By John G. Fornaro
For most private clubs in this country, board meetings are closed-door affairs. The question is: Why are they closed? Should they remain closed? Are there any reasons why a club should handle board meetings any differently?
For example, if board meetings are open to board members, committee chairs and senior paid management are regular attendees, are there times where board meetings should be open to anyone in the club who wishes to attend? Or should they be open all the time?
Should or would a board open its meetings to greater scrutiny from the club’s members?
Few people, i.e. club members are asked for their opinions on a regular basis, or in fact, few clubs even open their board meeting to outside participants. (i.e. members) and there are diverse opinions on what might happen.
Although the argument is often made that, open board meetings provide a private club’s public with an opportunity to observe decision-making processes so that the public may gain an understanding of the rationale for plans and decisions.
“We’ve seen a few traditional clubs (vs. club communities governed by sunshine laws) open their meetings to members with the exception of discussions on personnel and legal matters,” explained Kurt Kuebler of Kopplin Kuebler & Wallace, consultants in the private club industry.
“Most boards have stated in the past few years that they want and need to be more transparent to their members; few have taken this large a step. Those that have seem to limit input from spectators except during certain segments.”
Although he sees benefits in certain circumstances, Gordon Welch, president of the Association of Private Club Directors, suggests, “If the club practices an open meeting policy then all meetings would be open unless the board is in executive session in which non-board members would leave the room.
“I do not believe a club should practice open board meetings…open meetings are a bad idea. The board is elected and placed in office by the membership and their peers. The board has a fiduciary responsibility and board members are responsible for their actions. Having someone sit in on a regular board meeting will not help in my opinion, but I have been wrong before!” Welch exclaimed.
“Open meetings make me think of ‘strategic intervention.’ If a club has an open meeting policy I suspect, there would be one or two individuals that had nothing better to do than attend meetings and stir the pot. The board is charged with the running of the club and the membership should allow them (the board) to do their job,” he stressed.
Welch does however, see some benefits. “If a club is transferring ownership or has had major issues (financial, legal or hurricane/weather) it would be a good and ‘transparent’ communication,” Welch added.
Tarun Kapoor of Kapoor & Kapoor Consultants believes “board meetings should be open unless there are confidential topics on the agenda. However, there needs to be protocols in place to attend.
“Transparency and inclusion after all are fundamental requirements of private club (collaborative) governance.” He suggests “confidential topics such as executive compensation and/or performance warrant discretion and confidentiality.”
Kapoor doesn’t believe the club’s ’modus operandi’ for board meetings should or must change if board meetings are opened to club members.
“However, members need to attend only as observers and not as participants. The minute the president gives them the floor as fellow owners they expect their input to be part of the decision making vote. This would create anarchy,” Kapoor suggested.
“I believe it would limit the amount of discussion in a meeting and members would be more fearful of being sued,” Welch stated bluntly.
“Clearly, there are times when initial stages of an idea or concept can be fleshed out in a board room before the issue becomes more ‘public,’” opined Kuebler.
“Sometimes, however, these types of discussion are stymied in an open forum session, or the initial idea is in a very early stage of development or consideration, and there is a concern that it gets out to the membership before being fully vetted and misinformation ensues. Additionally, there are some members who monitor meetings and have brought disruption to the overall meeting. There have to be clear rules of order.”
Robyn Stowell, an attorney with Scottsdale, AZ-based, Sherman & Howard, says, “from a legal standpoint, the board needs to consider its legal and fiduciary duties.
“For example, with meetings open to the membership the board must be very aware of confidential information and confidential issues. The board should also check the requirements set forth in their bylaws and in the local statutes. I have reviewed bylaws that specifically require the board’s meetings to be open to the membership. In some cases, state law may require open meetings including, for example, when a single legal entity is the club and the HOA,” Stowell explained.
“Having open meeting may be inconsistent with the board’s desire to act efficiently. For open meetings, the board must consider how much information to provide to attendees or to the membership at large. For example, if you use a consent agenda, do you want to circulate all of the related reports ahead of the meeting or at the meeting?” she queried.
“From those I’ve spoken to and with, the benefit appears to be the transparency of discussion and issues…and letting the members know that they [the board] don’t have a hidden agenda of any sort,” expressed Kuebler.
“Most clubs that have opened their meetings, seem to have a relatively small group of attendees/monitors from the membership. In fact, a few managers have actually suggested to me that opening their meetings has reduced the amount of ‘grandstanding’ by some board members, so there can be benefits in doing so.
“And as I mentioned earlier there have to be clear rules of order.”
Kuebler doesn’t feel opening meetings will change a board’s operating methods. “Frankly, homeowners’ associations have had open forum for years and it typically keeps everyone on the agenda in better fashion, and meetings shorter overall.”
Welch says that “If a club is required to hold open meetings I would follow the open meetings act. You must post the agenda a few days prior and members are welcome to sit in the room (not at the board table) and listen.
“The only time they would be permitted to talk is if they have requested to do so (in writing) before the meeting or if they are specifically asked to state an opinion in the meeting. All reports to the board would be sent a week prior and most of the “board work” would be completed before the meeting.”
Still, Stowell believes that “with all the arguments against open meetings, there are practical and political reasons that boards want to be open and transparent to the members. If the club has historically conducted open board meetings, the club might slowly evolve to occasional town halls or open meetings.
“This allows the boards to operate very efficiently in its private meetings but to have an open exchange of ideas with the members at regularly scheduled town hall or open board meetings,” Stowell added.
The fact is, transparency and accountability seems to be the main forces behind more open governance. And often the major reason behind open meetings is not to have people to attend but to seemingly offer greater transparency, which might also have been seen as giving greater accountability to a club’s members.
The push for open meetings might also come because a club’s membership feels the board has handled an issue inappropriately, or the membership feels it hasn’t been consulted adequately, before a board decision was made.
What does seem critical in the push for greater accountability, is the need to balance confidentiality with the desire for more transparent governance.
“If boards and GM/COOs are doing a good job of providing consistent, insightful and beneficial updates of what occurs and why in each board meeting, it probably still makes sense to keep them closed in order to promote better candor and debate/discussion amongst the board,” Kuebler offered.
“Re-evaluating communication methods and information emanating from each meeting is something that should be done by the president and GM/COO regularly to ensure relevance.”
Publisher’s Final Thoughts
So where does the dust settle on open board meetings?
Robyn Stowell raises a fundamental issue…know what your club’s bylaws say and be fully aware of local and state laws. Non-profit, tax-exempt (501(c)(7) corporations generally do not conduct their business (except under special circumstances), unless required by law.
As Stowell has said in reviewing “bylaws that specifically require” open meeting, boards must consider carefully how much information is provided at the meeting. This includes boards being very aware of confidential information and issues.
While it doesn’t really make sense to have private club board meetings open to members all the time, it does make sense to allow club members to attend some open sessions if for no other reason than to encourage member understanding.
And certainly, as Tarun Kapoor has stressed, there must be protocols in place, “because the moment the president give them the floor as fellow owners, they expect their input to be part of the decision making vote.”
That just can’t happen.
And yes, open meetings might just allow for what Gordon Welch describes as a “strategic intervention… one or two individuals with nothing better to do than attend meetings and stir the pot.”
If nothing else, open board meetings might well provide a chaotic disruption with no redeeming value. And just because it’s an open meeting does not guarantee an ‘observer’ – aka club member – the right to speak. Unquestionably when sensitive, confidential matters being discussed, meetings must be closed. I believe, a combination closed and open meetings can be a good thing for a private club, depending upon the circumstance, and if for no other reason than the fact it creates greater transparency, is more inclusive, and can negate dissent.
And finally, open board meetings, when chosen selectively, will enhance member confidence in the club’s board and how members view their club.
At least, that’s the way I see it! BR
John G. Fornaro, publisher
If you have comments on this article or suggestions for other topics, please contact John Fornaro at (949) 376-8889 or via email: firstname.lastname@example.org