Why Nonprofits Need Minutes
“The law requires that minutes be taken of board meetings and many nonprofit bylaws require minutes for committees,” Schuster says. “In the Hudson Valley we have smaller organizations that are all-hands-on-deck, and the board often plays a large role in decisions around operations.”
According to Schuster, it’s particularly important for nonprofits whose boards are intimately involved to have a record of decisions so that if and when a dispute arises, there’s documentation of exactly how and why a decision was made. “If you don’t have the minutes, you have a problem,” he says. “If the Attorney General or the IRS gets involved, the minutes are the first thing they ask for.”
What to Include in Meeting Minutes
Minutes should also always show who voted for or against a decision. “So many votes are unanimous, but occasionally someone does vote no. The law has a presumption that all board members agreed with the action taken unless the minutes reflect something different,” says Schuster. A director who votes no has the right to have that recorded in the minutes.
It’s also vital that nonprofit minutes include discussion of potential conflicts of interest that could impact the decisions of those in a meeting. According to Schuster, this often occurs in the form of a related party transaction, such as a member of the board who owns an advertising company that wants to provide the nonprofit with their services.
“In the Hudson Valley we have small organizations and close communities, so it comes up more frequently than you’d expect,” he says. In these instances, the minutes should always include that the members of the meeting decided that the transaction with a related party is fair and reasonable to the nonprofit, that the person left the meeting before the deliberation and vote, and the results of the vote. Charities must also show that alternatives to the related party transaction were considered.
With the increase in virtual and phone meetings during Covid, Schuster also says that it’s important to include who was at the meeting in the first place. This is important because bylaws require a quorum of members to vote on any issue. “For ten-plus years, the law has said electronic participation in a board meeting is valid and counts as personal presence as long as everyone can hear and be heard at the same time.”
While there is no hard and fast rule for what to include in meeting minutes, Schuster recommends keeping an eye out for these important moments and simply following along with the agenda. In the end, you should be rewarded with a concise record of what was on the agenda, who was talking, what actions were approved, and who voted for them.