Who we are
123 Up And Adam, Inc has officers at this time who are also called Directors and they have responsibilities. We are to perform functions like setting the organization’s strategic goals, approving its budget, and evaluating their performance.
123 Up And Adam, Inc was incorporated to achieve a specific mission, which is to help the Homeless Disabled men and women living in Massachusetts Nursing Homes and Shelters, find an alternative place to live. As trustees of the corporation’s assets, we shall use those assets for charitable purposes. The organization is now recognized as a 501 (c) (3) tax-exempt organization. We must not allow any activities to occur that would expose the organization to tax penalties or loss of its exempt status.
Our Board of Directors even though volunteer directors still have responsibilities these include:
- We shall act in good faith, and exercise fiduciary duties of care and loyalty. The statute, M.G.L. Ch. 180, Sec. 6C, states that a “director… shall perform his duties as such… in good faith and in a manner he reasonably believes to be in the best interest of the corporation, and with such care as an ordinarily prudent person in a like position with respect to a similar corporation… would use under similar circumstances.”
This means that as a director within our organization you shall act in an honest manner. (e.g) If a director relies on third party information when approving an action, and doesn’t ask about what was told them (the facts) that support the director’s decision on a matter this can be considered a lack of good faith. Failure to act in good faith can have significant consequences including jeopardizing the director’s right to indemnity by the corporation or coverage under any directors and officers liability insurance maintained by the corporation.
Under duty of care, the director shall perform “Due Diligence” with issues or subject matter being considered by the board. A director is permitted under certain circumstances to rely, on reports and recommendations from an officer, director or staff person who he or she believes to be reliable as to the matter presented and from other professionals as to matters within that person’s professional competence.
As to the duty of loyalty, we shall act in a manner that best represents the best interests of 123 Up And Adam. This means that a director may not improperly benefit from transactions with the organization, and shall not divert opportunities that belong to the organization, and shall keep confidential private information learned as a board member.
123 Up And Adam has adopted a conflict of interest policy which is on this website please read it. Basically, if a director has an interest in a transaction under consideration by the board, that interest must be disclosed to the board. The interested director may not participate in the consideration by the board of the proposed transaction.
Massachusetts has some immunities and protections available to volunteer directors of a nonprofit but failure on the part of a director to properly comply with his or her duties can still lead to embarrassing consequences. The Massachusetts Attorney General is charged with enforcing the due application of funds given or appropriated to a public charity. The Attorney General has broad power to challenge and seek appropriate remedies when the board fails in its governance responsibilities. The Attorney General has, in recent years, taken action to address executive severance arrangements, compensation to outside directors, related party transactions and conflict of interest matters, and fundraising practices. If a director has breached his or her duty which adversely affects 123 Up and Adam, Inc the organization may take action against the director or former director.
The IRS Form 990-PF asks the organization to disclose information regarding our governance, Independent Directors, and the establishment of a conflict of interest policy, whistleblower policy and document retention policy, and our process for determining executive director compensation. Here are a few things we need to consider.
- That we ensure that directors are not involved in the approval of excessive compensation arrangements, or other excess benefit transactions.
- That we ensure that Form 990-PF and good governance practices are kept on top off;
- Establish an audit committee,
- Recruit financial expertise to the board
- develop and implement Internal Controls
- Be sure the board has a sufficient number of independent directors
Be sure that the board includes directors with the appropriate expertise
Observe corporate formalities
For any proposed matter that must be acted upon by the board, counsel must consider what notice is required for a meeting of the directors, how the meeting should be called and notice properly given, how directors may participate in the meeting, and what are the quorum and approval requirements for board action.
For certain extraordinary actions, approval of the members of the corporation may be needed. In some cases, the board should meet in executive session or in the absence of a specific director with a conflicting interest. Minutes should be drawn that carefully and accurately reflect the matters considered and actions taken. When there is a potential conflict of interest by a board member, the minutes should reflect how the conflict was handled.
The new board will need to carefully consider the limits on what may be delegated or approved by the board and committees.
There are limits under Massachusetts law on the power of the directors to delegate their authority to others. The Massachusetts Supreme Judicial Court has held that the power of an officer of a charitable corporation to bind the corporation, without approval by the directors, must be more strictly construed than in the case of a business corporation. 123 Up And Adam’s board can not freely delegate authority to encumber a substantial part of the corporation’s assets or to transfer management of the charity’s assets to another authority.
What this means is that the board, rather than the officers, should consider and approve significant transactions involving the corporation; the board should approve the relevant terms rather than delegate authority to an officer to do so; and the board should be aware of its limited authority when confronted with any proposed transaction involving a transfer of management of a significant part of the organization’s assets.
We as the board of directors need to ensure that the board will be adequately prepared to make its decisions on Decisions about executive compensation, deployment of significant corporate assets, investment of corporate funds, and entry into ventures with other organizations may require a more developed record for the board. The board should not be asked to make any decisions without having adequate information, and in appropriate cases, advice regarding standards that govern its decision making.
For example, decisions about a chief executive officer’s compensation are often made under a compensation policy pursuant to which data regarding comparable compensation of similarly situated executives is made available. It may be appropriate to have a report and recommendation from a committee that has been charged to review issues on a particular matter on which the board is asked to act.
A must for the organization’s board will be to diligently follow the conflict of interest policy, this is an area where directors and the Organization have special exposure. There may come a time when a volunteer board member has a relationship that may create a conflict with the organization. 123 Up And Adam, Inc has adopted a conflict of interest policy, the board will need to follow it carefully. This includes obtaining regular disclosures from board members and officers regarding potentially conflicting relationships.
With respect to any specific transaction under consideration, a director must disclose any conflicting interest and permit the board to determine, without participation by the affected director, whether there is a conflict and whether the transaction is fair and appropriate. Minutes should be kept that reflect the procedures followed and actions taken by the board.
The board will need to make difficult decisions and may need Council to guide the board with respect to its crisis management, and assist where internal investigations must be conducted. Counsel can be particularly helpful in advising where special litigation or other investigative committees should be formed, and how board and committee activities should be conducted, especially where preservation of confidentiality is important. It can help balance the often competing concerns regarding transparency and public disclosure, and not taking any action that would jeopardize the organization’s position in litigation.
123 Up And Adam, Inc has started to make sure there is a process to assure succession in the board. The Massachusetts nonprofit corporation statute contemplates that a nonprofit corporation will have members who elect the directors. In many nonprofit corporations, the board of directors is the same body that has the power of the members. In a nonprofit setting, where most or all of the members or directors can be volunteers, it is not uncommon for a corporation to lose contact with members or directors, or not maintain a good record regarding who are its current members. 123 Up And Adam, Inc is looking for a volunteer to take the responsibility of assuring that there is a continuation of active directors.
Therefore, it is important for counsel, at the planning stage, to consider how the corporation should be structured to ensure succession in its board of directors. Counsel should also work with the organization to see that annual meetings and elections are held. Nonprofit corporations can also deal with issues of succession by an establishment of a governance committee or nominating committee that is charged with assuring that the corporate structure is the most effective structure, that new board members are selected, and that there is a succession in management.