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Legal Governance Challenges for Nonprofit Boards during the Pandemic

As we head into the final quarter of 2020 and look towards what we hope will be a perfectly ordinary and boring 2021, it’s a good time for nonprofit boards to review their bylaws and tighten any gaps identified during the Covid-19 crisis. While many nonprofit boards and volunteers spent much of the Spring and Summer scrambling to hold organizations together and patch together fundraising, governance processes were rightfully pushed to the back burner. Nevertheless, most organizations have bylaws that call for annual meetings, board meetings, elections and governance that traditionally were done in person. If you hold a board seat, you might be wondering how to do business in the midst of a pandemic.

Fortunately, back in March, when the Governor issued Executive Order 2020-04 declaring a state of emergency concerning Coronavirus COVID-19, the New Hampshire Charitable Trusts Unit within the Attorney general’s Office provided guidance to charitable organizations and non-profits operating in New Hampshire. (See file here)

The advisory notice (below) offers guidance on Electronic/Telephonic Meetings as well as filing Annual Reports and other documents with the Charitable Trusts Unit.

NEW HAMPSHIRE ATTORNEY GENERAL’S OFFICE – CHARITABLE TRUSTS UNIT
ADVISORY TO CHARITIES CONCERNING COVID-19

Meetings of New Hampshire Charitable Organizations

Bylaws that Permit Electronic/Telephonic Meetings: If the bylaws of a charitable organization permit the board of directors to conduct business by electronic or telephonic meetings, then that organization may apply those provisions to conduct meetings remotely.

Bylaws that Do Not Mention Electronic/Telephonic Meetings: If the bylaws of a charitable organization contemplate face-to-face meetings but do not contain language explicitly prohibiting electronic or telephonic meetings, the Charitable Trusts Unit will take no action against a board of directors for using electronic or telephonic means to conduct business, so long as the organization later ratifies any action taken at a subsequent live meeting.

Bylaws that Require Meetings Open to Members or the Public: With very few exceptions, New Hampshire statutes do not require a board of director meetings to be open either to members or to the general public. If the bylaws of an organization call for board of director meetings to be open to members or the general public, the Charitable Trusts Unit will take no action against a board of directors for using electronic or telephonic means to conduct business, so long as it makes arrangements for members or for the public to view or listen contemporaneously to the proceedings.

If the bylaws of a charitable organization contemplate annual meetings open either to members or to the general public, the Charitable Trusts Unit will take no action against a board of directors for adopting a resolution to delay the date of the annual meeting until the emergency declaration has expired.

Reports to Charitable Trusts Unit

Original Signatures: Some New Hampshire and out-of-state charitable organizations report difficulty obtaining or mailing original signatures from the president or treasurer on annual reports due to be filed with the Charitable Trusts Unit. The same difficulty may apply to paid solicitor and fund raising counsel documents. The Charitable Trusts Unit will take no action against a board of directors for filing an annual report or other required document with a photocopied or scanned signature. Similarly, the Charitable Trusts Unit will take no action against a board of directors for filing an annual report or other required document with the 2 photocopied or scanned signature of a notary public, even if the notary public remotely took the oath of the signatory. See, Governor’s Emergency Order #11 Pursuant to Executive Order 2020- 04 with respect to remote online notarization.

Extensions: Charitable organizations already have the ability to receive a six month extension to file annual reports by filing with the Charitable Trusts Unit both an extension form (available from the Charitable Trusts Unit website) and the annual report fee. The Charitable Trusts Unit will take no action against the board of directors if an organization is unable to deliver its report by mail, and instead delivers it electronically to charitabletrusts2@doj.nh.gov. Any fee due may be mailed separately, and the original document must be mailed subsequently as soon as possible. Unfortunately, the Charitable Trusts Unit is not yet equipped to accept merchant card or ACH payments.

The important takeaways from this guidance are:

• For Board / Annual meetings, there may be the ability to meet virtually via telephonic or electronic meetings, even when the current bylaws do not expressly authorize such meeting methods.
• If original signatures cannot be obtained for reporting, the organization may submit annual reports with a photocopied or scanned signature of the officers.

From virtual fundraising and board meetings to online elections and obstacles to meeting governance requirements, nonprofit boards and local associations are struggling to find answers to a host of pressing governance questions.

It’s possible to make your governance work. Sulloway & Hollis can help with understanding and properly interpreting the nuances in this complex area of the law and help your organization survive the governance hurdles posed by this pandemic.