Model Nonprofit Corporations Act and Designated Bodies

In February, Lloyd mentioned that the 4th edition of the Model Nonprofit Corporations Act was available for comment.

In May, the ABA released the Final Exposure Draft of the Model Act. And while I have every intention of reading through it entirely, I haven’t yet.

I did start it, though. And one change it makes is the introduction of “designated bodies.” Under the new Model Act, a designated body is a group to whom some, but not all, of the powers, authorities, or functions of the Board of Directors have been designated.

In an Official Comment, the ABA committee explains that it created the concept of designated body because “it is sometimes desirable for a nonprofit corporation to depart from the traditional governance structure based on a board of directors and, in appropriate circumstances, members.”

It is an interesting idea, but I’m trying to think through how this new designated body differs from a committee, which was explicitly authorized in the 3rd edition of the Model Act. I’d love to hear others’ ideas about the relevance of this new governance body in the world of nonprofits.

Samuel D. Brunson