[Foundation-l] Provisional Volunteer Council - proposal sent to the Board

Ray Saintonge saintonge at telus.net
Wed Apr 2 09:17:30 UTC 2008

Mike Godwin wrote:
> Florence writes:
>>  Can you give us a little bit of feedback on the issue ?
>> Let's say... if the board was to decide on a dual governance between a
>> "board of trustees" and a "program council", what would the legal
>> comment you would provide ?
> I'd have to research the issue at some length to give you a full and  
> reliable answer. That could take a significant amount of time.  But,  
> speaking very generally,  I can give you some worst-case scenarios, if  
> you're worried about risks.  For example, American corporation law  
> commonly prohibits boards of directors (or boards of trustees) from  
> delegating certain board-specific functions and duties outside of the  
> board.  Alternative structures are sometimes possible (especially if  
> designed into the corporation at the beginning). But to transmute the  
> current Foundation governance along the lines Florence suggests might  
> require dissolution and/or reincorporation of the Foundation, transfer  
> of assets to the new entity, and other complications, including  
> reapplication for tax-exempt non-profit status (perhaps in another  
> state).  It might also affect long-term gift commitments (the new  
> entity might have to reapply for grants already committed to the  
> former entity, for example).  I'm not saying all this (or any of this)  
> would necessarily happen, but I believe the risks of fundamental  
> governance change deserve serious legal study in addition to  
> philosophical debate.
> All of the risks may be worthwhile, of course, to craft a new  
> governance structure if it is generally believed that the Foundation's  
> current governance structure is fundamentally broken.  But  
> corporations, including NGOs and charities, are essentially legal  
> creations, so the legal questions *always* need to be addressed if  
> you're trying to figure out what is possible, or how to fix a broken  
> corporation, or if you're trying to solve any other corporate problem.
> I think the best place to begin, when one is considering corporate  
> governance issues, is to precisely define the problem you want to  
> solve.  Once you define the problem (or problems), you then research  
> what solutions are legally possible in the corporate-law framework  
> you're working with.  It may be possible that the problem is fixable  
> without any governance structure changes (e.g., by electing or  
> appointing new Board members to replace current ones, or in addition  
> to current ones), or by relatively minor bylaws changes.  Or they may  
> require a fundamental restructuring of the corporation (which, as I  
> said, is carries certain risks).
I don't fundamentally disagree with any of this, though I would not 
presume that the corporate structure is "broken". Nor would I see the 
Board/Council relationships as prima facie adversarial.  I anticipate 
that much of what the Council will need to do will deal with concepts 
that do not require by-law changes, and which the Board would probably 
be very happy to have off of its own agenda.
> At the beginning of these discussions on foundation-l, I assumed that  
> the upcoming meeting in Amsterdam was aimed at defining what problems,  
> if any, exist. But now the discussions seems to have shifted to an  
> assumption that there's a problem that requires a governance-structure  
> change to fix.  If that is the case, then we need to begin work now on  
> making sure the problem is fully defined, so that the Board can  
> consider whatever structural changes may be required to address the  
> problem, in full compliance with the law.
I don't know about any Amsterdam meeting, but I do see defining the 
problems as an essential part of the Provisional Council's duties.
> I could say more, but I feel that have gone on at (somewhat boring)  
> length already, so I'll do the prudent thing and end this e-mail.  
> Thanks for listening.
I wouldn't call it boring.


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