Folks, this one is going to take some time, as there are some twists and turns that need additional explanation to benefit the story as well as offer perspective. Let me start with the definition of “fiduciary duty “. That was one of the first questions I was asked. My answer was to protect the corporation and the members. That drew some frowns across some furrowed brows. Before I go further down this twisted path, allow me to interject what “fiduciary” duty means, and more importantly what it means to a nonprofit organization. This definition, from Legsalzoom is; Duties of a board member Each state has different laws that govern what board of director membersmust do and what their roles are, but, in general, a board member has three duties to fulfill: Duty of care. Board members are responsible for having the same duty of care about the organization that a prudent and ordinary person would. This means that they need to show up, participate, remain informed about all aspects of the organization, and take appropriate actions to help the organization meet its goals and thrive. The duty of care requires them to read and understand financial reports, track spending, and participate in strategic planning. The board members are also responsible for making sure the nonprofit's records are kept accurately and preserved. Duty of loyalty. Nonprofit board members must also be loyal to the organization itself. This means working in its best interest and not using it for their own personal or professional gain. If a board member has a conflict of interest, they must disclose it. Duty of obedience. Board members are also required to show the duty of obedience, which means they need to be aware of the laws that affect the organization and ensure that they follow them. They must fully understand and follow all of the organization's own governing documents, such as the bylaws, and are also responsible for helping the organization carry out its stated is description would have a director appear to have their loyalty to the organization. But there's more to this story Laws surrounding fiduciary duty requirements can differ depending on the state and the type of fiduciary relationship. However, the general types of fiduciary duties are as follows. · Duty of care: The duty of care requires that you, as a fiduciary, use due diligence to get thorough information before making a decision that could impact your beneficiary. Use reasonable prudence when making decisions and taking any action for the company. · Duty of loyalty: This requirement means that you work in the interest of your beneficiary and not for your own gain. You should approach all professional responsibilities without personal conflict, and fully disclose any personal conflicts that arise. · Duty of good faith: A fiduciary must make all decisions in the best interest of the beneficiary. These decisions include keeping the company's information confidential, taking actions that benefit the corporation, and disclosing any conflicts of interest. · Duty of confidentiality: In the duty of confidentiality, the fiduciary must uphold the confidentiality of all information that pertains to the beneficiary and avoid using this information for personal gain. · Duty of prudence: The duty of prudence means that fiduciaries must make all decisions with the highest degree of care, caution, and skill. · Duty to disclose: This duty requires a fiduciary to disclose all information that could impact their beneficiary or their ability to uphold their fiduciary duties. What fiduciary relationship? A fiduciary relationship is when one party (the beneficiary) places trust and confidence in another party (the fiduciary) to act in their best interest and help them make important decisions—typically in business, finance, or managing assets. Contracts, wills, trusts, and corporate settings can bind fiduciary relationships. For example, a board of directors has a fiduciary duty to act in the best interest of each other and the company's shareholders. Whereas a doctor has a fiduciary duty to always act in the best interest of their patients. What is the most important fiduciary duty? There are many different fiduciary duties that an individual must uphold, including the duty of loyalty, good faith, care, confidentiality, prudence, and the duty to disclose. However, a fiduciary's overarching and most important duty is to always act in the beneficiary's best interest. Acting in your own best interest for personal gain can lead to a conflict of interest and a potential breach of fiduciary. Corporate Director Role: Directors of a corporation are fiduciaries responsible for overseeing corporate affairs and making decisions in shareholders’ best interests. Responsibility: They must act honestly, exercise due diligence, and avoid conflicts of interest when making decisions that impact the company and its shareholders. Importance: Directors owe fiduciary duties of loyalty and care to shareholders, ensuring corporate governance practices promote transparency and accountability. Types of Nonprofit Membership Structures Nonprofit membership structures vary based on the organization’s mission and governance preferences. The main types include: Voting Membership Nonprofits: Members have legal rights, including electing board members, amending bylaws, and making key decisions. Examples include trade associations and professional organizations Lots of cut and paste, with highlights as the duty of the board, in a fiduciary level, is to the beneficiary. Sine the RCSC is not a corporate board with shareholders, but a nonprofit with members. the members are the beneficiary. The bylaws allow the board to seek legal counsel, but nowhere does it state the Legal Counsel shall be the decision maker in place of the board of directors. The legal counsel is to be in an advisory position, but the due diligence still rides with the board of directors to do do their own research and due diligence. In other words, do their fiduciary duty, not only to the corporation but to the shareholders/members. So, when the board stated voting was cancelled due to the advice of legal counsel, and read a prepared statement. this indicates the board abdicated their governing power to the Attorney. I repeat, there is nothing written that gives the Attorney the final say as to the disposition of any action. More to come
This is not sour grapes because I wasn't selected, but this culminates into some questions asked that just don't sit right, and wanted to share with you the thought process I surmise has been brewing. This particular line of questioning has caused my some great concern and am going to share this on TOSC. I originally was going to take it to the member meeting and have it on camera, and still may, depending on how I feel after a few days of pondering. Now that the definition of Fiduciary duty has been covered, and am stating the beneficiaries are the members, there exists a duty to the members as well. The board, in my opinion, had the right to seek advice from legal counsel, but I do not read where the legal counsel has the decision making power to control or make the final decision. in regards to stopping the vote at the members meeting. The board, states at the advice of legal counsel, made a unilateral decision. In doing so, puts the Corporation is violation of its own bylaws as well as the Revised Arizona Revised Statutes. That is a longer topic not being addressed today. During my meeting with the directors, I was asked that as a former board member, familiar with fiduciary duties to the board of directors, and having received legal counsel from a bona fide attorney, did I not try so stop John Fast from filing a lawsuit against the RCSC? I was taken aback with no witty retort, as I was stunned to have been asked such a question? Now that I have had time to gather what is left of my wits, here is my answer. First of all, it was the board's action to have no communication with the members about the proposed amendments as submitted. John Fast made several overtures to the board to ask for meetings and was rebuffed. Faced with the Corporate Documents supporting the members meeting with a vote, that complete lack of communication from the board, this left John Fast the option to pursue legal action as an American Citizen, through the legal system. My being a former board member has no bearing on John's ability to seek legal recourse. It was also pointed out that the filing of litigation had an indirect affect on the insurance increase brought upon the RCSC. Had the board not shut down all avenues of communication with the members, had anyone spoken with the members as to the reasoning of thought behind this complete blackout of communication, perhaps John would not have felt compelled to seek a remedy through the courts. Being a former board member has no bearing on John and my relationship and most certainly not in a position to detain John from pursuing what are his legal rights as an American Citizen. The tone of the admonishment was not one of support but rather of anger towards myself for not stopping John Fast. To that person, I am never going to stand in the way of any American Citizen from pursuing their rights under the Constitution of the United States. Any insurance increase is clearly an onus on the board for their actions of not considering the membership in the decision made. Rather, in my opinion, as I stated in the meeting, fiduciary duty is to the members as well. They are the beneficiaries you are supposed to be protecting. To the Board Members present at the meeting, I am most grateful to you for your time, it was most gracious of you to offer me this time out of your busy day. I am truly thankful for your service to the community.
As Tom Marone knows, i dislike discussions regarding the Bylaws. They bore me, as i suspect they do most members. I also dislike conversations regarding Fiduciary responsibilities; i've watched far too many times as what they mean and intend are often argued both ways. Which is also exactly why i stay out of legal arguments where attorney's are involved. Let's me be clear, bylaws are both essential and critical, and fiduciary responsibilities should be an integral part of any board training. From my perspective, they are busy work that is necessary and those that love that aspect of board governance are the ones best suited to sort things out and get it right. I'm not that guy. Attorney's are a whole other discussion. Most of them have been trained to argue a case from either perspective. I dealt with more than my share of them over the years and my goal was always to leave them out of the mix (which is clearly not always possible). In fact, i have argued the RCSC's legal affairs committee was a godsend. They kept us on track and online for years; or at least until the general manager decided she was better served to make those decisions. Then they were gone. When i read Carole's initial post regarding fiduciary responsibility, i kind of cringed. It does matter, but after having helped teach it for years, it's just not my thing. Then the second post came out and my head exploded. Literally; EXPLODED. Are you flocking kidding me? An RCSC member goes before the board applying for the open board position and one/some/or all of the board decided this kind of question made sense? An inquiry as to why she didn't try and stop John Fast from filing a suit against the RCSC is full stop-on stupidity. I'm sorry, but if that's how these 8 board members are going to try and conduct business, they need a lesson in conducting interviews (and so much more). I am literally in shock anyone thought this kind of question made sense. And then you all/we/i wonder why almost no one is applying for those positions. Warm and welcoming indeed! Come on gang...you all can do better than that can't you?
Bill, The question was posed by a single member of the board, and I could tell by looking around the room, the question was not well received by all. The conundrum I felt was present was the belief of the scope of the duty to the membership or lack thereof. I wasn't there long enough but when I suggested a newsletter for everyone in the community, I heard no feedback. That to me is telling of the desire for outreach is limited to websites. and even they are not working well. Yes, I know they are coming someday, but they are not going to be enough and I still feel members should not have to come to us for their news at the rec centers. Email blasts are for those who have the ability to get email. Why is it so hard to want to include everyone to the party?
Carole, I was made aware that one long standing board member has taken it upon himself to defame and attack me. He made a remark at the Board meeting saying, in effect, the lawsuit was frivolous and RCSC should sue me for damages. Let me be crystal clear to this Board member: I have never and will never file a frivolous lawsuit. The lawsuit sought to compel the board to allow members to vote on motions I made and, if successful would have equally applied to motions other members made. It did not seek ANY monetary damages. Over 1,700 members were represented at the annual meeting and were denied the right to vote without any understandable explanation of why they could not vote. I DO NOT CONSIDER VOTING RIGHTS OF THE MEMBERS FRIVILOUS BUT APPARENTLY THIS INDIVIDUAL DOES. Following the actions of the Board, which included a statement by President Tom Foster that the attorney was highly confident RCSC would recover all costs, I could have easily pursued monetary damages and demanded court ordered discovery. It is my firm belief that this Discovery would have exposed multiple ethical breaches by the individual I believe asked you those questions. I chose to voluntarily withdraw the lawsuit. The court granted my request without prejudice and did not award RCSC or me any costs. I apologize on behalf of the members for the distasteful conduct of the individual that asked you those questions.
I suspect the Board was advised by the lawyers to use the following statute in the Arizona Revised Statutes: 10-11003. Amendment by board of directors and members 3. The board of directors may condition its submission of the proposed amendment on any basis. I guess they conditioned the submission of the various amendments on their inability to figure out that they should have simply contacted the authors of each amendment first? Anybody who read those amendments knows that not all were controversial and could have, and should have been presented to the Membership. Instead of attempting to fulfill the wishes of the Members, they took the easy way out placing the blame for their decision on the lawyers while pissing off the Members!
Good to hear it was just one them who felt the need to throw a "gotcha" question at you. I'm sorry, but it was foolishness and it would have been appropriate for other board members to tell him/her the question was out of line. I've written it so many times, one step forward, two steps back. Some day's they simply cannot get out of their own way. As far as the Update (Sunviews) being printed on a monthly basis, Mike D reported at one of the previous meetings the cost to print and distribute would be crazy expensive; if memory serves me, something in the 100k neighborhood (if mailed) per year. He suggested they consider a twice a year mailing. We used to cover the printing and delivery costs with 8-10 pages of ads, but print media is barely breathing and ad buys aren't very well received. I suspect those days are long gone. This question has never varied: How do we best reach people? Organizations across the community (and the country) all ask the same thing. There's no one right answer, we all understand that technology affords us opportunities that sadly we have ignored. That doesn't solve the dilemma of seniors who aren't online, or who seldom if ever leave their homes. The question/solution may well be discovering/revisiting aspects of the community that have been ignored or forgotten. We used to have neighborhood block watch groups, we used to feature rec center festivals, we used to have far more meetings between the RCSC and the members. Nope, not calling for any of them. My arguments almost always circle back to the new home buyers who come here curious and get so little attention. I'd start there, i'd pick their brains on what their expectations are? I'd begin to build bridges across multiple platforms to help create and forge that sense of community and belonging. Clubs have enormous potential for reach, growth and exposure. They've always been an untapped source. It's the value of being so large; we have an enormous pool of talent that we all but ignore. I know, beating that long dead horse yet again. My bad. What i do know is this: Insulting a member offering to help the organization with an idiot question that serves no purpose is crazy. Attacking a member who posed a legal question whether the board had a legal right to deny us our votes at our meeting is crazy. Suggesting they should sue them for it is even more nuts. We are on the cusp; either we begin to change and grow or we let the small band of merry men and women lead us to their version of the promised land. I want to believe in them, but the question you were asked offers me little in the way of hope for change. It simply sounds like more of the same old us versus them. I truly hope i am wrong. It would be refreshing if the board member who asked you was reading this was pick up the phone, call you and just admit it was a poor choice on their part. That would be a great first step. As, always, just one man's opinion.
Please forgive my silence, antibiotics has me sleeping more than usual. I don't see much hope for change. There was still a concern of my being active on TOSC and would I continue? My answer was no, it would be radio silence, just like it was previously. Why such reluctance to involve and inform the members is baffling to me. Why don't we have a section that highlights the week in review of the board? No, everything is cloak and dagger, and if you find anything out that may be of value, well, that is the end of the mystery. Why the mystery anyways? The Corporate Documents state to do all possible for the benefit of the members, so why is it so hard to find out what is happening behind those closed doors? And for God's sake, is this same old methodology being perpetuated all these years later? John, I am so sorry to use your name but it was your name that was mentioned. You owe me no apologies for pursuing your ideas to help the members. Would the cost to print and share space with the Independent, as it once was done, be as costly? Rather than do a stand alone application, utilize the Independent newspapers as a resource to get the information out there? Don't know, just an idea? I found the board members welcoming so I was astounded at the question I was asked. So Much so, that even after sleeping on it, I felt compelled to share this with you folks. I have held out such high hopes for change, starting now. I don't feel there is much impetus for the changes to come. It feels like more of the same. It will take 4 new people to step up and run with the agenda of change management. Stir up the current methodology with an eye on the future or what can and should be, Perhaps 4 like minded individuals who can see a brighter future with the choices made that need to happen, Otherwise, we will keep getting the regurgitation or the same old stuff, different day. If we are seeking the buyers coming into Sun City to be the salvation, then the tide of flippers needs to be stemmed. Far too many properties are being sold to real estate investors and not to those would make this their home. While the amenities are numerous, are they enough to attract the buyers of today? Nope, not gong there again, as we both have our own ideas of what should/could be happening to invigorate the buying public. Both require investments in the rec centers, making them places of gatherings and relaxation, to include after hours to accommodate those still working. A large segment of the population still works, and we do very little o entice them to be a part of the community. That was also a statement I made, and the reply was who was going to be responsible for this? I suggested asking for volunteers, but was told they are most hard to come by. Another missed opportunity to engage the members where needed. Perhaps is there was greater communication with the members rather then everything being so secretive, we could start build a sense of community once again
It's my understanding that a replacement Director for Connie Jo has already been selected....so when are they going to tell us?
Usually presented and installed quickly after the vacancy, at the next board meeting, which is Thursday, June 26th, 2025, Sundial, 9am. Took forever for the board to decide on an appointee this time!!
I get that, but what's the secret? Surely they can't use the excuse of an Executive Session. The final decision or action taken during the Executive Session can be revealed publicly without disclosing the detailed discussions. It is, after all, going to be public knowledge that affects the Members!
CM, et.al., I was shocked that a question like that was asked as a condition of the interview. Simply put, it was appalling! As people who read TOSC are aware that John and I have had are differences over the years. That said, as a former Board member, this is not like the military wherein you completed your service as an officer and could be reactivated at any time. If I was approached to instigate this action I would loudly decline probably using colorful metaphors, advise it is clearly illegal and I would not impede John’s Constitutional right to seek redress of a grievances through the judiciary, as the Constitution specifically states. It is part of the foundation of our legal system. In the instant matter wherein the Board President advised they essentially could countersue for damages was a bullying tactic and possibly be an abuse of process. As John advised me once, tread lightly. I doubt John’s action had any adverse effect on the Directors and Officers insurance coverage other than a notice of potential claim. Considering John withdrew his action, any funds spent on this claim were covered by the deductible. While it might remain on the claims history, I doubt the facts of the claim would have any adverse effect on the premium for this coverage. The defense rests.
Thank you so much for the clarification. Your background is this arena is comprehensive and I am most grateful for the information provided. The “question” was not really a question, but a statement, followed by an allegation that I should have stopped the suit from happening. I now have a whole new perspective of this board member, and my personal level of mistrust and disdain is heartfelt. The good news is this person is one of nine and the hope is high for the new incoming four. I also don’t feel the other board members support the accusation made, as they have a higher standard of conduct.
Carole, For what it is worth I wrote the board and requested that the offensive board member call you to acknowledge his question/statement was unprofessional. I am distraught that this individual would call a lawsuit regarding the right of members to vote "frivolous". I will not engage in character assassination regardless of the provocation.
Personally I think it was inappropriate to mention a Member by name in an interview for a position as a Director of the Board.
