Not-for-profit and charity boards may sometimes need to make a board resolution – something that formalises — in writing — the critical decisions made by members in board meetings. If you are not familiar with what resolutions are and how to formulate one, we’ve put together a quick guide to how to write one and some best practices.
Comparatively speaking, making decisions is often easier than writing a board resolution. Nonetheless, drafting them is far easier when your board understands its purpose and the components that go into writing them.
To that end, we will cover:
A board resolution is sometimes called a directors’ resolution. Simply put, a board resolution is a formal document of a board’s decision.
A board of directors is the highest authority in an organisation, and their decisions can have far-reaching consequences. Boards should write clear resolutions so that nothing can be called into question later.
Writing board resolutions for important decisions is considered a best practice for good governance. Record all resolutions in the meeting minutes and store them on your board management system. Your board management system gives all board directors easy access to resolutions as needed.
The entire board is accountable and liable for its actions and decisions, and individual board directors may be held personally liable if they are not diligent in their duties. Resolutions provide proof that the board is fulfilling its responsibilities in an efficient, responsible manner.
The benchmark for writing a board resolution is fairly broad. Boards of directors can write resolutions for any reason they deem appropriate. Boards often write them to proactively protect themselves in case anyone questions their decisions.
Think about a board resolution in terms of any act a board resolves to do. A board of directors can decide to draft a resolution for almost any reason they choose.
For example, some of the common reasons for writing resolutions include board and shareholder decisions on the following scenarios:
The board secretary typically writes board resolutions, but any board member or trustee can write them. The length of the resolution isn’t important. It’s best to keep it clear and simple, stating only what you need to say.
Before writing a board resolution, be clear on the purpose of writing it and stay focused on its purpose.
The following steps will guide you through the process of writing a board resolution:
The Charity Commission for England and Wales has some advice and guidelines on the law and good practice of charity meetings.
Once a board resolution has been written, the board will need to approve it orally at a board meeting and preserve it in writing after the meeting.
The following steps will take you through the process:
The reason for asking for further discussion is it gives any dissenters a final chance to provide their reasoning for casting a no vote. Such statements may influence other directors’ votes.
Lastly, the minutes should reflect whether the resolution passed or failed, along with the number of aye votes, no votes and abstentions.
Understanding how resolutions are written should take any intimidation out of the process. You may even learn to eventually enjoy it.
It helps to review templates of resolutions that were written by other boards for similar purposes. Find a good template to help you get started yet keep it flexible enough to serve the true purpose of the resolution.
Most importantly, never lose sight of the fact that board resolutions are legal documents, and they are legally admissible in a court of law.
It is perfectly legal and acceptable for boards to sign resolutions digitally, and for the sake of convenience, they often do.
Boards should store all board resolutions with their other important books and documents. It is wise to keep a backup copy somewhere in case the original gets lost. Many boards make it a practice to keep one copy with their articles of incorporation and bylaws and another in their board management system.
Board resolutions formalise board decisions in writing and help to protect the board in case any of their actions or decisions are called into question by stakeholders or the courts.
Jill is a Content Strategy Manager at Diligent. Her strategy background and content expertise working across a variety of sectors, including education, non-profit and with local government partners, allows her to provide unique insights for organizations looking to achieve modern governance.
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