Nonprofits and Memberships

Nonprofits and Memberships

A nonprofit corporation must decide whether to have members, and if it does, if there will be different classes of members, such as voting and nonvoting.

Allowing people to become members of a nonprofit organization may seem like a good way to get support, but because formal members of nonprofits are granted legal rights to control it, many organizations decide against formal membership, at least in the beginning. In most states, formal members have a right to vote on major decisions and to choose directors or officers. One way to keep control with a membership corporation is to provide that the officers and directors are elected from a slate chosen by a nominating committee. This committee can be composed of the founding members and those they approve.

However, the easiest way to keep control of a nonprofit corporation is to set it up as a non membership organization. 

As an incentive to support an organization, you can give people an informal membership or list them as benefactors, contributors, associates, or with a similar title. This gives them the feeling of being part of the organization without giving them the power to control its affairs.

  • Definition of a Nonprofit Corporation
    A Nonprofit corporation is a special type of corporation that has been organized to meet specific tax-exempt purposes. To qualify for Nonprofit status, your corporation must be formed to benefit: (1) the public, (2) a specific group of individuals, or (3) the membership of the Nonprofit. Examples...
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  • Reasons to Form a Nonprofit Corporation
    As someone involved with a charitable cause, you might be weighing the benefits of formally organizing your nonprofit. While it might take a little extra work, only with a state-recognized nonprofit corporation can you obtain private and public grants, low-cost postage rates and be exempt from...
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  • Comparing a Nonprofit to an LLC or Corporation
    Nonprofit corporations enjoy the same liability protection as regular corporations and limited liability companies. In other words, your directors, trustees, members, and employees are not generally responsible for corporate debts and liabilities. There are also significant federal and state tax...
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  • Tax Exemption for Nonprofits
    Forming a nonprofit corporation with your state does not automatically qualify you for federal tax exemption with the IRS. Once you have created your nonprofit by filing the necessary documents with your state, if you want federal tax exemption, you must file a separate application with the IRS....
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  • Commercial Rights of Nonprofits
    The fact that a corporation is a nonprofit does NOT mean the corporation cannot sell goods or services for money. In fact, many nonprofits make money selling everything from clothing to medical services. A nonprofit can pay salaries to officers and employees. But, in order to maintain nonprofit...
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  • Managing a Nonprofit Corporation
    Directors are responsible for the management and operation of a nonprofit corporation. Nonprofit directors can serve with or without compensation. If you decide to compensate directors, remember that compensation must be deemed "reasonable" by the IRS. Directors are under the same constraints of...
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