Must a non-profit organization have elected leadership?

General Questions
#1

I am trying to understand my options for creating a non profit organization.

Does a non profit organization have to have a board running it?

How are leaders of a non profit organization selected? Do they have to be elected in some way? Do they have to have term limits?

I guess I am asking for the details regulating the structure a non profit organization must take in terms of how it’s operations are controlled.

In other words, if I create a non profit organization, do i have to surrender ultimate control of that organization to a board or to the membership?

#2

well, I wrote quite a disertation, but this crappy wannabe-board ate it.

In short:

  • a non-profit is a corporation. it issues stock, which you can hold all of. this means that you have absolute control of it.
  • like any other corp, it has officers, including mandatory roles (usually according to state): President, Treasurer, & Secretary. If desired, usually, this can be two physical people (President and Secretary), with Treasurer played by one of the other two.
  • like any other corp, it will have a board of directors. I believe you can have a single director who is also the sole shareholder in most states for a non-profit, but I’m not certain about that.

If it’s your desire to create a real charity which does real good, I suggest you take a different tack and go out of your way to give away control. Go find lots of people who will give time and money to your cause and give them a bit of control in return. Otherwise it’ll never grow into anything.

– Now copying this so I don’t have to retype. –

#3

Argh, I misspoke above: Most states allow a single person to be both the sole Director, the President and the Secretary for a non-profit.

And if you do involve other people, technically here’s how it works: the shareholders elect the directors, the directors appoint the officers, and the officers run the non-profit.

As the sole shareholder, you’ll initially recruit and assign roles as needed. And as the sole shareholder, you can add, remove or replace anyone at will.

#4

What??? I’ve been on the board of several non-profits. None issued stock. Where did you get that?

It is usually a requirement that a non-profit have a board of directors of some sort. No one on the board can be paid a salary by the nonprofit.

The boards of directors are chosen in various way, but most commonly by a vote of membership. The rules of how they get elected and how they serve are laid out in the non-profit’s bylaws.

Now, you can set up a nonprofit where you are the head of the Board of Directors, but they can outvote you, and you can’t be paid a salary as part of the position. Ultimate control of the nonprofit lies with the Board of Directors.

#5

Bill, no. Nonprofits most certainly do not issue stock. That’s the point of being a non-profit. There are no shareholders to which a profit is given. All profits must be reinvested back into the organization or the organization’s mission.

#6

Clergy are often officers of the board of their churches which are incorporated as non-profits. And the clergy are paid by the non-profit.

At least, that’s in NJ. Doesn’t state law govern incorporation?

Peace.

#7

State law governs incorporation.

#8

A quick look through www.guidestar.org shows a considerable amount of charities where board members are paid a salary. If you’re wondering if a particular non-profit pays their board members, just ask for their 990s.

#9

Gadzooks was I wrong! And I’m on the board of a couple of non-profits; you’d think I’d have known better. Non-profits do not issue stock almost by definition.

However the other stuff I said was correct: If you want to, you can set yourself up as the sole Director in the by-laws, and maintain control. Although again, I recommend you bring in strong people and give up some control.

Sorry about that.

#10

Good form, Bill! I was ready to smack you around a bit!

But for the record, here’s the IRS Exemption Requirements.

Noteably:

#11

thanks everyone.

Could someone please give me the final staight dope on the question:

Can any board members receive a salary or income from the non profit organization?

A legal cite would be great!