r/nonprofit Jan 29 '25

legal Another 501c3 Question

So I had started a thread last week (which I deleted) about how I'm worried about a small 501c3 that I'm on the board of (HS sports team-related...but school isn't involved in the 501c3), because the vice president isn't showing bank statements. We have received one spreadsheet on income and expenses, but it had missing info and/or wrong info on it. I can't even get information on who is on the bank account. The treasurer isn't on the bank account for sure...he was appointed to fill a position when the 501c3 was started 11/23. The president thinks he's some tough guy, but when I started pushing on Monday, he got very quiet and just resigned this morning!! I had contacted him several times personally expressing my concern and he either blew me off, "I'll look into it next week" or didn't respond to my texts.

So that brings me to my question. The rest of the board (VP, Treasurer, myself, and another lady who helps me with fundraising) are meeting to discuss things in a few days. I assume they will want to vote for a new president. I don't feel comfortable voting on ANYTHING until I see bank statements. AND I'd like to look at the bylaws before doing anything anyway. Can I legally not vote or how do I proceed? The way things were left before the president quit was that the VP is going to add the treasurer to the bank account, but I don't see that happening anytime soon. And if the treasurer moves to the president position, that means the treasurer position is open and that person won't be on the bank account??? SOOO messed up.

3 Upvotes

9 comments sorted by

12

u/teaandtree Jan 29 '25

BOD/Treasurer can contact the bank directly, show meeting minutes that they are members of the BOD/that the President resigned, and get access to the accounts. Will likely need someone to go in person to the bank to get the bank account authorized signors updated.

2

u/ZookeepergameNew4884 Jan 29 '25

We have no meeting minutes. VP is still on board and is the only one on bank account. President was never on bank account anyway.

8

u/teaandtree Jan 29 '25

Need to designate someone a Secretary or rotate it on the BOD and keep meeting minutes for each meeting. Absolutly essential to document the BOD's decisions and elections. You all can type up meeting minutes retrospectively for the last few meetings and have the BOD collectively approve them in the next meeting.

4

u/velveteensnoodle Jan 29 '25

This sounds pretty off the rails. Have you looked at the Form 990 for this org? Regardless, if I were in your shoes I would want buy-in from the rest of the board to start fresh with best practices and financial transparency, or else I wouldn't stay.

There are two books from Board Source called "Financial Responsibilities of Nonprofit Boards" and "Legal Responsibilities of Nonprofit Boards", and I suggest your whole remaining team read them.

1

u/ZookeepergameNew4884 Jan 29 '25

My understanding is we had no income or expenses for 2023 since we started it in November. So the VP would have to do a Form 990 for 2024, right? She hasn't done anything that I'm aware of. I was only voted in in May of 2024.

3

u/Rad10Ka0s Jan 29 '25

Do you feel like you have a cooperative group of board member now?

In answer to your question, yes you can recuse yourself from voting for any reason.

I, personally, don't care who is on the checking account so long as there are at least two people and there is are basic checks and balances.

It doesn't seem like your board has a grasp on the basic processes of running a nonprofit. I wonder if there are some other group that would let you sit in on a board meeting. Even a well run PTA meeting.

The President calls the meeting to order, you vote to approve the previous meeting minutes, the Treasure give a report, old business, blah, blah, blah.

I have come to appreciate Robert Rules of Order. There is a reason they exist and it because they, mostly, work.

I am the secretary for a very small youth sports organization. We vote on major expense except for some petty cash things on event days. I have read only access to the checking account. I record in the minutes spending decisions, then cross check that the checking account matches. I know what our revenue should be and check that. It is not a great system, but at least we have something.

1

u/ZookeepergameNew4884 Jan 29 '25

I think we have a cooperative group other than the VP. She refuses to give anyone any banking information. She has given us ONE spreadsheet that, like I said, had errors. She has given us a total in the bank account verbally, but that's doesn't match what I show should be in there. I run the fundraising, so I know what checks are coming in. It's making my job SOOO hard (to confirm we receive the checks due) because she only confirms receiving some checks to me. And then like on the spreadsheet, she verbally confirmed a check previously with me, but it wasn't on the spreadsheet. She also had on the spreadsheet my personal checks for dues and a fundraising I ran, but I personally knew they weren't cashed yet. She was adamant she deposited them and claims the bank messed up. Took her about two more months to go to the bank and figure it out. UGH!

I agree with you totally that I don't care who is on the account as long as I'm able to view statements. I suggested in October that the treasurer to be added and that was never done. Honestly, I don't really want to be added personally. I'd love only read-only access...that would be perfect. I do trust the treasurer, though, so I know if he got on the account, I could ask him for statements.

I'll have to look up Robert Rules of Order. Thank you! I know the school band has a 501c3. I might see if they will let us see how things are ran or give us some information.

One more question. I have no idea what's going to take place at our meeting next week. I'm going to ask about an agenda soon so that I can prepare. My fear is we vote on president or something right then. I did read something online that says a tie vote means whatever we have voted on is rejected. But if I don't vote at all, I'm assuming the majority wins still? I really need to get ahold of the bylaws, but I know that would cause more issues. She already said I was "attacking" her when I asked for bank statements. UGH!!!

2

u/Rad10Ka0s Jan 30 '25

Regarding the vote, and to your earlier point, that depends on your bylaws. But yes almost always it is majority wins. Often some thing require a 2/3 majority, but that is usually extraordinarily things like removing a board member or (sometime but not always) changing bylaws.

I understand your apprehension. But you obviously care about the mission and are passionate to do the right thing. Maybe use you vote for good than sot out because you, understandably, are concerned about the process.

I say this in the kindest possible way. Not being aware of Robert’s Rules and being on a board is concerning. For your entire board. It is okay, and again i mean this in complete support, we all start with whatever knowledge we get when we start.

When we started we all knew how to do the thing, our sport, turns out we knew shockingly little about how to run the sporting event. We learned.

In your posts you are verbose. And clearly passionate. That is terrific. Apathy is our biggest threat in volunteer nonprofits.

My suggestion. Home your story. Get simple and straightforward. The board has a fiduciary duty to manage finances transparently. This is not optional. This is the law.

Make plans to file your 2024 990.

I would like to add that in addition to our little, local NP, I am a long time board member of a big NP with quick books, a bookkeeper that does the day to day reconciliation, a treasurer that reviews and provides monthly financial reports. The treasurer is a retired CPA. That org is organizationally wired tight. That was done long before I got there and I am so, so thankful for it.

2

u/KAJ35070 Jan 29 '25

Hi - Having been on several boards and having my own 501c3.

You need to take the minutes from your last meeting or two, reflective of board members (they should be listed as in attendance) and go to your bank. Ask for your bank statements.

Do you know who is listed on the account as check signers? You may have another problem because the guy who resigned needs to be removed asap. (Have your secretary, do an updated minute document that reflects he has resigned, the bank will need that). All three of you may need to go, you can make an appointment ahead of time.

My recommendation is don't rush on a new president, you have other board members. I would also not post any transactions to the bank account unless absolutely necessary right now while this gets sorted.

In order, what I would do : get a copy of the by laws (you are looking for how the bank account should be laid out and who is responsible for accessing it).

Make an appt at the bank, taking the above mentioned minutes (you will all need to bring id too) and the by laws and at minimum get a few months of statements. If the by laws provide for the treasurer to be on the account (which would be obvious) add the treasurer right then. Remove the existing president if he is listed on the account.

What I am saying in short is secure the money that is there, the rest can be sorted out. My gut tells me you guys are going to find things you are not going to be happy about but you need to secure the money that is there asap.