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Can we give more votes for more money?

Your Legal Questions Answered

Can we give more votes for more money?

Can a nonprofit organization put in its bylaws that members who donate more (i.e. $10,000) have 10,000 votes, as compared to one who only donates $1 and has one vote? 

Probably yes. This is a matter of state law, but state nonprofit corporation laws normally allow an organization to set its own voting provisions. Although the one-person-one-vote rule is normally the default provision if the bylaws don’t provide otherwise, the bylaws may usually provide otherwise if the incorporators or members agree. The flexibility applies both to members’ voting and to directors’ voting.

Trade associations often give more votes to larger organizations that pay more dues, or allow different votes to different types of organizations that participate in an industry. Homeowners’ or condominium associations usually charge dues and give votes disproportionately on the basis of square footage of the lots or apartments. Family foundations will frequently give more votes to the patriarch (or matriarch) of the family, or divide votes equally among branches of the family so that second generation members on one side of the family have smaller voting power than second generation members on the other side who are fewer in number but have the same total vote for each branch.

Some organizations achieve disproportionate voting power by creating separate classes of members or directors and requiring approval of actions by all classes, even though there are different numbers of people within the different classifications.  Some give more power by giving veto powers to founders, or life trustees, or other critical interests. In short, you can exercise almost unlimited creativity in establishing the voting requirements that work for your organization. (See Ready Reference Page: “Bylaws Function as ‘Constitution’ of Nonprofit Corporations” or attend one of our Bylaws webinars.)

Tuesday, January 7, 2020

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