When clients first file the paperwork for incorporation of their nonprofits, they are often unclear about the difference between voting members and board members. In short: while every nonprofit organization must appoint board members, voting members are optional.
Membership vs. Non-Membership Organizations
Most nonprofit organizations have a board of directors, executive director, and eventually other employees. However, some nonprofits also have members. In Colorado, a member is “any person or persons identified as such in the articles of incorporation or bylaws or by a resolution of the board of directors.”[1]
Nonprofit organizations with members are called membership organizations, or membership-based nonprofits. In a formal membership organization, members have voting rights and participate in the selection of board members, as well as voting on the direction and priorities of the organization (e.g., resolutions to change bylaws, dissolve the organization, etc.). Membership organizations are most common when the nonprofit serves only a limited number of people, for example: social clubs, churches, neighborhood associations, chambers of commerce, labor organizations, or veterans’ organizations.[2],[3]
In contrast, non-membership organizations – a.k.a. board-driven organizations – do not have members or have non-voting members. All rights and responsibilities related to selection of the board and direction of the organization are vested solely in the board of directors and there are no members to cast votes. Informal membership organizations (e.g., museums or public radio stations), where membership is awarded in exchange for a monetary donation and members do not have voting rights, are still board-driven organizations. Most charities and complex nonprofits are structured as non-membership organizations or non-voting membership organizations.
This distinction is important when filing articles of incorporation – if it is only the board who makes decisions for your organization, then you are a non-membership organization and you do NOT have any voting members to declare in your articles of incorporation.
Pros and Cons of Voting Members
The decision about whether to create a membership-based or board-driven structure depends on the complexity, size, mission, and needs of the specific nonprofit. Here are some pros and cons of membership-based structures:
| Benefits of a Membership-Based Structure | Drawbacks of a Membership-Based Structure |
| Membership is a way to raise money for new organizations, given the fact that members usually pay membership dues | Governance is more complicated when there are many voting members |
| Power, rights, and responsibilities more broadly distributed throughout organization | Membership structures are hard to undo because members are unlikely to vote to remove their own power |
| Members help determine the direction and operations of the organization; give members ownership over the nonprofit’s success | Membership-based organizations may be less stable, especially if there are many members and power struggles develop |
Need help with deciding whether or not to allow voting members in your organization? Curious about how to structure a membership organization? Have other questions about nonprofit incorporation, governance, or administration? The Colorado Nonprofit Legal Center can help! Contact us today.
By Rachel Wilson
[1] Colo. Rev. Stat. § 7-121-401(24)
[2] Nolo, https://www.nolo.com/legal-encyclopedia/difference-between-membership-and-nonmembership-nonprofits.html (last visited Jun. 23, 2021)
[3] Upcounsel, https://www.upcounsel.com/nonprofit-corporation-members (last visited Jun. 23, 2021)
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