For many nonprofits, “membership” can be a confusing concept. Some organizations use the term for supporters who receive perks like free admission and newsletters, while others grant members legal rights such as voting on the board or approving major decisions. These differences stem from whether a nonprofit has statutory members under state law or uses a more informal, non-statutory membership structure. Most nonprofits choose not to have any legal voting members because of concerns about complexity, administrative burdens, and the loss of control such members may bring, but for some types of nonprofits, membership can be appropriate and bring many advantages. Below is an overview of what it means to be a statutory member, the pros and cons of this arrangement, and why some organizations instead opt for non-statutory “members.”
What Are Statutory Members?
Statutory members are individuals or entities with legally recognized membership rights as defined under applicable state nonprofit laws. In California and most states, a member is defined as a person with legal voting rights on key issues such as electing the board of directors, mergers and dissolutions, and amending articles of incorporation and bylaws. Having members requires a nonprofit to follow specific rules set forth in state statute surrounding membership rights and responsibilities, many of which may not be varied. As a result, nonprofits must maintain precise membership records, adhere to rules for admitting or terminating members, and properly hold and notice membership meetings, among other requirements.
Advantages of Statutory Membership
When considering whether a statutory membership is right for your organization, keep in mind a few key benefits:
- Deeper Stakeholder Engagement: Members have a real voice in governance, fostering a stronger sense of ownership and commitment
- Accountability and Transparency: Required protocols for meetings, voting, and recordkeeping can encourage openness and a diversity of perspective in decision-making
- Enhanced Legitimacy: When major changes require membership approval, the organization may gain added credibility from broader participation
Disadvantages of Statutory Membership
On the other hand, be aware of some challenges associated with a statutory membership:
- Complex Administration: Maintaining membership records, sending formal notices, and ensuring proper voting procedures can be time-consuming
- Potential for Conflict: Larger, more diverse groups of voting members may form factions and complicate decision-making, and disagreements between members and the board of directors of the nonprofit could lead to gridlock
- Risk of Inactivity: If members lose interest or fail to participate, reaching quorums and passing votes can become difficult
What Are Non-Statutory “Members”?
Many nonprofits refer to supporters as “members” without granting them legally defined membership rights. Their role is often more symbolic or advisory, with their involvement governed by the nonprofit’s bylaws rather than state statute. These individuals may receive certain benefits, such as free admission, event discounts or special communications, but they do not have the right to vote on major corporate actions. Non-statutory memberships are attractive to organizations that prefer to keep decision-making power consolidated with the board as the nonprofit’s board of directors retain ultimate control over governance decisions while being able to rely on non-statutory members’ engagement or increased participation in the nonprofit’s programs and initiatives. Overall, non-statutory memberships allow for flexibility, streamlined governance, and fewer administrative burdens.
Deciding Which Model Is Right for You
An organization’s purpose and type of nonprofit status often guide this choice. Those seeking a simpler structure typically find non-statutory membership more practical. Most nonprofits, especially those recognized as tax-exempt under IRC Section 501(c)(3), do not have statutory members, instead relying on a board of directors for nonprofit stewardship. On the other hand, nonprofit organizations that value broad democratic input, professional associations that provide services specific to their members, or mutual benefit corporations that serve the common good of their members rather than the general public may benefit from or be legally required to provide for statutory memberships. It is also crucial to consider available resources: if your nonprofit lacks staff capacity to manage membership records and formal voting procedures, non-statutory membership could be more efficient. Always consult legal counsel to understand your state’s requirements, ensure your chosen membership structure is accurately described in your entity’s governing documents, and learn the process for switching membership models if needed.
Conclusion
If a nonprofit is considering members, recognizing statutory members or designating supporters as “members” in name only can significantly affect governance and daily operations. Statutory members can bring depth and democratic participation, while non-statutory membership allows for a more flexible structure. By weighing the pros and cons—and seeking legal advice where appropriate, your nonprofit can adopt a membership model that aligns with its goals, resources, and mission.