Key Takeaways:

  • Non-voting board members of a nonprofit participate in discussions but do not have decision-making authority.
  • Common types include ex officio members, honorary board members, and board observers.
  • Bylaws should clarify the rights, roles, and limitations of non-voting board members to ensure proper governance.
  • Non-voting members can provide expertise, act as advisors, or represent stakeholders without influencing votes.
  • Governance structures should specify when and how non-voting members can be included in decision-making discussions.

Drafting Nonprofit Bylaws

You must be careful while drafting nonprofit bylaws. Boards and committees often take months to draft an appropriate set of bylaws. Sometimes board members find the bylaws of other organizations available on the internet and use them as a template. However, they forget to check whether the said bylaws are suitable for their organizational setup or whether they meet the requirements of federal and state laws.

It's always advisable to begin with the right template and customize it for your organization with the help of an experienced attorney right from the start. Different attorneys use different styles for drafting nonprofit bylaws. Some attorneys prefer to include rules for almost every possible situation to provide complete operational guidelines. Others try to keep it simple and include only important legal requirements.

Since every state has its own corporate law, the details you should include in nonprofit bylaws also vary with the state. However, the essential elements almost always remain the same.

Governance Structure

A nonprofit organization can be under management either by the board or by its members. In case of a board-managed organization, there are usually no members. Even if there are, their rights are highly limited. In a member-managed organization, the members usually have voting rights, and they can elect or remove the directors. State law grants certain rights to voting members.

Therefore, you should clarify members' rights in the bylaws, so you don't end up vesting control to the members inadvertently when you actually intend to set up a board-managed structure.

Types of Non-Voting Board Members

Non-voting board members can take on various roles within a nonprofit organization. These roles provide insight and guidance without granting voting privileges. Common types include:

  • Board Observers: These individuals attend meetings and participate in discussions but do not have voting power. They are often appointed to monitor board activities, provide strategic insights, or represent stakeholders such as investors.
  • Ex Officio Members: Some individuals automatically gain board membership due to their role in another organization or within the nonprofit. The bylaws should specify whether they have voting rights.
  • Honorary Board Members: These members are recognized for their contributions to the organization but do not engage in governance decisions.
  • Advisory Board Members: Often specialists in a particular field, they provide expertise without engaging in the nonprofit’s governance structure.
  • Emeritus Board Members: Former board members who are honored with a title and may continue advising but without a vote.

By distinguishing between these roles in the bylaws, nonprofits ensure clarity on participation and decision-making authority.

Provisions for Controlling the Organization

Once you determine whether the controlling power of the nonprofit corporation will vest in the board of directors or the members, you should consider the following factors:

  • Many states allow a nonprofit corporation to have directors and members appointed by a third party or who hold office by virtue of their position in some other organization.
  • You can use super-majority votes and reserved powers to strike a balance between competing groups. For instance, you can have reserved powers for certain actions such as removing or replacing a director, so it would require the approval of certain members or delegates.
  • Super-majority votes refer to the requirement of having a certain percentage of votes higher than the majority (for example, 75 percent) for certain actions.

Legal Considerations for Non-Voting Board Members

Non-voting board members still have legal and fiduciary considerations, even though they do not participate in formal decision-making. Key legal points include:

  • Conflicts of Interest: Even without voting power, non-voting members should disclose conflicts of interest to maintain transparency.
  • Confidentiality Obligations: They may have access to sensitive information and should be bound by confidentiality agreements.
  • Liability Concerns: While non-voting members may not have direct governance authority, they could still be held accountable under certain circumstances, depending on state nonprofit laws.

Bylaws should clarify the extent of their obligations and protections to avoid misunderstandings regarding their role and influence.

Director's Terms

You should clarify the terms of office for directors. Directors can hold:

  • A successive term where the terms of all the directors come to an end simultaneously.
  • A staggered term where directors' terms end in groups at different times. Staggered terms offer the benefit of continuity in the functioning of the board.

You may also specify ex-officio directors, whose position is tied to their holding office in some other organization. They do not hold office in terms. For example, if the president is the ex-officio member of the board, then whoever becomes the president automatically becomes a board member by virtue of his or her office. Ex-officio board members may or may not have voting rights.

You should also specify the procedure for the removal and the replacement of directors.

Term Limits and Appointment of Non-Voting Members

The bylaws should address:

  • Term Lengths: Non-voting board members may serve fixed terms, indefinitely, or at the board’s discretion.
  • Appointment Process: Should the board or executive leadership appoint them? This should be clearly stated in the bylaws.
  • Renewal and Removal: Procedures for reappointment or removal should be outlined to ensure accountability.

Nonprofits should establish these provisions to prevent conflicts and ensure continuity.

Officers

  • The bylaws should clarify the procedure for the appointment, the removal, and the replacement of officers and what their duties and terms would be.
  • Most of the state laws require a nonprofit corporation to have a president, a treasurer, and a secretary. In many states, you can also designate other officers in the bylaws.
  • You should also clarify whether only directors can be appointed as officers or any staff member can serve as an officer.

Voting Procedures

The section on voting procedures should include the following information:

  • Quorum or the minimum number of directors required to be present to hold a meeting.
  • Minimum number of votes required to pass a resolution.
  • Notice requirements such as the minimum notice period required to hold a meeting and the valid modes of serving a notice.
  • Voting rules for members and directors.

Participation in Board Discussions

While non-voting board members do not cast votes, they often contribute to discussions and strategic planning. The bylaws should define:

  • Whether they can participate in closed sessions.
  • The extent to which they can provide formal recommendations.
  • How their input is recorded in meeting minutes.

Clear documentation of these practices ensures that non-voting members provide value without overstepping their advisory roles.

Committees

  • Instead of having provisions for ad hoc committees, it's better to provide procedures for creation and abolition of committees.
  • The bylaws should be clear about the type of authority that can be delegated to committees and the authority that the board must retain.
  • You may also want to have a provision for advisory committees.

Frequently Asked Questions

  1. What is the role of a non-voting board member in a nonprofit?
    Non-voting board members provide expertise, advice, or stakeholder representation but do not participate in governance decisions.
  2. Can an ex officio board member vote in a nonprofit?
    It depends on the nonprofit’s bylaws. Some ex officio members have voting rights, while others serve in an advisory capacity only.
  3. How are non-voting board members appointed?
    Appointment varies by nonprofit but is typically outlined in the bylaws. The board or leadership may select them based on expertise or organizational needs.
  4. Are non-voting board members legally responsible for nonprofit decisions?
    Generally, they are not held liable for board decisions but must adhere to confidentiality and conflict-of-interest policies.
  5. Should nonprofit bylaws specify non-voting board members?
    Yes, bylaws should clearly define their roles, rights, and limitations to avoid governance confusion.

If you need help with nonprofit bylaws non-voting members, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.