FAQ: ABCs of Nonprofit Membership Corporations

December 17, 2019

Does your nonprofit corporation have members? If so, do you know who they are and whether they get to vote on key matters affecting your organization?

Because the term “member” is often used loosely, it is easy for confusion to arise about whether a nonprofit has members for state nonprofit corporation law purposes, who the members are and what rights they have. In some cases, this confusion may lead to disputes about whether particular individuals are members and thus get to vote on certain corporate actions. In other cases, it may result in failing to obtain member approval of corporate actions, which can invalidate them or prevent them from occurring.

In the past many states, including Massachusetts, required all nonprofit corporations to have members. Over time, most states have done away with this requirement and now permit, but do not require, nonprofits to have members. The trend today is for nonprofits not to have members but instead to be governed solely by a self-perpetuating board that delegates day-to-day operations to the CEO or Executive Director.

Some nonprofits (especially older ones) that intend to be governed solely by a board of directors may have voting members and not realize it. Other nonprofits – such as museums and public radio and television stations – may call donors “members” but not give them voting rights. Yet other nonprofits – such as trade professional associations, social clubs and advocacy groups – are formed to serve and be governed by members and therefore choose to have voting members as well as a board of directors.

In this FAQ, we’ll explain:

  • What it means for a nonprofit corporation to have voting members.
  • How the role of voting members differs from that of the board of directors.
  • What rights voting members usually have.
  • How to tell whether your nonprofit has voting members.
  • How voting members differ from other supporters the nonprofit may call “members.”
  • What can happen if your nonprofit has voting members but has not been holding members’ meetings.
  • Other key points to be aware of if your nonprofit has voting members.

Click here to read the full FAQs or here to listen to the PODCAST.