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Self-elected Boards: Common or Uncommon?

February 24 2008 at 1:32 AM
Steve Bridge  (Login expres)
Veteran Member

After several hours of research, I have some further answers on Charles Platt's question, "where are all the self-electing boards?" http://www.network54.com/Forum/291677/message/1202937646/self-elected+boards-+Common+or+uncommon-

It turns out that the answers are not easy to find, because there is no one source that lists this information. Someone else told me that this was easy; I was a librarian. Just go to the list of nonprofits and look.

Well, there is NO list of all non-profits. There are a couple of pretty large lists; but they don't report how the Directors are elected. Most non-profits web sites do not display the Bylaws or otherwise discuss details about their governance. They are not required to list this information on their IRS 990 annual report forms. Even the non-profits that Charles listed don't all have that information on their web sites, and I couldn't confirm all of his judgments. I'd like to know where he got his information. Even what he did find is a bit misleading. The Better Business Bureau, Goodwill Industries, and the Red Cross do not have individual members. They have *Institutional Members" -- businesses, other non-profits, or local affiliates, who generally select their individual boards however they want to. The United Way is much the same, although the National Board does not seem to be voted on by the affiliate members. The web site claims that "The Board is now compromised of diverse volunteers who are senior representatives of the largest, most influential donors and sponsors, noted intellectual, civic, and moral leaders, and other stakeholders."

Also, IEEE is basically a professional organization. None of these are remotely comparable to a cryonics organization. Now, if we had an *association of cryonics organizations*, this pattern would make complete sense.

Also, the Red Cross and perhaps others of these organizations require that voting be only done at the Annual Meeting and only by organizations represented at that meeting. So at least they all get to hear speeches by potential Directors and meet them. This is what is done for most large religious organizations at their annual conventions, I believe.

The Carnegie Corporation does not appear to have members at all. As far as I could tell, every announcement they have made about Directors stated that some new Director was "appointed" as Director by the current Board of Directors. I see no evidence that they have voting by some group of members.

So I sent letters to several local non-profit associations and one local company that helps to manage about a dozen non-profits. I received mixed answers. No one knew of a source for the information or knew of no recent research on that question, at least for Indiana.

A consultant for the management company told me that it was her impression that most 501(c) 3 organizations that she had experience with had self-elected Boards. She said that most of the professional associations are 501(c) 6 organizations and the majority of them have member-elected Boards. She said that the problem with member-elected Boards is that the members are generally not acquainted with the candidates and so make poor voting choices or don't vote at all. The problem with self-elected Boards is that the Directors tend to elect their friends and don't make an effort to attract a more diverse Board. She said that both methods are improved if you can have a very active Nominating Committee that works to explore and attract better candidates.

One of the managers for an Indiana association of non-profit organizations told me nearly the opposite. It was her impression that most 501(c) 3 organizations DID have member-elected Boards. She also stressed the importance of the Nominating Committee to find diverse and competent Directors.

I finally obtained some facts from another non-profit leader who loaned me a 1995 report from The National Center for Nonprofit Boards (which became Boardsource in 2002). The report, *A Snapshot of America's Nonprofit Boards,* is the result of a national survey of 1,163 non-profit organizations. 95% were 501(c) 3. The nonprofits in the survey were from a wide variety of income levels and mission areas.

In answer to the question, "How are your organization's board members selected?" 75% responded "Selected by current board members". 22% chose, "Elected by your organization's chapters, affiliates, members, etc." I doubt that the numbers would have changed much since then, since I assume that most organizations select the way they do things once and then don't change much.

Now, please understand that I do not consider any of this to be evidence of what is right for Alcor. Alcor Board of Directors cannot make decisions about the basic structure of Alcor based on what is most common or popular, either way. I only report this to rebut suggestions that Alcor's self-elected Board of Directors is illegal, uncommon, or anything other than one normal style of organization structure.

Steve Bridge

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