In response to questions regarding Senate Bill 1232, which would ammend the Albion College charter is passed, President Randall sent a response to The Pleiad:
April 5, 2010
Senate Bill 1232 represents the last step of a governance review instituted by the College in December, 2007 and approved by the Board of Trustees (BOT) in May, 2009. The approved governance changes were based on a report submitted to the BOT by a special committee of the board in February, 2009. The governance review and the cost of the consultant were funded by a grant to the College from the Mellon Foundation.
The BOT approved (with some changes) a number of the special committee’s recommendations designed to improve the College’s governance, including changes in the size and composition of the BOT and the institution of trustee term limits. Many of these proposed changes were implemented by new bylaws of the College approved by the BOT in October, 2009. Some of the changes (primarily number of trustees and term limits for trustees) are in conflict with the College’s charter, however, and so it became necessary to amend the charter. This complicated the process.
Albion is one of only three private colleges in Michigan whose charters are a matter of state law; all other colleges were formed under the Michigan Nonprofit Corporation Law (Nonprofit Law) by filing incorporation papers with the State of Michigan. Albion’s statutory charter is an important part of the College’s history (the initial charter was approved by the Legislature in 1857), but, because any amendment to the charter must be approved by the Michigan Legislature and signed by the Governor, it limits flexibility. This is why the charter has not been amended since 1972, while most private colleges formed under the Nonprofit Law have regularly amended their charters to update governance procedures and to take advantage of amendments to the Nonprofit Law.
In 1987, the Nonprofit Law was amended to permit corporations subject to that Law to amend their charters to limit the liability of volunteer directors or trustees to the corporation and third persons and to shift that liability to the corporation. The intent of the legislation was to promote volunteer service to nonprofits and to help nonprofits recruit qualified directors and trustees. Most private colleges (including Hope, Olivet, Calvin, Aquinas and others) and other nonprofits amended their corporate documents to take advantage of the new law. Albion did not, however, because of the time and effort involved in changing state law.
Having been unchanged for 37 years, the College’s charter was out of date in 2009. It was therefore decided that, because the charter was being amended, it was an appropriate time to bring it current by eliminating certain provisions that are no longer applicable and by adding the volunteer trustee limitation of liability language. This would complete the full governance review, make the most of the Mellon Foundation grant, and put the College on par with many other Michigan private colleges and nonprofits. Thus, Senate Bill 1232 includes three areas of changes to the charter: the size and composition of the BOT and the addition of trustee term limits (Sections 2 and 3); the addition of the volunteer trustee limitation of liability provisions (Sections 7A-7C), which are taken verbatim from the Nonprofit Law; and the repeal of two charter provisions that are no longer applicable (Enacting Section 1 at the end of the bill).
In summary, the new law represents the conclusion of almost three years of work improving the College’s governance procedures and bringing its charter current. All aspects of the governance review were approved long before the BOT considered any reductions of faculty positions – and the trustee limitation of liability provisions of the new law would have been adopted years ago had the charter amendment process not been so involved.