Does a Non-Profit Have to Have Members?

By John Green

Whether a nonprofit organization is required to have members can depend on its type and the state in which it is incorporated. In addition to state law requirements, the standards for nonprofits with exempt status can also determine whether a particular nonprofit must have members.

Membership Defined

Generally, the legal definition of members under nonprofit organizational statutes refers only to individuals or entities who have a right to vote in the election for directors or on fundamental corporate transactions, such as closing the business or amendments to the bylaws. Having rights as a director does not make an individual or entity a member, because is a separate category that is distinct from the board of directors of a nonprofit.

States with Optional Membership

Most states give nonprofits the choice not to have members, although the scope of this option can vary. For instance, Illinois generally provides that a nonprofit can choose not to have members, but in New York, only a charity has the right not to have members. If a nonprofit has chosen not to have members, this may be set forth in its articles or bylaws.

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The Membership Requirement in Delaware

Delaware requires all nonprofit organizations to have members. If an organization does not expressly provide for members in its articles or bylaws, Delaware law states that an individual or organization with the right to vote for directors shall be considered to be a member. In practice, this means that when members are not defined in the articles or bylaws, a Delaware nonprofit's directors are members by default.

Membership and Federal Tax-Exempt Status

A nonprofit's tax-exempt status can also affect whether it must have members. For example, there is no membership requirement for charities exempt under Section 501(c)(3) of the Internal Revenue, but by definition, a Section 501(c)(7) organization is a social club supported by its members.

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The Texas Non Profit Corporation Act

Nonprofit corporations in Texas are governed by Chapter 22 of the Texas Business Organizations Code. Though forming a nonprofit corporation doesn’t automatically mean your organization will be tax-exempt under IRS rules, creating the corporation is often a first step toward tax-exempt status. Forming a corporation also allows your organization’s personnel to shield themselves from some liability risks.

Steps for Dissolving a Nonprofit

Nonprofit organizations usually aim to raise funds for a particular social, educational, charitable or religious purpose. Those in control of the organization may choose to dissolve it if it has achieved its purpose or if other circumstances dictate that dissolution is the best course of action. The precise steps for dissolving a nonprofit depend on the legal basis of the organization and the state where it is registered, but basic principles apply in almost all circumstances.

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