Scenario: a former employee of a growing nonprofit organization submits a formal complaint to the board. The organization’s Executive Director (who is also the founder) is the target of the complaint. The board chair acts swiftly and decisively to remove the Executive Director’s access to their email and other systems, and otherwise prevents the Executive Director from communicating with her direct reports. All of this happens under the guise of launching an investigation into the complaint.
Launching an investigation may be the right thing to do. But it’s clear that the board chair acted hastily and ungracefully right out of the gate, in such a way as to suggest that perhaps the chair was already looking for a reason to remove the Executive Director. The chair forms a board committee (with herself as the chair of the committee) to conduct the investigation, thus removing the possibility of a fair and independent process.
Let’s say you are a member of the board in this scenario. And here’s what you may have noticed over the preceding year:
Even prior to the complaint, you’ve heard the board chair and a like-minded member of the board make subtle, derogatory comments in board meetings. Between the chair and the other board member, they have occasionally made mild insinuations that the like-minded board member might be more competent in the Executive Director’s role than the Executive Director herself.
Sure enough, that day came along when an employee submitted that formal complaint. And sure enough, the board chair seizes the opportunity to get the ball rolling to “investigate” the complaint. This chair, as far as she is concerned, is going to save the organization from the very person who built it.
Even as the rest of the board is going along with the chair’s plans, you see the chaos that has erupted throughout the organization, thanks to the chair’s swift actions. Being a board member, you’re not sure how the situation could have been better handled. After all, you were recruited to the board for your skills in marketing. What do you know about how a nonprofit board should handle employee complaints? Nonetheless, you’re rightfully concerned that the way the complaint is being handled may be doing more harm than good.
You’re afraid to say anything. But you also have a passion for the organization and its mission, and enough confidence in the Executive Director’s capabilities that something doesn’t seem right in all that is happening. If you feel strongly enough that this situation could be handled in a more fair manner, and in a way that does not harm the organization, then you have options. You do not need to know what the “better way” is, so long as you know that the process being carried out is definitely not it.
Hire an attorney and conduct your own investigation
Your first option will leave open the possibility of filing a lawsuit, if necessary. But don’t let that possibility scare you away from this option.
Find an attorney who specializes in corporate governance (even better if this attorney has experience in matters involving nonprofit corporate governance). Use the initial consultation to explain the situation, and that you do not believe that the situation is being handled in a fair manner, and that it is damaging to the organization.
The attorney is going to explain to you during this initial consultation that if the chair has the majority of the board behind them, then you have to follow the will of the board. This may be true, but only if you have no reason to doubt that the other members of the board are acting in good faith and placing the organization’s interests above their own.
Your attorney should help you first determine whether you have ample evidence to establish probable cause that the rest of the board is acting on bad faith… or, to be more precise about it, if the rest of the board is following the will of one or two members who are acting on bad faith. This should be a fairly quick process. But it’s important for you to establish early and often that you are the one acting in good faith — that you have the organization’s best interests at heart.
Your attorney may coach you, or your attorney may be able to speak on your behalf to use those findings of probable cause to convince other board members to stop following the will of the bad actors. This is likely the best possible outcome of making this choice. If you can convince other members of the board to stop the organization from running itself into the ground, then you have saved a lot of people a lot of time, expense, and mental anguish.
If you are successful in steering the will of the majority of the board away from conducting a compromised investigation and acting on it, then you have successfully stepped up to fulfill your legal obligations as a member of the board. More importantly, you showed far more courage in doing so than what I’m sure you anticipated you would ever have to during your board term.
You would do well to check the indemnification clause of your organization’s bylaws to see if you can get reimbursed for your legal expenses. But you would also do well to take a look in the mirror and congratulate yourself for a job well done. At least you can look at yourself in the mirror with a good conscience, knowing that the process of healing can begin.
Send a demand letter
What if you are not successful in steering the rest of the board toward doing the right thing? You have a new decision to make. The good news is that the work you did in your investigation will give you a stronger case to take a big step closer toward filing a lawsuit.
Most states will allow you to file a derivative lawsuit, which is a claim against the other board members made on behalf of the organization. Whereas you have not been personally injured as a result of the actions of the other board members, you would not have standing to file a direct claim against the other board members. But in a derivative claim you are acting in the best interests of the organization because it is the organization that was injured. Should you prevail in that claim, any monetary damages awarded would go toward the organization.
The first step in the process of moving forward with this type of claim is a demand letter. Your attorney will need to write this letter and send it to the other board members. Your attorney will give you instructions. It is very likely that once that letter is sent, you will not be able to have any direct contact with the other board members. They may choose to comply with the demand, negotiate a settlement, or threaten a countersuit.
If the other board members comply with the demand or negotiate a settlement, then you can congratulate yourself for steering the organization away from a complete disaster.
Make a public statement
If you feel that it’s appropriate to make a public statement, first take into consideration what has already been said (if anything) in public. Has the board made a statement? Did the former employee (you know, the one who made the complaint) make a statement on their personal social media page? If no one has said anything in public about what is going on, then making a public statement is probably the riskiest action you can take.
Take some time to assess the situation. You can bet that if you hired an attorney, they would tell you not to say anything in public. Your attorney’s representation of you may even hinge on whether you follow that instruction.
A situation such as the one in this scenario is, by its nature, emotionally charged. The people who serve on the board (most of them, at least) joined the board because they believed in both the mission and the founder. They have presumably invested some part of themselves in all of it. And yet, one or a few people are calling the founder’s leadership into question. The accuser or accusers did that despite the founder’s work and many sacrifices that resulted in the organization’s truly extraordinary accomplishments. And the response of the other board members is to engage in a series of damaging blunders, which they inexplicably feel the need to justify and double-down on them.
If you say anything in public about the matter, you will need to be sure that you have your facts straight. Do not say anything if you cannot back it up with evidence to show that what you are saying is true.
While I am sure it is possible for a public statement to work out well and lead to an acceptable ending, I don’t know of any cases where it has worked out. I would be very interested to hear of any such cases. The most important thing you can do in your role is act according to the best interest of the organization. If you have a good reason to believe that the loudest board members in the room advocating for punitive action have interests that conflict with the organization, it is important for you to act according to your best conscience.
The organization that I co-founded is now gone. That organization had become an important resource to the community we served, and it will likely be a long time before an organization like it will come around to fill the vacuum that is left. I have some regrets that I carry with me, especially that I did not act sooner to engage an attorney to advise or even represent me. I will never know if it would have made a difference.