Membership driven organizations vs. a self-perpetuating board

When establishing a charitable or non-profit organization an important decision that needs to be made is whether the organization will be board driven or member driven.  The not-for-profit corporation statutes in this part of the world are all being increasingly modeled on the premise that members will influence the management of the organization.  Recent statutory reforms are designed to enhance membership rights and responsibilities in non-profit organization.  But many organizations have no real active membership at all.  In an organization that is board driven, there are typically no real members at all, or the members that do exist have very limited rights.  Often these are referred to as self-perpetuating boards, where the members and the directors are one and same persons. 

Self-perpetuating boards vote for their own replacements.  In a nonprofit with a self-perpetuating board, the Board of Directors is typically the ultimate seat of authority within the organization.  In contrast, in member driven organizations, the members are typically voting members who have the power to elect and remove members of the board of directors, receive information about the organization’s activities and finances, and to take the organization to task when the organization fails to do so. 

Voting memberships are useful when an organization wishes to be democratically controlled by its constituents. Voting membership structures are commonly used by member driven organizations like social clubs, churches, chambers of commerce or trade associations.  Those organizations exist to serve their members and control is typically vested in the members.

When considering whether to establish an active member driven non-profit organization, remember that more and more members of a nonprofit organizations are generally analogous to shareholders in a business corporation.  Members have many rights and remedies when things go wrong.  Memberships can also be fickle.  Once a membership has been established, it may be difficult or impossible to eliminate without the consent of the members.  Members can also complicate the governance of a nonprofit corporation.  For example, membership organizations must keep up with noticing and documenting meetings of the members in addition to board of director meetings.  The membership roster must be kept up to date to know who is eligible to vote.
David van der Woerd
David van der Woerd
P: 905.572.5803