Reply To: Where does the information come from?

[Rezwan]

Here is more information on Membership law, per the Nolo Nonprofit Corporation book:

if a nonprofit corporation establishes a formal membership structure in its articles of incorporation or bylaws, then members of the corporation will be granted basic rights to participate in the affairs and future of the nonprofit corporation. We refer to members who are give these special legal rights as formal members.

It is optional for a nonprofit corporation to have formal members with legal voting rights. To avoid the problems (including the paperwork and expense) of having to put elections of directors and other major corporate decisions to a vote of the members, most nonprofits choose not to have formal membership structures.

Not having formal members is organizationally simpler than adopting a formal membership structure because only the directors are legally entitled to participate in the operation of the corporation. People interested in a nonmembership nonprofit, although they may play fundamental advisory roles, need not be notified nor allowed to vote for directors or approve changes to the corporations’s articles or bylaws. Normally this works well – because most people become involved in nonprofit organizations out of interest in the group’s activities and purposes, or in some cases because they receive attendance privileges or discounts to nonprofit events or programs, not because they wish to participate in the legal affairs of the corporation.

In other words, the basic difference between formal and informal membership is voting rights. Both types of members would end up getting other privileges and perks of membership (to be discussed in a separate thread).

Below, Nolo sums up the “cons” of formal membership. It seems to me the cons apply to regular board membership as well, but there are just fewer people to manage. In other words, a membership just multiplies the problems of the board.

Why Not Having Members Makes Sense

Here are some reasons why most nonprofit incorporators prefer not to have members:

* Setting up a formal membership with voting rights dilutes directorship control over corporate operations.

* It isn’t always easy to expel a member. State law may require that members only be expelled for good cause following a formal hearing. [no idea if that applies in New Jersey]

* Nonmembership groups can still receive suport from subscribers, sponsors, patrons, friends, benefactors, and so on. You can offer discounts or other benefits to outsiders who participate in the activities and programs of the corporation without giving them a legal right to participate in the management and other affairs of the corporation.

In some states, you may even call these outside supporters “members” of the corporation without running the risk of entitling these persons to voting and other legal membership rights in the corporation. Nontheless, to be safe and to avoid confusion and controversy later on, we suggest you use another term for persons who will not be legal members of your corporation but who will otherwise contribute to, or participate in, corporate affairs and activities.

And, of course, with members voting, you have to set up voting procedures and quorum and voting rights.

And now, how about the pros?