When Does a Board Member's Resignation Become Effective?

By Raul Rivera

We recently received an email from a long time reader who asked, “When does a board member’s resignation become effective?” For privacy purposes we will call him “Bob.”

Bob’s question spawned from a previous blog that addressed board member liability and how board members can reduce the risk of personal liability.

In his email, Bob explained that several months back he had to resign from his position on his church’s board due to a recent job transfer. 

Bob explained to his pastor why he had to resign as a board member and he even handed him a letter of resignation. But Bob did not hear anything else about his resignation after meeting with his pastor. 

Since board members are generally held liable as it pertains to their fiduciary responsibility to the church, Bob wanted to know how a board member’s resignation affected his/her liability. 

In other words, he asked, “Is an individual who resigns from the board still liable for actions of the board until his/her resignation becomes effective? If yes, when does, or when should, his/her resignation become effective?”

Bob’s question brings up a very good point for all churches, ministries, board members, and potential board members because how and when a board member resigns is very important from a legal perspective. 

My response to Bob led me to realize that there are many questions involving a church’s or ministry’s board of directors that need to be addressed. 

Therefore, in this blog article, I want to spend some time addressing three aspects of a church’s or ministry’s board of directors:

1. How to properly add board members, and the documents new board members should receive at this time;
2. How to effectively remove board members when they are no longer maintaining their fiduciary responsibilities or when they have gone rogue; and
3. When a board member’s resignation becomes effective, and the steps to take to make it effective. 

How to properly add church board members

Adding a board member is much easier than removing one. Be sure that the designated person to nominate board members and the proper amount of votes to approve nominations are specified in your bylaws.

Below is a recommended, basic procedure on how to appropriately add someone to your board:

1. The president, pastor, or designated person identifies and invites the person that he/she wishes to serve on the board. This is done by calling that person and sending an officially approved letter of invitation to serve on the board. That letter should explain, or offer a future time for explaining, the ins and outs of being a board member and the responsibilities involved. (See sample below.) 
2. If the nominated board member wishes to serve, he/she replies to the letter of invitation and expresses a desire to serve.
3. If the nominated board member replies affirmatively, then his/her name is added to the agenda of the next board meeting.
4. Proper notice is sent out to existing members prior to the meeting.
5. During the board meeting, the nominated board member’s name is called out and followed by a vote to be accepted or rejected. If the board accepts the nominated board member, then the new board member must sign the conflict of interest statement and the board member entry statement. We will take a look at each of these statements below.

(Recommended reading: “How to Conduct a Better Board Meeting”)

Documents every new board member should receive and sign

1. Invitation letter to prospective board members

Below is a sample of a letter that you should give to any prospective board members.

2. Incoming board member statement

No matter what the governing structure of your church looks like, every individual who agrees to become a board member should sign a statement expressing the following components:

• His/her acceptance to join the board of directors,
• His/her willingness to participate as a board member,
• His/her agreement to comply with all of the provisions of the bylaws, and 
• Acknowledgment that he/she will have equal voting power among all the members of the board.

For a free sample statement for incoming board members, give us a call at 877-494-4655 and we will be happy to provide you with one.

3. Conflict of interest statement

The potential for a conflict of interest arises when someone serving on the board of directors, who is responsible for promoting the interests of the church, has a reason to also promote his/her own personal interest.

(Recommended reading: “Understanding Conflict of Interest and Your Church”)

To ensure that the board of directors follows best practices, each board member must annually sign a conflict of interest statement. This is a supporting statement to the conflict of interest policy that must be in the church's corporate records. When it comes to applying for 501(c)(3) status, the IRS will want to see a conflict of interest policy in the church’s records.

In essence, this document contains four declarations. They are as follows:

1. The board member has a copy of the conflict of interest policy; 
2. The board member has read and understood the policy; 
3. The board member agrees to comply with the policy; and
4. The board member understands that the church or ministry is a tax-exempt, charitable organization, and it must engage in activities that accomplish its purpose in order to maintain tax-exempt status.

For a free sample conflict of interest statement that your board members should sign annually, give us a call at 877-494-4655 and we will be happy to provide you with one.

How to effectively remove a board member when necessary

In all relationships, there comes a time when we do not see eye-to-eye. This happens with those we are closest to, such as our spouse, children, and extended family, and perhaps it occurs even more with those who are not family such as friends, coworkers, church members, and board members.

The manner in which we handle grievances and disagreements with one another can make all the difference in the outcome. 

Removing a board member is much more difficult than adding one. Aside from the board member voluntarily resigning by submitting a resignation letter, asking someone to resign or voting them off is a balancing act between the legal ramifications and the ripples that it can send through your church. This is one of the reasons why we cover this topic at all of our conferences.

In short, I have found that there are two ways to remove a board member involuntarily. They are as follows:

1. Diplomatically

This is the method that I always contend for first. Below are some steps you can take:

1. Have a long and thorough conversation over coffee or tea.
2. Speak individually to each board member under strict confidence.
3. If after the first conversation the “problematic” pattern re-emerges then a second conversation is needed.

If the board member refuses your counsel, follow the steps of the next method. 

2. By vote of the board

A vote by the board should only be done as a matter of last resort.

In almost every case where a church takes this action to remove a board member against his/her wishes, the repercussions are usually negative. However, if the church follows this course after first attempting diplomatic measures, the results have less of an impact on the congregational life of the church while keeping the legal foundation unmoved.

Below are the proper steps to take.

1. Call a special meeting of the board,
2. Create an agenda,
3. Send proper notice, and
4. Hold the board meeting.

For more detailed information on removing a board member diplomatically or by vote of the board of directors, please see “What to do When You Need to Remove a Board Member”.

When does a board member’s resignation become effective?

We have discussed how to properly add board members and how to effectively remove board members who have gone rogue, but what about a board member who resigns from the board before his/her term is up? When does his/her resignation become effective?

Our automatic inclination is to say one’s resignation becomes effective the day the resignation is given or specified by the individual. Yet, what happens if there is no documentation or letter of resignation? What happens if a board member gives his/her resignation to the pastor orally? 

Unfortunately, most churches and ministries do not consider this until a board member resigns. 

In general, since board members are held liable as it pertains to their fiduciary responsibility to the church, board members will remain liable for the actions of the board until their resignation is effective.

With that being said, what can be done to clarify the effective date of a board member’s resignation? 

There are several things to consider.

1. The first thing pertains to churches and ministries. The bylaws should clarify when a board member’s resignation will be effective. This will help prevent any uncertainty surrounding this issue.
2. Board members should write a letter of resignation, clearly indicate within the letter when they intend for their resignation to become effective, and they should submit it to the pastor and/or board of directors. The letter of resignation does not need to be lengthy, but along with the effective date, a letter of resignation should include a short explanation and perhaps some words of appreciation.
3. Once a member submits a letter of resignation, the board should approve the resignation by an official act of the board that is then recorded in minutes.

Implementing these considerations will help to provide better clarity to your church and board members as to when one’s resignation becomes effective.

Lastly, when a board member resigns you will need to determine if his/her resignation will cause your board of directors to be “unbalanced”, thus causing your board to be our of compliance. 

For more information on what a “balanced” board of directors is, please read “Help, My Board Isn’t Balanced!”

Being better informed for the road ahead

Through the back-and-forth email correspondence with our longtime blog reader, he now felt like he had more of a well-rounded knowledge of his church’s board of directors. Although he knew some of the basics of leading a church board, he said that he now felt more confident.

I think there are many pastors and ministry leaders who feel this same way about leading a board of directors. You have an idea about how to lead a board, but there is much that you are still uncertain of regarding the topic. That is okay.

We work with thousands of pastors across the country and leading a board is something we are able to help provide guidance on.

If there is a compliance or administrative aspect of ministry that you feel you could use some more training or insight, then I invite you, and some of your board members, to spend the day with us at one of our conferences in a city near you. 

Through this conference, we equip pastors and ministry leaders with the knowledge and strategies to confidently lead their churches or ministries in the 21st century.

Handpicked articles for you:

• “How to Handle Designated Donations Given to Your Ministry”
• “10 Simple Steps to Ensure Legal Ordination”
• “The Best Way to Remain Connected with Your Congregation”

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