If your organization’s current bylaws require that the Board meet in person, public safety during the pandemic may require you to be out of compliance and meet virtually until your bylaws can be properly amended. When meeting virtually you still need a quorum, the same as a normal meeting. To strengthen the force of any decisions made, they can be ratified at the next meeting through approval of the minutes.
Questions about contractual obligations and canceled events may also arise among nonprofits. Under the law, specified disasters may excuse contractual performance under the concept of force majeure, also called an Act of God. However, if a particular type of disaster, like a pandemic, was not listed in the force majeure provision of the contract, courts are not likely to widen the provision to provide coverage. Click here for more on force majeure.
The pandemic may raise questions regarding whether you can dip into an endowment for operating expenses. This will depend on whether the rules governing the endowment were written by the donor or the board. If mandated by the board it is termed a quasi-endowment and the principal can be used with the permission of the board. If the governing rules were written by the donor, the donor must give permission before funds are used outside the original endowment.
Your organization may also want to use funds raised through a capital campaign for operating expenses. To do so, you must contact each donor and get written permission. Donors should be notified when a nonprofit is in crisis as a capital campaign is generally not what is used to keep the doors open. Your supporters will understand the needs created by a crisis and may be able to offer resources.
As a side effect of COVID-19, the IRS is allowing electronic signatures, not only physical signatures as in prior years.
Learn more in the Leadership: Governance, Board Policy & Volunteerism class. Click here for the yearly schedule to find the next class.
Source: BoardSource