Can a nonprofit organization maintain the right to refuse membership to anyone it chooses? The bylaws say it can, but isn’t that susceptible to bias and discrimination?
Yes. It is susceptible to bias and discrimination, but private associations generally have the right to select their own members. We specifically include such a provision in our standard form of bylaws for membership corporations, unless there is a reason not to include it. (See Ready Reference Page: “Bylaws Function as ‘Constitution’ of Nonprofit Corporations.”)
It helps prevent hostile takeovers and helps assure that the members will be sympathetic with the goals of the organization. The Board can determine how aggressively to exercise the power.
The right is not absolute. Some organizations, like the Jaycees and the Fraternal Order of Eagles, have been found to be “public accommodations” under state civil rights laws and ordered not to discriminate against individuals within protected classes. (See: “Court Orders Eagles to Consider Women,” November 1, 2005.) Some trade associations have been challenged on antitrust grounds for denying admission to competing businesses. The IRS will deny charitable exemption to an organization that discriminates on the basis of race.
But other organizations, like the Boy Scouts, have been permitted to limit membership pursuant to the right of expressive association under the First Amendment.
Friday, February 27, 2009