April 24, 2018

The Rewards of the Nonprofit Board

Michael Van Zandt

In my career, I’ve had the pleasure of serving on two nonprofit boards for a total of six years. Both experiences were simultaneously rewarding and challenging.

My first nonprofit experience was with a social club devoted to the arts, such as music and theater. The reward from that experience was knowing that the members could enjoy the performances and not worry about the mundane issues of revenue, expenses, policies, and budgets. As fulfilling and demanding my board member duties were for that organization, they paled in comparison to my next experience.

It is important to understand that my participation in these two nonprofit boards was as a community member, not as an attorney. Like many other law firms, my firm, Hanson Bridgett LLP, has a policy that if you are a member of a nonprofit board, you may not give legal advice to the organization. The nonprofit boards are usually not clients of the firm, and there is no attorney-client relationship between the nonprofit boards and the attorney who sits as a member of the board. Generally, the boards have their own outside legal counsel, whose advice is protected by the privilege. Although nonprofit boards most likely have Directors' and Officers' Insurance, such policies may not extend to a member who gives legal advice without being in an attorney-client relationship. So if for nothing but liability reasons, one should refrain from giving legal advice if you are an attorney on a nonprofit board.

My second experience with nonprofit boards was entirely unlike my first. My managing partner was asked by the chairperson of Easter Seals of Northern California (ESNC) to nominate a new board member to replace one whose term was limited. To my delight, he chose me to be his nominee. I attended my first board meeting as a candidate interviewee.

First, let me tell you about this organization and why I was willing to devote my already overtaxed time. My son was born with cerebral palsy. We did not know it at first, but compared to my daughter, my son was not developing as quickly. We were warned to not make such comparisons, but alarm bells were going off concerning my son's inability to sleep or to use his limbs the way we expected him to. Finally, at his one-year checkup, we received a referral to a pediatric neurologist who confirmed the diagnosis. One of the first referrals we received was to Easter Seals for resources.

Easter Seals is an organization that devotes itself to providing services to developmentally delayed children from birth to seventeen years of age. These services include physical, occupational, and speech therapy in addition to providing support for parents who are struggling with raising a developmentally delayed child. My son became a client of Easter Seals, and we were rewarded with the experience and knowledge of Easter Seals to assist my son. I was incredibly happy to give back to this wonderful organization, which had provided a great service to my son and my family.

When I first joined the ESNC Board, I learned two very important things. First, the main function of the board was to raise funds to continue providing services and paying our staff. Second, I learned that in a time of recession, fundraising was very difficult. Just raising the funds to keep all the services in place was a full-time job. During my second board meeting, I found out that the current chairperson was term-limited at the end of the year and searching for a replacement. I also learned due to economic and efficiency of management concerns, the national organization of Easter Seals was intending to merge ESNC with another regional chapter. To my surprise, the Chairperson of ESNC wanted me to take over his position after only two months of experience, and the rest of the ESNC Board was wholeheartedly in favor of my nomination. Thus, I found myself chairing ESNC.

My greatest reward in this job was visiting the various centers to meet the children and parents in addition to witnessing the wonderful acts of kindness and skill our dedicated staff displayed in carrying out their tasks. Devotion to duty and the mission was the watchword of these people, and their never-ending patience was repaid with the measure of slow and methodical achievements of the children.

While we were working towards normality in serving the children and parents, we were struggling with our fundraising and management issues. We also initiated the processes of merging with the other regional chapter and dissolving ESNC as a charitable organization in California. Without the support of my board, especially my treasurer, I could have never succeeded in these efforts.

Taking a charitable organization from operation to dissolution is no simple task. First and foremost, you must ensure that there is a smooth transition of care for the children and parents and the meticulous transfer of their welfare and their files. The physical plants in which we were operating had to be transferred as well. To complicate matters, we were in the midst of moving one of the centers physically to a new location, which required a three-way negotiation on the new lease. Moreover, there was the issue of handling the staff by ensuring that their benefits and pay were appropriately addressed and that no personnel claims were left unattended. Luckily, the new organization was willing to hire everyone on our staff, which made the transition much easier. Nonetheless, ESNC had to reconcile the benefits owed at the time of transition, which we did successfully.   

ESNC also had creditors who had to be notified of the pending dissolution. Each was given a period of time to file a claim with ESNC if they were owed any monies. My treasurer worked tirelessly to clear up any owed debts to vendors and landlords to ensure our record was spotless. Negotiation was necessary with some vendors in order to unravel some claims. This took a significant amount of time. There were also instances where ESNC owed money to other service vendors or funding sources, and we worked to obtain releases from them.  

Why was so much effort put into this unwinding? The answer was simple. In order to dissolve a charitable corporation in California, one must either petition a court to approve the dissolution, or one must seek approval from the California Attorney General. We chose the latter course, as it was less expensive. To say that my legal skills were not tested or exercised in this dissolution would be a diversion from reality. I did not give myself or the board advice, but I was responsible for carrying out the requirements of California law to effect the dissolution.  

After addressing all of the issues of the unwinding, ESNC had to demonstrate to the Attorney General that we accomplished all of our obligations under California law. We submitted detailed budget information showing our revenues and expenses and proving that we satisfied all of our obligations to our creditors. After all this effort, ESNC had some leftover funds that had to be disbursed. We had to demonstrate that these monies were transferred to another qualified charitable organization with a similar charter, and we accomplished this.

I would not say that my experience with nonprofit boards was typical. The personal rewards I received from helping clients and their families tackle very difficult circumstances and receiving their thanks along the way were reward enough. Just serving on the board of a charitable organization can be a lifelong experience of satisfaction. To know you have contributed in some way to helping others is a great achievement. In my case, to know that I was a part of an organization that provided very valuable service to children and parents was heartwarming. To know that I could help to transition ESNC's mission and close out its history was an important milestone in my life.

Michael J. Van Zandt

Michael J. Van Zandt is a partner and co-chair of the Environmental & Natural Resources group at Hanson Bridgett in San Francisco. In addition to chairing the Senior Lawyer Division’s Experience editorial board, Van Zandt is a member of the Senior Lawyers Division Council, a representative for the ABA SLD Environment, Energy, and Resources Special Committee, a Litigation Counsel of America senior fellow, and an American Bar Foundation life fellow.