Why is proxy voting different for nonprofits? Shareholders of a business can vote by proxy, but directors of a nonprofit can’t. Is there any explanation for this?
The law is NOT different for nonprofits.
Members of a nonprofit, like shareholders of a business, can usually vote by proxy under state nonprofit corporation law (although sometimes only if permitted or not restricted by the bylaws). The general rule is that directors may not vote by proxy in either business corporations or nonprofit corporations.
Those who have a fiduciary duty (directors) may not delegate that duty to another. Those who do not have a fiduciary duty (members or shareholders) may delegate.
The comparison you raise is like apples and oranges. Shareholders and members have a very different role in a corporation from directors.
Monday, July 27, 2009