The word “members” in the nonprofit context is often misunderstood, so today, we’re going to break down the legal and practical meanings. Knowing more about nonprofits with a membership structure can help you determine if your new nonprofit needs members.
So what are “members” of a nonprofit?
A member, in the legal sense, is a person who has some sort of voting rights that are built into the corporate documents, like bylaws. People often confuse members with two other groups: patrons and board members.
Patrons of your nonprofit are people who are often receiving a benefit or service from your nonprofit organization. For example, if you run an arts organization that shows local films, the people attending your screenings are patrons. Patrons do not have voting rights, which simply means they don’t make decisions that directly influence the direction of the organization. Patrons often also donate. When they donate, we commonly assign them donation levels, which we might (confusingly) call “membership” levels. But such patrons are not, actually, members.
Board members (or the board of directors) are the governing body of every nonprofit. While every nonprofit must have a board, not every nonprofit must have members (that requirement went away in the 90s). Generally, the board of directors are a group of people who oversee the nonprofit. They provide accountability for leadership to ensure they’re reaching towards their charitable mission, and they can provide direction, advice, and vote on big picture decisions like bylaw updates or mergers.
Members, on the other hand, make up a group that is usually larger than the board. Common responsibilities of members include electing or removing board members and voting on changes to the nonprofit’s bylaws.
What kind of nonprofits typically have members?
Social Clubs (also known as 501(c)(7) organizations), many churches, chambers of commerce, and professional associations have members. Most other types of nonprofits do not have members.
What are the pros and cons of having members?
- For organizations with members, those members are often served by the nonprofit in a specific way, and thus, want a say in how the nonprofit is run. It can be a democratic solution for an organization serving a specific population over a long period of time.
- Membership organizations can increase accountability for the board, especially in cases where there may be personal gain or a conflict of interest.
- Members can feel more involved in the nonprofit, which can lead to increased giving. Membership dues can be another way for the organization to bring in funding.
- For many charities, not having members helps streamline the decision making process.
- If your organization is a members-based organization, it can be difficult to transition away from that structure.
- More people in the decision-making process sometimes leads to an increased amount of conflict. We’ve navigated conflict between groups of members and the board of directors for many nonprofits (reach out if you’re experiencing this).
- Nonprofits with members have the added task of keeping up-to-date information about the current members and their meetings, in addition to the regular board roster and meeting minutes.
- Members sometimes act as if the board of directors is there solely to serve the members’ interests, which is decidedly not the case in most instances.
- Members (or, factions of members) can, in extreme cases, attempt to take over the organization entirely. A vocal faction of members can try to lead a coup to take the organization in a different direction or expel current leadership.
For most nonprofits, members complicate the decision-making process, and the membership structure shouldn’t be entered into lightly. There are varying structures for membership organizations that grant members different amounts of rights and powers. If you’d like assistance from an experienced nonprofit attorney on how to structure a nonprofit with members, please reach out to us. We’re happy to help.