Deerfield Beach, FL asked in Business Formation and Business Law for Florida

Q: Local Tax Exempt Organization - how should a Board of Directors be constructed? Worried about losing control of entity.

Local Tax Exempt Organization IRS 501(c)(3) - how should a Board of Directors be constructed? I am worried about losing control of entity. What defensive measures can be instituted to prevent loss of voting control? I am the founder of the entity. This will be a big entity someday- tremendous opportunity to scale this group over the USA and beyond. It will be driven by volunteers but the entity support staff will be significant (100+ full time employees). This a multi mission, multi disciplined non profit with lots of moving parts. I need legal representation that can see the big picture, but yet address the here and now. My legal issues will be local, at first. There are no current legal adversaries now. We are new and young. I always plan for the worst (law suits). The best defense is to lead with a strong legal presence.

1 Lawyer Answer

A: You ask a question that many founders of nonprofits ask. And lawyers who work with nonprofits inevitably deal with the situation that you fear: a board of directors who develop a different view of the direction to take the organization than the founder's view, resulting in strife and board factions.

The most sure-fire way to avoid a board taking the organization in a different direction is to require a unanimous vote of the board of directors on certain matters. But the risk of adding that requirement is that the organization may fall into paralysis if the board cannot agree on a path forward. An alternative could be to require a large majority (short of unanimous) to take certain actions. Under that rule, you might still lose "control," but it would only happen if the rest of the board overwhelmingly disagrees with you.

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