Managing Board Resignations

The resignation of a volunteer board member or director is not an uncommon occurrence. Typically it is because the person finds themselves unable to fulfill their duties. Personal or family matters or new work commitments can unexpectedly get in the way of their continued board involvement. And, it can occur too as a result of a conflict on the board.  A person is unhappy with recent happenings or decisions and is unwilling to continue serving.

It is the latter kind of situation that recently sparked some advice from me to a group.  But the cause of a resignation, or preventing them, is not the focus of this post. Regardless of the reason for a board departure they need to be handled properly. This is not complicated governance territory but, much to my own surprise, I discovered that there are important considerations one should be aware of.^[1]Helpful in writing this post was Mary Childs’ 2020 piece Canada: Directors of Not-for-Profits and Charities_ Resignation, Removal and Replacement published by Mondaq

I should add here that this post is not about the “removal of a director” or the resignation of some or all the board due to a public controversy. The former, which includes being asked to resign, is a very different matter and more complicated than a director motivated resignation. The latter, and it does happen, is very situation specific and from a “how do we recover perspective” a topic I hope others might write about.

What do your bylaws say?

Most governing bylaws say little about the mechanism or process of someone leaving a board before their normal term is over. Frequently they allow a board to fill a vacancy, from amongst the association’s members, for the unexpired portion of the term, or until the next AGM, as an “interim director”.^[2]Non-profits sometimes use the interim director article to help populate their board between AGMs not just to replace a resignation. This provision should be used sparingly

Few organizations have crafted more policy on the matter. I am not sure I feel that more formal requirements need to be specified, but maybe they do. You can decide. I will offer few suggestions about the wording of bylaw and board policies below.

Is a resignation letter needed?

Most boards would probably expect that a director resignation would involve a letter or email to the board or board chair. Such communication would indicate the decision to resign and when the leaving might be effective. The person stepping down might offer regrets along with the reasons why. Such a letter need not be long.^[3]One can find some online advice on what to include in a resignation letter. For example here is a 2022 post How To Write a Board Resignation Letter (with Template Example) on Indeed, the job and … Continue reading

Could a person resign merely by verbally communicating their decision? I know of situations where this has happened, especially as a consequence of a conflict on the board. One might be reluctant to ask for a letter in such a situation, but a verbal resignation might not be an adequate in some situations. Read on.

Making it legal

For a director resignation to take effect the board must accept the resignation with a motion, seconder and vote. This ought to be recorded in the minutes.^[4]One source I read suggested that a resignation letter be attached to the board meeting minutes. This may depend on the how confidential a Board considers it minutes to be. I have a 2018 piece about … Continue reading This is certainly the first board step with or without a formal resignation letter.

I do not believe, from what I have read, that a board has the power to not accept a resignation.

Should such a motion be made at a board meeting immediately following the receipt of such a communication?  Yes, but I can easily imagine a board deciding to hold off accepting a resignation in the hope of there being some reconsideration or reconciliation.

I know of a one situation where a board member resigned and the resignation was formally accepted but then, at a board meeting or two later, the person makes a request to come back. Here, if the board wants to reinstate the former board member, I think the group would need to formally rescind the original motion, not pass a new one. Again, this ought to be recorded in the minutes.

And yes, there is a wrinkle

In a different context I was once asked if a change in the composition of the board between Annual General Meetings needs to be communicated to the jurisdiction (provincial or federal) incorporating the organization? I thought not;  why would this matter? I was wrong.

Most legislation covering non-profit boards seems to be pretty clear on notification. The Ontario Nonprofit Corporations Act, for instance, says that any changes to the directors need to be communicated to the government within 15 days. Nova Scotia, and probably other jurisdictions, have similar requirements.  Often there are forms available for formally communicating “Changes in Directors”.

In other words, for someone to cease to be director and no longer liable for the sins or omissions of the organization, as unlikely as they might be, their name needs to be removed from incorporation records. So, at the very least, the change in directors needs to be filed.

A non-profit might well get away with not formally communicating a change in its directors outside of its annual post-AGM filing of director names, addresses and occupations. However, depending on the nature of the non-profit’s “business” there may be risks of not doing so. And it may be important to have one’s legal house in order where there are important matters (funding, leases, mergers) pending.^[5]Fellow governance consultant Jane Garthson suggested to me that notification of a change in directors might apply to other bodies like insurance companies where contractual documents include the … Continue reading

Similar notification rules apply in Canada to non-profits that operate as charities, regulated federally by the Canada Revenue Agency. Here is the link to their Change Director page.

I would note that the appointment of a “interim director”, assuming the bylaws allow this, also needs to be filed. This person is legally a board member and able to vote even if they must be elected or otherwise confirmed by the membership at one’s next AGM. ^[6]I should note that I was not able to find any information on the legal status of appointed or interim board members

Is 15 days a reasonable amount of time? It does not seem so to me especially since boards normally meet monthly. It depends of course on when one starts counting. I would not (normally anyway) counsel a board to call a special meeting to deal with a resignation. I would say that the resignation is effective from a board’s perspective from the date when the board deals with the resignation not when the organization (or its officers) receive notice.

As I have already said, because of the possible ramifications of a director resignation, as unlikely as they are, boards should ensure that the legal requirements have been met. Skulduggery, like the backdating of a resignation, should be avoided.

Acknowledging a resignation

Finally, I would underscore the importance of a board acknowledging a resignation with a letter of thanks, regardless of the circumstance of the departure, sent from the chair or secretary. In many situations, such a letter might indicate that the person would be welcome to apply to return to the board if their circumstances change. Such a letter has symbolic importance for the person leaving and for the remaining board. It underscores the significance of the matter for all involved.

I would also recommend an exit interview with the departing director, perhaps via telephone call with the board chair. Having a page of exit interview questions in the board’s files helps. Even though the cause of the resignation may not have much to do with the organization, there is frequently something to learned. There are board exit interview templates to be had.^[7]Two useful pieces on board exit interviews are: Nancy Droesch and Susan S. Stepleton’s, April 2018 piece The Power of Nonprofit Board Exit Interviews on the BoardSource blog. The second is a … Continue reading

Should you have a policy?

As I suggested at the beginning, I would not have thought one would need to formalize the process of a board resignation. On second thought, perhaps this might be re-considered.

One could add a bylaw item under the board-related articles such as this

• In the event that a director resigns their office, or while holding office ceases to be a member in the Society, the change requires formal notice by the director. The vacancy thereby created may be filled for the unexpired portion of the term by the Board of Directors from among the members of the Society

A policy statement might also be considered, perhaps an addition to the board’s existing director position description:

• Should a director need to resign from the board, a letter of resignation should be sent to the chair or secretary giving the board at least one month’s notice.  

And if the person resigning is a officer, that is a person who serves as chair, secretary or treasurer, a statement might be added to the each board officer’s position description.

• Should the (chair) need to resign from the board a letter of resignation should be sent to one of the other officers. A least two months notice to the board is requested. .

For more on this topic

As always, comments on this post are most welcome. Given that I have delved into some legal territory, I would appreciate anyone pointing out the need for nuances if not corrections.

There are of some other useful resources available on this topic. For board members considering the need to resign, this 2018 article How to Best Approach Nonprofit Board Member Resignation from Board Effect may be of value. And, from a long favourite source of mine, Blue Avocado, here is a 2010 piece by Jan Masaoka, The Golden Rule of Board Resignations. It is subtitled “Don’t botch your resignation: do it right.”

Thanks for reading.