Dear Nonprofiteer, When Is My Term Up? Is There Time Off for Good Behavior?

Dear Nonprofiteer,

Is this one an etiquette question, a law question, or Nonprofits 101?  Only you can answer all of the above.   When a friend of mine, call him Lodger, decided ten years ago to set up an educational 501(c)(3), call it Cheroot Appreciation, he asked me to join his six-person board.  The board met once and as far as I know no other meetings were ever scheduled.  Lodger told me he got the IRS approval.  He seemed to keep up Cheroot Appreciation as a one-man hobby, with a semiannual newsletter. 

Lodger and I quarreled two years ago and haven’t spoken since.  I don’t know if the newsletter is still coming out.  Cheroot Appreciation has no Internet presence.  I’d just as soon not check in with our mutual acquaintances, but I will if you say I have to: What are my obligations as, so far as I know, a board member of a nonprofit?  You have warned us readers about liability for unpaid payroll taxes and the like, but I’m pretty sure Cheroot is close to a do-nothing organization.  Certainly it never had any employees I ever heard of.  Can I let a sleeping cigarillo lie, or do I have Responsibilities?  What lessons should I take away for the next time a friend invites me into a start-up nonprofit?  Worriedly, Mammon

Dear Mammon:

Last question first: the next time you’re invited into a start-up nonprofit, run the opposite direction unless you’re passionate about the cause.  This runs counter to my usual philosophy–everyone should be involved in everything all the time–but your experience is more common than you realize, and goes to the question of this week’s earlier posting: why are there so many new nonprofits?  If a friend asks you to join, do a modicum of research (how did we live without the Internet?) and point him to the 10 other charities that do the same thing; then return to your regularly-scheduled life, already in progress.

As for Cheroot Appreciation, here’s what you do: 1) go to GuideStar, which keeps a roster of registered nonprofits, or do a search in IRS [on-line] Publication 78–if the spark has truly gone out, the group’s 501(c)(3) may have lapsed, in which case you’re off the hook for the dreaded withholding taxes.  2) Check with your state Attorney General, who is charged with the regulation of nonprofits incorporated therein.  First, s/he should be able to tell you whether Cher.Apprec. is still registered as a nonprofit corporation; failure to re-register annually will cause a group’s charter to lapse, once again letting your off the hook.  In addition, most states (see the Illinois AG Website, for instance) exempt from regulation organizations with less than $4000 in assets–which means the Board members of those groups have no enforceable duties.  If Ch. App. never raised any money (as seems likely!), it’s probably been flying under the regulatory radar all these years–which means you have, too, hallelujah. 

If C.A. still exists, you should be able to find out from the Secretary of State the name of its registered agent.  Send that person a registered letter, resigning.  Your letter of resignation can–in fact, should–be content free: "Dear [Registered Agent]: As a result of competing obligations, I am compelled to resign as a Board member of Cheroot Appreciation effective today.  As you know, I have been unable to participate in the deliberations of its Board since [some time ago–specific to the extent possible], and so my resignation will be in the best interests of all concerned.  Sincerely, Mammon."

And seriously: the next time someone asks you to serve on the Board of a nonprofit, ask one question if no others: "For what term?"  Nonprofit Board terms should be established in the bylaws of the agency and should never exceed three years, for precisely this reason: many groups never get off the ground.  Every state requires a minimum number of Board members, so if those Board members have expiring terms, the group can just wither away like the state under Marxism.

If Cher.App. accumulated assets, it–not you as an individual, but the group as an entity–is obliged to distribute those assets to another charity when the agency dissolves.  But if, as seems more likely, there was no money–just an idea in the mind of Lodger–then you can go on your merry way and find a Board that actually functions and on which your role is clear.

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