Nonprofit meeting minutes are a necessary form of record-keeping for all non-profit organizations. Nonprofit meeting minutes serve as the official (and legal) record of board and committee meetings. They are presumed to be correct and are considered legal evidence of the facts they report. Because meeting minutes hold such legal significance, it is essential that they accurately reflect the Board of Directors’ actions.
The person tasked with taking the minutes should word them in a simple, straightforward, and unambiguous manner. Nonprofit meeting minutes should consist of a clear, accurate, and complete report of all business transacted. However, they should not be a transcript of all that was said at the meeting.
Nonprofit meeting minutes should include enough detail to make them valuable if they are ever needed for reference or used as evidence that the directors took action, decided against taking action, or fulfilled their fiduciary duties. While it is not necessary (nor recommended) to record everything that the directors said at a board meeting, some things that you should always record in minutes include:
- the date and time of the meeting,
- whether the meeting is an annual, regular or special meeting,
- whether notice was given or a waiver of notice signed by all directors,
- names of directors in attendance and directors not in attendance,
- names of other guests in attendance,
- the establishment of a quorum,
- any departures and re-entries of attendees,
- any board actions (e.g., approvals, delegations of authority, directives), and
- whether any directors abstained from voting.
In addition to the items listed above, the person charged with taking minutes should include:
- alternatives considered for important decisions,
- a description of Board decisions,
- a summary of key points from any reports given to the board,
- recusals from discussions and abstentions from voting,
- votes that were against a motion, and
- actions items.
The person keeping the minutes should know and record what vote is required by the bylaws for specific actions and indicate whether the motion passed according to the vote requirements.
If the board does not vote on a matter yet reaches an informal decision, it is sufficient to note “it was the consensus that,” “each director present expressed his/her approval of,” or “doubt was expressed as to,” and to follow with a statement of the facts. This places on record evidence of what was agreed to at the meeting.
Common mistakes when taking nonprofit meeting minutes include:
- failing to track who was present, excused, and absent,
- failing to document a quorum was present,
- failing to report or provide a clear description about the board votes and decisions,
- drafting a transcript of everything said at the meeting, including information that might be harmful to the organization if read by someone with access to the minutes or by a court reviewing the board’s action,
- drafting and distributing minutes to directors after a long period has passed, and memories have faded, decreasing the likelihood that board members will catch and correct mistakes, and
- failing to maintain a sound document management system resulting in the loss of minutes from past meetings.
Because courts, the IRS, and other regulators view minutes as true and accurate records of board meetings, they rely on them as legal evidence. For this reason, it is crucial to keep minutes that are clear, free of harmful and excessive information, and signed and verified promptly to ensure that the minutes always reflect the board’s true intentions.
A resolution is an action taken by the board of directors which applies to a single act (as opposed to bylaws which are the rules that govern an organization and regulate its affairs). If a resolution conflicts with a bylaw, the bylaw prevails unless amended or repealed. If a resolution is clear and concise, it can minimize future misunderstandings among board members and the organization as a whole.
A director can propose a resolution by making a motion. Typically, another director will second the motion. Once the motion is made and seconded, the person presiding at the meeting calls for a vote on whether the board should adopt the resolution.
There is no formal law to govern when the board should propose a resolution; however, there are some circumstances when a resolution is the most appropriate course of action. These include cases where:
- the matter is one that the statute, charter, or bylaws require to be covered by a resolution;
- delegations of authority;
- a governmental agency or another third party (such as a bank, brokerage, title company, or purchaser), requires a certificate showing that the directors have authorized a particular act;
- policies and procedures regulating the management of the corporation in a manner they intend to be permanent until changed;
- the matter is one of importance;
- the matter is likely to be referred to from time to time; and
- any amendments to the charter or bylaws.
The secretary of the meeting typically drafts resolutions. The secretary typically prepares critical resolutions in advance of the meeting to clarify the subject matter. Often, the secretary gives the officer or director who proposed the resolution a copy of the language in advance to ensure it reflects the individual’s wishes.
One exception is resolutions that involve legal technicalities; these resolutions are generally drafted or reviewed by legal counsel. It is also common practice to provide a copy of the resolution to the chairman or president of the organization before the review. In cases where new topics are brought up in a meeting, and no resolution has been drafted, it is acceptable for the secretary to immediately write out the resolution in full and submit it to the chairman for approval, or write out the resolution after the meeting.
When recording a resolution in the nonprofit meeting minutes, the exact wording of the resolution, the names of proposers and seconders, and the names of those voting in favor of or contrary to the resolution should be recorded. Examples of resolutions for everyday actions are attached hereto as Exhibit D.
Occasionally, urgent board action is required, yet it is not possible or practical to have the board meet in person or even over the telephone. In these cases, most states permit the board members to conduct official business by signing a unanimous written consent in lieu of a live meeting. For instance, Arizona law states as follows:
[A]ction required or permitted by chapters 24 through 40 of [ARS §10] to be taken at a directors’ meeting may be taken without a meeting if the action is taken by all of the directors. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken. ARS §10-3821(A) [emphasis added]
Unlike directors voting at a meeting which may require only a majority of the directors to approve any board action, most states that permit action by written consent require unanimous approval. Once an action by written consent is signed by all of the directors, the written consent resolution will have the same effect as a unanimous vote of the board.
In such cases, a consent resolution will be sent to each individual director by mail, email, or fax for his or her signature. To streamline the signature-gathering process, the written consent document can permit counterpart signatures. This means that each director can sign the signature page of his or her copy, and the signed signature pages, when taken together, are considered a validly executed document.
In the case of direct mail or fax, the director will sign his or her approval and submit the signed copy to the secretary for filing. When written consents are conducted through email, however, some questions on legality arise. For instance, is it enough for a director to simply reply yes to the email? What if the answer is yes followed by some condition? Would this be valid? State law differs with respect to what is considered a valid electronic signature; however, where electronic signatures are permitted, the best practice is to have some sort of established electronic signature that only the individual director has access to. For example, DocuSign, hello sign, and similar programs permit users to create an electronic signature that is password-protected to ensure that only authorized users can access and use it. This avoids complications in the future if some director tries to challenge the resolution on the grounds that it was not legally signed or argues that some other person accessed his or her email account and assented to the resolution.
If it is too difficult to create an electronic signature, it is always easy enough to print and sign the email and then fax or email a copy or mail the original to the secretary. In the case of consents that will be relied upon by a third party, such as a bank or title company, it is best if the records contain the signed original consents rather than copies or emails approving the transaction to ensure the signatures will be accepted.
Generally, the action is considered to be taken on the date the last director signs the consent. For record-keeping purposes, the signed consents must be kept by the secretary in the corporate minute book. Additionally, the resolution should be entered into the minutes of the next board meeting and made part of the official record of the corporation.
Storing Meeting Minutes.
It is important to retain copies of all board and committee meeting minutes. Minutes serve as evidence of deliberations, decisions, delegations of authority, and other board actions. They can resolve questions when disagreements arise about past actions. They serve as a reminder of who was assigned what task and next steps. They can also help the directors defend their decisions when something goes wrong.
Traditionally, most nonprofits use a simple binder with tabs called a “Minute Book” to organize key governance documents and meeting minutes. When that binder is full, a new volume is started. Today, many nonprofits prefer to retain documents in an online database. If you choose to store corporate records in a paperless faction, it is important to ensure there are backups in the event of a technology failure, ransomware event, or another mishap. Our recommendation is to keep both a paper and digital copy. If you remember to send your minutes to your lawyer, your lawyer can retain a copy as well.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.