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Membership structures

The Ontario’s Not-for-Profit Corporations Act (ONCA) allows for different kinds of membership structures. We list some of the more common ones below.

Anyone who supports your nonprofit’s vision, mission, and values can become a voting member.

Some of the pros and cons of this kind of membership are:

Pros:

  • more accountability as members may represent diverse viewpoints
  • more volunteers, which may attract funding
  • more revenue through donations and membership fees

Cons:

  • more privacy concerns since members have access to the membership list
  • the chance for more conflict, as members can challenge your board
  • the chance that a majority of members change your nonprofit’s direction and purpose as members have no fiduciary duty
  • more work to keep track of members and inform them about meetings and finances

Not everyone can become a member because your bylaws can have conditions on membership.  For example, your bylaws can say:

  • who can become a member and how
  • how they can become a member and stay
  • what code of conduct they have to follow to stay a member
  • the maximum number of members your nonprofit can have

However, you can’t take away the rights that members have under the ONCA. For example, the right to vote.

Depending on the conditions you set, a semi-open membership structure could have the same pros and cons as the open membership structure.

Directors don’t have to be members, under ONCA. However, your bylaws can say that directors will be the only members. This structure is called “self-perpetuating” because the directors, acting as members, elect all new directors.

Some of the pros and cons of having directors as your nonprofit’s only members:

Pros

  • less chance of conflict as stakeholders cannot challenge board decisions
  • no legal way for members to get around directors’ legal duties to act in the best interests of the nonprofit
  • less work to inform and keep track of members

Cons

  • no legal way for stakeholders to hold directors accountable if they don’t act in the best interests of the nonprofit
  • the risk of less stakeholder participation and input which may make it harder to serve your community
  • the possibility that people will see your nonprofit as closed, less transparent and so trust you less

If your nonprofit is a project of or created by a founding person or organization, this structure might be right for you. The founding person or organization is your only member.

Some of the pros and cons of this kind of membership are:

Pros:

  • more accountability as the single member can make sure your directors act in the nonprofit’s best interests
  • less work to inform and keep track of members

Cons:

  • less transparent because the majority of stakeholders don’t have the right to information about finances and decision-making
  • risk of less stakeholder participation and input which may make it harder to serve your community
  • the possibility that people will see your organization as closed, less transparent and so trust you less

Your directors are your only voting members, and a non-voting class is open to anyone who supports your nonprofit’s work.

Note: Under the ONCA, non-voting members may still be able to vote on major issues like changes to your purpose, mergers, or closing down your nonprofit. However, the earliest these rights take effect is at least 3 years after the ONCA takes effect.

Some of the pros and cons of this kind of membership are:

Pros:

  • more stakeholder participation than the self-perpetuating and single-member structures. This may attract funders and help further your mission.

Cons:

  • less board accountability since non-director members can’t vote, they can only indirectly influence board decisions by taking them to court.
  • more workto keep track of a larger number of individuals, and to inform them about meetings and your finances.

Your directors make up one class of voting members. You also have one or more other voting classes made up of members who are elected by and represent different types of stakeholders for example, regional or youth stakeholders.

Some of the pros and cons of this kind of membership are:

Pros:

  • more flexibility since you can divide the voting powers in many different ways
  • more transparency and accountability if you balance voting powers well
  • less chance of conflict between members and board since you can limit the total number of members
  • less chance of members changing your nonprofit’s purpose or direction because stakeholders are fairly represented, preventing one group from taking over

Cons:

  • more work since you have to coordinate more elections and, in some cases, separate votes

If you know of other structures, please email us so we can consider adding them to this list.

Reviewed: February 18, 2020