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Will No Member corporation protect founder from hijacking?

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Will No Member corporation protect founder from hijacking?

Following the hijacking of a previous attempt to establish a nonprofit corporation, I am now drafting Bylaws that are intended to prevent a recurrence of that experience. My wife wants an organization that stipulates “no members.” My concept is to draft Bylaws that recognize a “Founding Director,” my wife, vested with sole authority to make overall operational decisions, appoint and remove “Associate Directors,” assign special duties such as Clerk, Treasurer, fund raising, and other roles, and establish key policies. The Bylaws also would have specific protections against the Founding Director being out-voted, expelled or removed by a small group of Associate Directors, all volunteers. Would the declaration of “No Members” mean that no one with voting rights belongs to the corporation? Exactly what do the terms “Member,” “Sole Member,” and “No Members” mean?

When you talk about having “no members,” you are giving up the primary means of protecting your wife’s control over the organization.  “Members” of a nonprofit corporation are like shareholders of a business corporation and have the ultimate control over the organization.  The Bylaws can provide that they have the power to elect and remove any of the directors, the people you want to call “Associate Directors” and require the member’s approval of any changes in the governing instruments.   The key to the protection is that the founder is the only member (the “sole member”) and cannot be outvoted in exercising the member’s powers.  Being the sole member is like being the sole shareholder and sole owner of a business corporation.  The ultimate control resides in the sole member.

We don’t recommend giving up the benefits of a board of directors.  They can play an important role in providing advice and access to resources, advancing the mission as the directors of any nonprofit.  But we do advocate protecting the founder so that the friends who are appointed to the board can’t “hijack” the organization and prevent the founder from pursing the vision.  (See Ready Reference Page: “Sole Member Bylaws Can Protect Founder of Nonprofit”)

Tuesday, July 2, 2013


Can the "sole member" be another entity like an llc or a trust?

This is a matter of state law, but I am not aware of any state law that prohibits an entity from being a member of a nonprofit corporation.  —Don Kramer


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