Nonprofit 411: Emergency Law Provides Governance Flexibility for Massachusetts Nonprofits

Nonprofit 411 Hemenway & Barnes-min-min-minBy Brad Bedingfield and Eleanor Evans, Hemenway & Barnes

On April 3, 2020, Governor Baker signed Chapter 53 of the Acts of 2020, which includes an emergency provision (Section 16) intended to make it easier for nonprofits incorporated in Massachusetts to function remotely during the COVID-19 crisis. During the governor’s state of emergency (declared on March 10, 2020) and for 60 days thereafter, a nonprofit board may take certain actions regardless of what the nonprofit’s bylaws may say, so long as the nonprofit’s Articles of Organization do not expressly forbid it. Specifically, the board may:

Service of Directors and Officers:

  • Allow directors and officers to continue to serve beyond their designated terms during the state of emergency and until their successors are elected and take office.
  • Appoint successors to any officers or directors (as well as employees or agents), even if the bylaws do not otherwise provide for that.

Board Meetings:

  • Provide notice of board meetings in whatever manner is practicable under the circumstances, and to whichever directors it is practicable to reach.
  • Allow directors to participate in board meetings through the use of any means of communication by which all directors participating are able to communicate simultaneously, even if they cannot all hear each other simultaneously. Directors who participate in a board meeting held according to Section 16 are deemed to constitute a quorum, regardless of what the bylaws say.

Member Meetings:

  • Cancel a meeting of the members with notice given in any practicable manner.
  • Permit members to vote in person or by proxy, even if the bylaws do not allow proxy voting. Any member voting by proxy shall be considered present for purposes of meeting a quorum.
  • Allow members to participate in a members’ meeting by remote participation, even if not physically present at the meeting. Members will be treated as present for a remote meeting if:
    • Reasonable measures are implemented to verify that each participant is in fact a member (or the holder of a valid proxy);
    • Members are given a reasonable opportunity to participate in the meeting and to vote on matters submitted, including an opportunity to read or hear the proceedings of the meeting substantially currently with such proceedings, pose questions, and make comments, regardless of whether the members can simultaneously communicate with each other; and
    • Votes or other actions taken remotely are adequately documented and records retained.

To Note:

  • Boards Must Authorize Actions – This new law does not automatically provide this flexibility, but instead authorizes the board to permit it. Thus, for example, if the members of a nonprofit want to meet remotely, the board must first authorize that pursuant to Section 16 of Chapter 53 of the Acts of 2020. A nonprofit corporation with members must notify the members, as soon as reasonably practicable, of any actions taken by the board under Section 16.
  • Check the Articles of Organization – While Section 16 allows a board to override (temporarily) a nonprofit’s current bylaws, it does not allow a board to override the nonprofit’s Articles of Organization. Accordingly, it is important to confirm that nothing in the Articles would prevent what the board is seeking to authorize under Section 16.
  • Limited Time – The board may take the actions described above only during the current state of emergency and 60 days thereafter. If the board and/or the members are concerned about how they will operate effectively after that time, they should consider taking advantage of this opportunity to make structural changes to accommodate long-term remote participation, such as amending the bylaws to allow proxy voting by members and to confirm that directors may participate in board meetings by Zoom or teleconference.

Brad Bedingfield is Chair of the Nonprofit Group at Hemenway & Barnes LLP. Brad assists private foundations and public charities with navigating complex tax regulations and procedures, including receipt and disposition of complex charitable gifts and participation in innovative forms of impactful philanthropy.

Eleanor Evans is counsel at Hemenway & Barnes and a member of the firm’s Nonprofit Group.   She has over 20 years’ experience representing nonprofit organizations in a diverse range of legal, governance and compliance matters.