Does a Nonprofit Have to Have Members?

By Jane Haskins, Esq.

Does a Nonprofit Have to Have Members?

By Jane Haskins, Esq.

Members are optional for nonprofits that benefit the public but required for nonprofits that benefit only a select group of people.

Find out whether your nonprofit must—or should—have members as part of its official legal structure.

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Nonprofit Membership Structure

Like a for-profit corporation, a nonprofit must have a board of directors that's responsible for guiding the operations of the business. Nonprofits can also include members in their official legal structure.

Nonprofit members are entitled to vote on major decisions that affect the nonprofit's structure, mission, and operations, such as amending the nonprofit's bylaws or mission, electing directors, or dissolving the nonprofit. Members' roles are similar to the ones shareholders play in a for-profit company but, unlike shareholders, nonprofit members don't take home any profits.

A nonprofit's articles of organization and/or bylaws should describe its membership structure. The bylaws will also detail the nonprofit members' voting rights, whether there are classes of members, and the way member meetings will be held.

Mutual-Benefit Corporations: Members Required

Some nonprofits are mutual-benefit corporations. These nonprofits are designed to benefit a select group of members, as opposed to the public or community at large. Examples of mutual-benefit corporations include homeowners' associations, chambers of commerce, professional organizations, unions, and country clubs.

Mutual-benefit corporations must have members with voting rights. Such membership typically also includes benefits specific to the organization, whether it's use of the homeowners' association pool or participation in a union pension plan. Mutual-benefit nonprofits are usually funded through member dues.

Public-Benefit Corporations: Members Optional

More traditional nonprofits have a mission to serve the public good. These public-benefit corporations or LLCs include nonprofits that qualify as tax-exempt 501(c)(3) organizations. Examples include social, educational, or arts-related nonprofits. Public-benefit corporations typically raise money through donations from the public.

Under state nonprofit organization laws, public-benefit nonprofits such as 501(c)(3)s can have members, but they can also operate without them. If a nonprofit does not have members, then the board of directors makes all major decisions.

Informal Membership Corporations

Some public-benefit corporations use the term “member" informally, as a way to reward supporters and give them a greater sense of belonging. For example, a museum membership may get you free admission and an invitation to special events. This type of "membership" doesn't confer any voting rights in the organization.

You can create this type of informal member program even if your nonprofit's legal structure doesn't include voting members. Always be clear about what benefits your members will—and won't—receive.

Pros and Cons of Membership Nonprofits

Voting memberships can help supporters feel more engaged with the nonprofit, ensuring their active support in the future. A membership model can also feel more egalitarian, allowing for meaningful input from a wider range of viewpoints. In addition, voting members can provide a check on the power of the board of directors.

However, a membership nonprofit is more complicated and cumbersome to manage than a nonprofit that's run solely by a board of directors. And it can be harder for the nonprofit's founders to keep control over the direction of the nonprofit under a membership model.

Starting a nonprofit is exciting, but deciding what type of nonprofit to form and whether it will have members raises both legal and tax issues. To make sure you get it right, consult with a lawyer with experience in nonprofits before you begin.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.