Nonprofit Operations During a National Emergency

As the COVID-19 pandemic disrupts normal nonprofit operations, many nonprofit leaders are wondering how to operate their organizations during a national emergency. For many nonprofit boards, this may be the first time they have had to govern during a crisis. Although it may be difficult, or at times impossible, to continue with normal board actions, such as holding an in-person board meeting, nonprofit corporation laws in states such as California, described in this blog, can help make the process easier.

California Guidance on Nonprofit Operations

Emergency Rules

Since Governor Gavin Newsom proclaimed a State of Emergency in California as a result of this pandemic, the emergency provisions of the California Corporations Code (the “Code”) can be deployed by California nonprofits that have included those provisions in their bylaws.

These provisions ease various meeting and notice requirements during a state of emergency. Some of the provisions include:

• Relaxed notice requirements for board meetings,
• Allowing officers to serve as directors in order to achieve a quorum at a meeting, and
• Protection for directors and officers taking good faith actions during an emergency.

Additional Rules

In addition to the emergency provisions, the following default Corporation Code provisions will help facilitate board meetings during a crisis:

• Boards may conduct meetings electronically,
• Votes can be held during electronic board meetings, and
• Boards may call special meetings with only 48 hours of notice if given by phone (including by leaving a voicemail) or by email.

Governor’s Order

Ordinarily, section 21 of the Code requires advanced consent from directors (and members) to receive meeting notices by email. However, the Governor recently executed an order eliminating this consent requirement, at least as it applies to shareholders of for-profit corporations. Since section 21 applies to nonprofit corporations in the same manner as for-profit corporations, it is likely that this order will apply to nonprofit corporations as well.

How to Apply these Rules to Nonprofit Operations in a National Emergency

Bylaws

First review your organization’s bylaws. If they include emergency provisions compliant with your state’s nonprofit corporations laws, your nonprofit should be able to utilize them. If your organization’s bylaws do not contain emergency provisions, now might a good time to consider adopting a new set of bylaws that contain such provisions.

Board Meetings in an Emergency

Since the stay-at-home order was issued by Governor Newsom, in-person board meetings are no longer permissible. However, that doesn’t mean boards should stop holding meetings. Here are some tips for conducting board meetings during this time:

• Conduct your meetings electronically. You can hold your regularly scheduled meetings by phone or by using a video conferencing platform such as Zoom.
  • If you host a meeting electronically, everyone must be able to hear one another; however, it is not necessary for everyone to see one another.
• Call a special meeting of the board to discuss and vote on emergency governance matters that cannot wait until a regularly scheduled board meeting.
  • If a vote or any other action is taken during an electronic meeting, the board must maintain a record of that vote or action (i.e., by maintaining meeting minutes).
• Become familiar with Zoom, or a similar video conferencing platform.
  • Zoom has several features that can assist boards during their electronic meetings, including:
    • Individuals can raise their hand to cast a vote or indicate that they would like to speak on a matter,
    • A moderator can control muting and un-muting individuals so that every person has an opportunity to speak without interruption, and
    • The host can create a waiting room to individually invite each board member into the meeting, ensuring each participant’s identity.

By using these methods, nonprofit boards can continue governing their organizations, with a few modifications. Please contact The Law Firm For Non-Profits for more information regarding nonprofit operations in emergency situations.