Non-profit Boards & Non-voting Directors

by Malcolm Macdonald, March 10, 2016

Under the moniker, “Just in From Fort Bragg,” last week's AVA carried a submission that in its very first sentence asked readers to grasp, without any prior reference, that the stand alone word “Council” meant the Fort Bragg City Council. The piece went on in this vein, springing names on us without connecting civic titles like Council member. Despite a lack of coherent chronological order, the piece rambled between a hodgepodge of meetings, presumably all located in Fort Bragg (the name of the city does not appear until the tenth, and final, paragraph unless you count the title applied by AVA staff), California in January and February of 2016 before the author honed in on the Mendocino Coast Hospitality Center (MCHC) holding abbreviated meetings. “A member of our community did in fact go to the Board meeting last week [third week of February] and got there at 9:00. By 9:10 she was asked to leave and was in fact in her car on her way home. The extent of her attending the meeting was a prayer and then she made a statement. That’s it.”

From this report it is not clear whether the “member of the community” or a MCHC Board of Directors member offered the prayer, but we'll get back to that subject in a bit. The AVA submission in question goes on, “According to the Bagley-Keene Open Meeting Act these meetings should in fact be open to the public if for no other reason than the amount of public funds they receive. That in fact makes this the rule. I would go a step farther and say if in fact The Board is discussing the clients of this organization perhaps they themselves are violating confidentiality laws.”

First, as I learned at my pappy's knee long ago, anyone who resorts to the phrase “in fact” thrice in a three sentence passage is automatically suspect. Secondly, the Bagley-Keene Open Meeting Act says the following in California Government Code Section 11120, “It is the public policy of this state that public agencies exist to aid in the conduct of the people's business and the proceedings of public agencies be conducted openly so that the public may remain informed.

“In enacting this article the Legislature finds and declares that it is the intent of the law that actions of state agencies be taken openly and that their deliberation be conducted openly.

“The people of this state do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.”

The Bagley-Keene Open Meeting Act goes on in Code Section 11121, “As used in this article, 'state body' means each of the following:

(a) Every state board, or commission, or similar multimember body of the state that is created by statute or required by law to conduct official meetings and every commission created by executive order.

(b) A board, commission, committee, or similar multimember body that exercises any authority of a state body delegated to it by that state body.

(c) An advisory board, advisory commission, advisory committee, advisory subcommittee, or similar multimember advisory body of a state body, if created by formal action of the state body or of any member of the state body, and if the advisory body so created consists of three or more persons.

(d) A board, commission, committee, or similar multimember body on which a member of a body that is a state body pursuant to this section serves in his or her official capacity as a representative of that state body and that is supported, in whole or in part, by funds provided by the state body, whether the multimember body is organized and operated by the state body or by a private corporation.”

Misconstruing this last paragraph into some sort of half-truth is where some critics of the Mendocino Coast Hospitality Center travel far afield from reality. Simply because the MCHC has received Community Development Block Grant (CDBG) money does not satisfy the Bagley-Keene Opening Meeting Act. In order to compel the Mendocino Coast Hospitality Center to conduct thoroughly open public meetings of its Board of Directors MCHC would have to have a voting member of its Board also be a member of a city, county, or state entity and that Board member would have to be specifically appointed to the MCHC Board by such a city, county, or state entity.

If one wants to use the term “in fact,” the Brown Act comes closer to what critics of MCHC are looking for. California Government Code Section 54952 states in part that open meeting laws must be adhered to by any governing body that “Is created by the elected legislative body in order to exercise authority that may lawfully be delegated by the elected governing body to a private corporation, limited liability company, or other entity...” and “[r]eceives funds from a local agency.”

However, the Brown Act of CA Government Code 54952 goes on to immediately add an important and... “ the membership of whose governing body includes a member of the legislative body of the local agency appointed to that governing body as a full voting member by the legislative body of the local agency.”

Unfortunately, this is not the case with the Mendocino Coast Hospitality Center. I say unfortunately because MCHC does offer itself up to question when one examines its bylaws. Article I, Section 1 of the Mendocino Coast Hospitality Center bylaws is headed, Qualifications for Directors, with the following language, “Directors of the Board of Directors will adhere to these by-laws in personal life and behavior. Failure to do so and/or immoral, unethical sinful, illegal or shameful behavior or activities shall be just cause for dismissal by the remainder of the Board.” Critics of MCHC should be careful in noting that this clause only refers to the Board of Directors, not employees of MCHC.

Perhaps MCHC's “sinful… shameful” wording can be written off as odd, overly faith based lingo. If one is out to get MCHC, one has to move on in their bylaws to Article II, Section II, headed Composition of Board of Directors. “The Board of Directors shall consist of not less than seven (7) persons, to include the President, Vice-President, Secretary and Treasurer. The Board may contain no more than thirteen (13) members. It shall be at the discretion of the Board to expand or contract within these parameters without further amending these by-laws.”

Pretty straight forward, but if you're laying in the weeds ready to yell, “Gotcha,” at the MCHC Board, here it comes: Again quoting from the MCHC by-laws, Article II, Section II, “An Advisory Board of unspecified number shall be appointed by the Board of Directors. Advisory Board members are non-voting members of the Board who act at the discretion of the Board of Directors on an advisory capacity.”

Let us turn to state law, specifically to California Assembly Bill 1233 (AB 1233) signed into effect six years ago in 2010. There is quite a bit to the entire bill/law, so we'll turn to Public Counsel Law Center for their language pertinent to non-profit Board of Directors: “Many nonprofit corporations give titles to advisors or major donors that suggest they are directors (“honorary directors,” “directors emeritus,” “advisory directors,” etc.). Additionally, many non-profit corporations have “non-voting directors” that have the same rights and responsibilities as the other directors, except the power to vote. AB 1233 clarifies that a director is a person who has been elected (or designated or appointed, as provided in the bylaws) to act as a member of the board and vote on actions or decisions taken by the board. Thus, a non-profit corporation may not have non-voting members on its board of directors.”

This might be instructive information to other non-profit organizations locally, who like the Mendocino Coast Hospitality are continuing to employ advisory boards long after AB 1233 became the law.

One Response to Non-profit Boards & Non-voting Directors

  1. Jim Updegraff Reply

    March 14, 2016 at 9:56 am

    Excellent article!!

Leave a Reply

Your email address will not be published. Required fields are marked *