair and legal voting procedures is a critical responsibility of the nonprofit board of directors. Using a board management solution such as BoardEffect helps ensure these actions are legal and compliant.
BoardEffect makes it easy for nonprofit boards to access all the tools they need for responsible service. It offers a searchable document library that ensures board members can access information on the board’s bylaws and regulations for voting. A survey and polling feature enables digital voting, making it easier for board members to cast their votes and avoid proxy voting.
Let us know how we can support your nonprofit board today.
