#RVABizLaw Tip of the Day: Can the Organization President do That Without Board Approval?

Our nonprofit organization is mired in controversy with a bitterly divided board of directors that argues regularly over a variety of strategic and financial issues.  The latest board dispute relates to access to the organization’s operating account.  Can the president of the organization change the signatories on the bank accounts without board approval?

It depends.  Most bank resolutions provide that certain officers have authority to sign checks and take other actions on behalf of the organization.  Therefore, if the treasurer is authorized to sign and the old treasurer is replaced by a new individual, the president can change the signatory as a ministerial matter. On the other hand, if the president decides that it would be nice to have an additional officer or executive also empowered to sign, but that was not included within the original resolution, then board approval should be obtained for such a change.
While possible, it would be unusual for a board of directors to give the president blanket authority to determine the individuals who could sign on behalf of the organization, and arguably it wouldn’t be a good idea for most organizations.  The board is ultimately responsible for the finances and ought to keep control over the designations of individuals who can spend the organization’s money.


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