How do we get control of a nonprofit?
February 9, 2018 10:04 AM   Subscribe

I'm on the board of a non-profit, and last year, the person with the majority of the information and control (bank accounts, financials) left abruptly and is not currently on speaking terms with the majority of the board. She is also the nonprofit's registered agent, which means that mail goes to her. Just to add to the fun, she's the only one who lives in the state where the nonprofit was incorporated.

One person on the board is still in contact with her. However, he has become non-responsive to email or phone for the last several weeks, and disappearing into silence is a pattern of his. I wouldn't care so much, since 4/5 board members are responsive and ready to go, except that he is our only contact with our bank account.

So, what's my next step? Do I need to lawyer up? Has anyone dealt with anything similar and have advice?
posted by anonymous to Law & Government (9 answers total)
Do I need to lawyer up?

You guys should lawyer up, yes.
posted by showbiz_liz at 10:21 AM on February 9, 2018 [13 favorites]

Not clear from your description is whether the female person who absconded with everything is still on the board or has resigned. If she is still on the board, check your bylaws for provisions for removing board members. Typically, the board can remove members who don't show up for several consecutive regular meetings, or other defined circumstances. Vote to remove the member, if she still is a member, and then send a certified, return receipt letter informing her, and demanding the return of all materials, account access information, etc. that she has. Have a lawyer send that if you think she'll respond better to that. Send a letter also to the bank, informing them that she has been removed from the board and should no longer have account privileges. Ask them what they need from the organization in order to transfer account privileges to someone else. Make sure there are TWO members on the signature card. Go through similar steps with the secretary of state's office in the state in question, to change the registered agent to someone else. It sounds like the other (male) person you mention is a problem as well, and if he has qualified for removal under the bylaws, I'd initiate the same steps there. If the bylaws don't provide for a removal option, you can amend them to enable you to do that, as long as you comply with the amendment procedures, and then proceed with the removal(s).
posted by beagle at 10:22 AM on February 9, 2018 [10 favorites]

BTW a final fallback would be to petition the Secy of State of the incorporation state to intervene and restore control to the still-active board members. Definitely lawyer up for that.
posted by beagle at 10:24 AM on February 9, 2018 [3 favorites]

State attorney generals often have a branch or department that supervises non-profits. I would recommend first speaking with a lawyer, but the AG's office may also help. If your non-profit is charitable in nature, you may be able to find pro bono representation. It would be helpful to know which state is involved if you are able to ask a mod to post it.
posted by Mid at 10:43 AM on February 9, 2018 [3 favorites]

She probably _wants_ to be off the board and to just hand everything over, but worries that she's the only one who understands how things run and that she's the only one who cares as passionately as she does about some particular part of the mission. If you and/or your intermediary can convince her that she can be free and that you all really care about taking care of the real mission of the organization, if you can convince her that it's really OK for her to let go so she can move on to different priorities in her life, it could help a lot.
posted by amtho at 10:58 AM on February 9, 2018

Do you have an accountant or executive director with access to your bank accounts or no?
posted by fshgrl at 11:13 AM on February 9, 2018

I know nothing about the details of doing what you need to do, but I just wanted to add - your explanation of not just one, but two connected people, ditching, one with control and one with access to the money - well, I think you really need legal help of some sort. There are so many red flags in there... I'd honestly be surprised if something isn't crooked.
posted by stormyteal at 12:29 PM on February 9, 2018 [2 favorites]

IANAL Has the current head of the board contacted her as personally as possible and requested the information as politely as possible? She could be ill, traveling, hella cranky, or something. Try the least-confrontational and cheapest methods 1st.

A lawyer in the state where the organization resides can send a demand letter for the bank and other information.
If that is not successful, the lawyer can file a civil suit requiring the ex-board member to furnish the information.
Documentation - copy of incorporation and letter signed by current head of the board and a majority of members and probably notarized can be used to get the bank access and other information, but this will be time-consuming, and every place will have requirements.

If the bylaws don't cover unresponsive members, that might be good to correct, unless Non-responsive Member has great value to the board.
posted by theora55 at 12:40 PM on February 9, 2018

I'd be really surprised if one person was the only person on the account. My org.'s bank required that multiple "officers" sign the bank documents - this included the chair, vice chair and secretary as well as staff. I think that is for the bank's security, not ours. A lawyer isn't a bad idea, but I'd also call the bank and talk to a manager, explain the issue and ask which officers are on the account.
posted by Toddles at 2:44 PM on February 9, 2018 [5 favorites]

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