The Donald J. Trump Foundation, which was been mired in a 2016 lawsuit brought by the New York Attorney General, will be dissolved pursuant to an agreement dated December 18, 2018 and court supervision. This nonprofit’s dissolution has a general teaching for nonprofit board members: take board meetings seriously!
One of the primary complaints brought by the attorney general alleges that the board of directors breached their fiduciary duty by not meeting for 19 years. The board members are Donald Trump, his three adult children (Ivanka, Donald Jr., and Eric) and the Trump Organization’s CFO, Allen Weisselberg. The most interesting part of this complaint is that, by a literal definition of the word “meeting,” these people have most certainly met together. They are family members, business colleagues, and now political officials together in the same administration. But, at least as the New York Attorney General argues, nonprofit corporate law requires more than mere physical presence of board members in each other’s company.
So, if being in each other’s company isn’t good enough, how can a board make sure a valid meeting is occurring? Here are some practice points that any organization should consider regarding board meetings.
First, board meetings should take place at an established place and time. As we see with the Trump Foundation, just because you’re meeting with other people who happen to be board members at a restaurant or elsewhere does not mean that you’re having a board meeting.
- Practice Point #1: Set apart space for board meetings (both in time and in location) and devote all time spent in that time and place to the organization.
Second, anyone entitled to be at a meeting of the board needs to be provided notice. In depositions, Allen Weisselberg stated that he didn’t even know he was on the board of the Trump Foundation. If all the encounters that the board had with each other in the past 19 years were board meetings, then Weisselberg required formal notice of all such meetings in order for the meeting to be valid.
- Practice Point #2: Board meetings not already pre-scheduled in the bylaws or through a board resolution require advanced notice to all board members.
Third when the board does meet, actions need to be taken and recorded. No action may be taken by the organization without board approval. According to the New York Attorney General, the Trump Foundation’s board never approved any expenditures and no such decisions were ever recorded.
- Practice point #3: When the board meets, make sure all actions are taken in the form of an organized vote and such decisions are recorded in meeting minutes.
If you need help in conducting board meetings, what to say about meetings in your bylaws, or any other help in this area, feel free to give us a call or email us. We’ll be happy to help!
The article provided above is for general information purposes only and should not be relied on as specific legal advice. This article does not form an attorney-client relationship. If you have any questions about this article, please feel free to contact Jacob Ferrari at Jacob@apexlg.com