Board elections culminate in the selection of new board members and officers, but where does the board election process actually begin? For a nonprofit organization with a traditional board structure, the answer should be easy – in the bylaws. For any nonprofit board, effective bylaws provide the guidelines for candidate eligibility and selection as well as board structure. The hard part, then, is the journey from start to “finish.”
Why Start with Bylaws?
Neither Federal nor state laws establish specific rules around board elections for charitable organizations. According to Nonprofit Issues, the IRS “does not care who controls the organization so long as it operates ‘exclusively’ for charitable purposes.” Meanwhile, state laws generally distinguish formal membership organizations (where members have voting rights similar to shareholders of a for-profit corporation) from non-member organizations (where constituents do not vote and the board is self-perpetuating), but organizations themselves determine which structure is appropriate. Similarly, it’s up to each organization to specify the rules by which it is governed — including those related to board membership — in its bylaws.
What Do Bylaws Determine?
One of the first things nonprofit entities do is create their bylaws, so it can be easy for some to regard them merely as legal documents rather than the treasure maps they are. Bylaws provide essential clues on how organizations are set up to function in achieving their goals. As explained by Charity Lawyer, some of the essential information included in nonprofit bylaws addresses the following:
Clarification about whether the organization is board or member-driven. If the latter, members will have the power to elect and remove board members. Voting membership is appropriate when an organization aims to provide its constituents with democratic control over the entity. This structure is common among organizations that exist to serve their members, such as: trade associations, chambers of commerce, credit unions, churches, and social clubs. Since voting members have legal rights, it is essential to clarify membership criteria, privileges, and obligations, including those related to voting eligibility. In extreme cases, divided membership can lead to election battles where each side promotes its own cause and candidates.
In the more common board-driven structure, a self-perpetuating board serves as the “ultimate seat of authority within the organization.” Board members vote for their own replacements. Such boards also can become “insular and unresponsive to the needs of constituents” if board membership is not refreshed regularly.
As Charity Lawyer reminds us, “no one ‘owns’ a nonprofit corporation, (but) there is always control.” Beyond indicating whether the organization is board or member-driven, the bylaws address other considerations about control. In many states, nonprofit board members can be appointed by third parties or serve in ex-officio positions based on a role or office they hold. In addition, some organizations provide for reserved powers or super-majority votes to balance power among competing interests.
Part of the election process is knowing when terms of office expire. Director terms can be successive or staggered and ex-officio directors might not be subject to them. Bylaws should address not only how board members can be added, but also removed and replaced.
Similarly, the bylaws prescribe the officer positions, duties, and terms, as well as how officers are added, removed, and replaced. State laws might inform required positions, but bylaws can be more specific about what’s appropriate for a given organization and what constitutes eligibility.
As much as bylaws inform board election criteria and process, they also leave much room for interpretation. Within the construct of organizational rules, boards often evolve their processes in keeping with the cultural norms and leadership skills in place. While that often promotes efficiency, it also can produce unnecessary risk.
When board members continually serve for consecutive terms, boards might be tempted to forego the official election process. Failure to follow the bylaws, though, is a legal violation that can result in state intervention. As noted by the Nonprofit Risk Management Center, it also jeopardizes the validity of any board action taken while the board was illegally constituted. Furthermore, by continuing to recycle the same board members, the board risks losing opportunities to cultivate new ideas, sources of funding, and leadership.
Nominations Not Enough
As the former Executive Director of a prominent nonprofit explains, “good governance is an ongoing process of board recruiting, board education, and board assessment.” To her point, some boards delegate board elections to a nominating committee that convenes in advance of board elections, but the board election process is best spearheaded by a board development or governance committee that works on an ongoing basis to identify – and address — the knowledge and skills gaps on the board. Through that committee, the board ensures its composition and performance are aligned with organizational needs.
Building Board Leadership
Among those needs is qualified board leadership. Recruiting the right board members helps ensure the cultivation of appropriate board leadership in the form of “officer material”. Beyond skill sets, board members need to bring willingness and capacity to step into critical leadership roles, ensuring organizational sustainability and effectiveness. An effective board election process is strategic and incorporates forward thinking about future leadership needs.
The former Executive Director emphasizes the importance of thoughtful officer selection. “The executive committee served as my go-to team, not to mention the people who evaluated me. Board and officer elections were critically important to me, yet it was always hard to get people to step up.”
She explained how her board previously interpreted the nomination process in the bylaws. For years, the incumbent chair would ask, “who will nominate a chair for next year?” There was no strategic thought behind the query and the former ED admitted the silence that followed was excruciating, so she worked with the governance committee to develop an officer succession plan. They created a process through which board members engaged in ongoing education and created a culture of mentoring, so each officer and committee chair was responsible for preparing others to step forward in future election processes.
A seasoned director of multiple nonprofit boards shared some observations about similar experiences with board election processes. “I don’t recall a ‘free’ election ever,” she reveals, noting that members of the executive committee typically hand-picked their successors. “We should be selecting those who demonstrate consistent leadership and willingness to take on responsibilities.”
Willingness is a key factor in board elections. In fact, it’s behind the first of two critical questions that board member considers paramount in the election process:
- Who has time (to stay engaged in the governance process)?
- Who demonstrates consistent commitment to serving the best interests of the organization?
An optimal board election process starts with review of the bylaws and perhaps finishes with the answers to those simple questions in consideration of candidates not only for board chair, but any officer or board member. Correction: an optimal board election process is ongoing; it culminates with new board members, but never really finishes at all.