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.
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.
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.
- Illinois General Assembly: General Not for Profit Corporation Act of 1986: 107.03
- Laws of New York: Not-for-Profit Corporation Law: 601
- Proskauer.com: Recent Changes in Delaware Law Governing Not-for-Profit Corporations
- U.S. Government Printing Office: Electronic Code of Federal Regulations: 1-501
- Legislative Counsel, State of California: Nonprofit Corporation Law
John Green is an attorney who has been writing on legal, business and media matters for more than 20 years. He has also taught law school and business courses in entrepreneurship, business enterprise, tax and ethics. Green received his J.D. from Yale Law School and his Ph.D. in religion from Duke.