Members and annual meetings: who votes in your nonprofit

This guide is for founders writing bylaws and for board members who aren't sure who actually gets to vote in their nonprofit. Many people call their donors or volunteers "members," but in nonprofit law a member usually means something specific: a person with the legal right to vote on things like electing the board. After reading, you'll know the difference between a member and a non-member nonprofit, what an annual meeting of members must do, how quorum and proxies work, and how a charity with no members holds its annual meeting as a board.

The rules come from two places: your state's nonprofit corporation law and your own articles and bylaws. This guide uses New York's Not-for-Profit Corporation Law as its example because its text is easy to read online. Your state's law may differ, so check it, or ask a lawyer, before you rely on any detail.

Members or no members

A nonprofit corporation either has voting members or it doesn't.

• A membership nonprofit has people (or organizations) with formal voting rights. Members usually elect the board, and some big decisions, like merging, dissolving or changing the articles, may need their approval too. Associations, clubs, neighborhood groups and some community organizations often work this way.
• A board-only nonprofit has no voting members. The board elects its own directors and makes every decision. Most small charities are set up this way, because it's simpler.

State law decides what's allowed. New York's law says a corporation "shall have one or more classes of members, or, in the case of a charitable corporation, may have no members," and that the choice "shall be set forth in the certificate of incorporation or the by-laws." So in New York, a charity may choose to have no members, but it has to say so in writing.

Our bylaws template is written for a charity with no members. It says any action that would otherwise need members' approval needs only the board's approval, and that the board may call supporters "members" or "friends" without giving them a vote.

Which one fits

A board-only structure usually suits a small charity that:

• wants to make decisions quickly;
• has a small, active board;
• raises money from donors who don't expect a vote.

A membership structure may suit a group that:

• exists to serve and be run by a community, such as a neighborhood association or a parents' group;
• wants the people it serves to choose its leaders;
• is ready to keep an accurate list of members, send them notice of meetings and reach a quorum.

Changing later is possible, but it usually means amending your bylaws, and sometimes your articles, so decide carefully at the start. Our guide to articles of incorporation explains what goes in your founding document.

The annual meeting of members

If you have members, state law usually requires a yearly meeting. New York's law says "a meeting of the members shall be held annually for the election of directors and the transaction of other business on a date fixed by or under the by-laws." Your bylaws should say:

• when the annual meeting happens (for example, "in May of each year, on a date the board sets");
• how members are told about it, and how far ahead;
• what happens at it: electing directors, hearing the annual report and any other business.

Missing the date isn't the end of the world. New York's law says failing to hold the annual meeting on the date fixed doesn't, by itself, "work a forfeiture or give cause for dissolution" of the corporation. But members who don't get their election can complain, and a board that never faces election loses trust, so hold it.

The annual report

New York also requires the board to present a financial report at the annual meeting of members. Under section 519, the report covers the organization's assets and liabilities at the end of its last fiscal year, major changes in them, revenue and expenses (both unrestricted and restricted), and the number of members. A copy, or a summary, goes into the minutes. Your treasurer's year-end report usually covers most of this.

Quorum: how many must be there

A quorum is the smallest number of people who must be present for a meeting to make decisions. Without a quorum, any vote may not count.

• For members: New York's default is that members entitled to cast "a majority of the total number of votes entitled to be cast" make a quorum. The articles or bylaws may set it lower, but not below one hundred votes or one-tenth of all the votes, "whichever is lesser."
• For the board: New York's default is that "a majority of the entire board shall constitute a quorum." The articles or bylaws may set a lower number, but for a board of 15 or fewer, not less than one-third of the whole board.

In a big membership group, a majority of all members may never show up, so many bylaws set a lower members' quorum within what state law allows. Write the number down and check it at the start of every meeting.

Proxies: voting through someone else

A proxy is written permission for another person to vote for a member who can't attend. In New York, "every member entitled to vote at a meeting of members" may authorize another person to act for them by proxy, in writing or by electronic transmission. The law says a proxy isn't valid after "eleven months from the date thereof" unless the proxy says otherwise, and that a proxy is generally "revocable at the pleasure of the member executing it."

New York's proxy section covers members, not directors. Check your own state's law and your bylaws before allowing directors to vote by proxy. Our guide to running board meetings explains that our bylaws template rules proxy voting out for the board.

If your bylaws allow member proxies, say how to give one (a simple signed form or email), who checks them at the meeting, and how long they last.

No members: the annual board meeting

A board-only charity doesn't have a members' meeting, but it still needs a yearly moment to do the same jobs. Most hold an annual meeting of the board, set in the bylaws, to:

• elect directors. Without members, the board usually elects its own directors under the bylaws. New York's law says directors are elected "in the manner and for the term of office provided" in the certificate of incorporation or the bylaws;
• elect officers, such as the chair, secretary and treasurer;
• hear the annual report. In New York, a corporation with no members must have its president and treasurer present the annual financial report at the annual board meeting, and the report is filed with that meeting's minutes;
• review the year: the budget, the Form 990, conflict of interest statements and the plan for next year.

Treat it like any board meeting: send notice, check the quorum and take minutes. Our board minutes template works for the annual meeting too.

Your annual meeting checklist

• Our articles or bylaws say clearly whether we have voting members
• If we call supporters "members," the bylaws say whether they can vote
• The bylaws set the month or date of the annual meeting
• We know the quorum for member meetings (if any) and for board meetings
• If members can use proxies, the bylaws say how; directors don't vote by proxy
• The treasurer prepares the annual financial report for the meeting
• Directors and officers are elected at the annual meeting, as the bylaws require
• Minutes of the annual meeting are taken and kept with the annual report