Preventing and De-escalating NFP Dysfunction: The Role of the Chair

A recurring and often distressed request we hear from NFP chairs and board members is “how to prevent and de-escalate dysfunction”. If only a single answer was big enough to accommodate the range of human values, emotions and agendas one might see expressed by members of an NFP board!¹

In this article I discuss some principles that might assist an NFP chair to help prevent dysfunction within the NFP. I do not pretend to have all the answers.

Relationship between the board and members

It is worth emphasising two general principles;

1. An NFP board has responsibility to manage the NFP, and the NFP’s members are not entitled to usurp or exercise those powers; and
2. A board cannot do whatever board members’ personal preferences dictate.

A chair that understands and respects those principles might respond effectively to help de-escalate dysfunction.

For example, in a “for profit” case² a shareholder group sought to put a motion to the company’s AGM. The proposed motion required the company to report on greenhouse gas emissions on projects the company was financing. The shareholders claimed there was a public interest in the company providing such a report.

The Court went so far as to suggest the shareholders’ interests were “legitimate interests”. However it found that in the absence of an express power, shareholders could not pass such a resolution “as an act of the company.”³ What the company was required to report on was a matter for its board.

One might reflect that a company chair could have avoided the litigation if they adopted language of the Court ie to acknowledge that shareholders had legitimate interests, even if motions representing those interests could not lawfully be put to shareholders.

In another case, an NFP board of a peak body sought to deny membership to a NFP affiliate. In submissions to the Court the board claimed it could “do anything it wished to do, unless expressly prohibited by the constitution”.⁴ The Court disagreed stating:

[The board] was obliged to exercise any power to made decisions about the applicant’s affiliation in accordance with the constitution and the [NFP’s membership] policy. That is the case regardless of whether the constitution contained any express limitations on the exercise of that power.⁵

The chair in such a case may have avoided litigation by encouraging the applicant to better put its case, consistent with the peak body’s membership policy.

Oppressive conduct

What I am touching on here is oppressive conduct by a chair. As the editor of Horsley’s Guide to Meetings puts it:

The Chair must ensure that all persons who are entitled to participate in the meeting are able to do so…

And where members are prevented from “fully participating” in meetings, then “actual oppression” occurs.⁶

Oppressive conduct provisions are found in NFP legislation⁷ and is conduct that is unfairly prejudicial to a member or contrary to the interests of members as a whole.⁸

Oppressive conduct may be found when a NFP board regularly refuses to admit members who may hold views contrary to the board, seeks out and admits members who share its own views and exercises disciplinary action against members who do not.^{9 10}

The litigation described in my previous Better Boards article¹¹ arose after a church chair exposed a female member for making a complaint against the church’s pastor. The chair publicly took the side of the pastor, before an investigation into an alleged breach of a pastor’s code of conduct concluded.

Some members successfully obtained orders to appoint an independent chair for the church AGM, an appointment which reportedly, almost entirely de-escalated the conflict.¹²

It should not be assumed that a chair should decide for or against a particular position. Creative solutions might first be discussed.

For example in another faith institution case, the Court ruled that a church committee (and not members) were entitled to control certain property. However, the Court also said:¹³

Any reasonable request by the [particular members], or by any other Church members, to use the … Church property at a time when it is not being used for core church activities, cannot be unreasonably refused.

One could imagine a chair opening discussion with members about the terms on which church property might be used, when “core activities” are not underway.

Some take home principles to assist a chair

Based on the case law and NFP legislation discussed above, some principles an NFP chair might apply to prevent and de-escalate dysfunction are:

• Encourage discussion within the board on issues, and where necessary or appropriate, within the wider NFP’s membership
• Remain impartial insofar as not favouring one view over another, but remain aware of time and other administrative obligations
• Acknowledge legitimate interests, even if those interests might not be lawfully met by the NFP
• Put forward creative (rather than defensive) solutions that respect viewpoints of numerically minor factions
• Respect your position as chair and accept that a time will come for you to vacate it, hopefully with your dignity intact.

This article was first published in the 2022 Better Boards Conference Magazine.

Further Resources

The Collective Voice – A Crucial Leadership Element

What is Your Director Personality?

Why Good Boards Behave Badly - Improving Your Board’s Performance Through Best Practice Boardroom Behaviours