A member is arguably the most important and most commonly misunderstood component of a not for profit corporation. When I ask not for profit organizations who their members are, in most cases the response is “I don’t know” or “we don’t have those”. Such responses are surprising because every not for profit corporation has members, so if the directors don’t know who the corporation’s members are, it is cause for concern.
A member of a not for profit corporation is a person who has been admitted into membership in the corporation. The definition of person includes both individuals (i.e. human beings) and corporations.
There can be multiple classes of membership (e.g. regular, student, honorary, etc.) and different rights can be attributed to different classes.
The conditions of membership are set out in the by-laws of provincial corporations incorporated under the Ontario Corporations Act and in the Articles of Incorporation of federal corporations incorporated under the Canada Not for profit Corporations Act. A corporation has the discretion to define who can be a member such as those who pay a fee, donors, the board of directors of the corporation, etc.
If you’re still having trouble understanding the concept of a member then think of them like a shareholder of a business corporation, but without the right to profit.
Members of a not for profit corporation generally have the right to do the following:
- Vote at a meeting of the members
- Receive notice of members meetings
- Add items to the agenda of members meetings
- Request the directors to call a meeting of the members and to call a meeting themselves if the directors fail to
- Elect directors and remove them from the board
- Approve or confirm by-laws
- Examine corporate records (i.e. minute book)
- Receive financial statements and accountant/auditor’s report
- Approve major or fundamental changes (e.g. change to the objects/purposes of the corporation)
- Appoint the accountant/auditor
It is important to note that the rights of members have increased considerably under the federal Not for Profit Corporations Act and will increase provincially when the new Not-for-profit Corporations Act is proclaimed to come into force on a date yet to be determined.
If you are a director of a not for profit corporation and you don’t know who your members are, you need to inform yourself as soon as possible. There are serious legal ramifications that may occur if a corporation has not identified its members. For example, some actions of the corporation require membership approval. If a corporation has done so without actual membership approval then you may have breached your governing legislation and exposed yourself to personal liability. It is important to remember that ignorance of the law is never a defence.
If you are a member of a not for profit corporation and you are being denied your membership rights, you can ask the Court to enforce a right or to address a problem with the corporation. However, the process and remedies available to you depend on whether your corporation is governed by the Ontario Corporations Act or the Canada Not-for-profit Corporations Act.
If you have a specific situation or question in mind regarding members, please feel to reach out to me, David J. Mifsud, at George Street Law Group LLP.
What if my not for profit group had members in the past that caused disturbances and made negative comments on the street about the group? Does the club have the right to accept or deny future applications of membership for these individuals?
Membership conditions would be set out in your by-laws. You need to review what your by-laws say to determine whether discretion is allowed in the application process. The default is that a person may be admitted to membership in a corporation by resolution of the board of directors. If this were the case in your organization, the directors could vote against the application for membership of a problematic person.
Great and insightful article!
Just for clarification, if we have 5 board of directors for our NFP do we need still need a member outside of just being a board of director?
I just want to make sure we are doing it correctly as currently we have no outside resigtered member.
Thank you for your time. I really appreciate this.
A not for profit corporation is required to have at least one member. If the directors of your corporation are also members of your corporation, then you have met the requirement.
How many members do I need for my not for profit corporation?
At least one
Does a member of a Not-for-Profit Corporation (non charity) have the right to have access to the organization’s full members list (names only, no other personal information needed)?
A member of a corporation incorporated under the Ontario Corporations Act or the Canada Not-for-Profit Corporations Act is entitled to a list of names and addresses of the members of the corporation upon the filing of an affidavit or statutory declaration with the corporation. There are statutory requirements surrounding the request and the provision of a list of members depending upon the governing act. If you would like assistance as a member to obtain a list of members or as a corporation to deal with a request for a list of members, please feel free to contact me.
Regarding membership conditions: new by-laws are being presented to the membership for their approval. The new bylaws, among other statements, conclude that admittance to the membership is at the sole discretion of the Board. Additionally, a member may be removed if that member violates any of the articles, by-laws or policies of the corporation. If membership policies, or other policies are developed by the Board and not shared, nor approved by the membership, how can then following those policies be a condition of being a member in good standing, especially policies dealing with members.
In your situation, following policies can be a condition of being a member in good standing because the members would approve the process by approving the new by-laws. If the members don’t like the proposed termination provisions for membership, they should not approve the new by-laws or approve the new by-laws with amendments. If the corporation is incorporated under the Canada Not-for-profit Corporations Act, there is an additional requirement that the articles or the by-laws must prescribe the process to be followed to terminate a membership.
Do NFP’s need to have a CRA BN from the outset or can this be done later as the association grows?
A NFP that incorporates in Ontario or federally or registers in Ontario automatically gets a BN (business number).
can a not for profit organization, “pay out” or give a “golden handshake” to a board member who is retiring, without notifying all members of the amount and why this amount was given to an andividual?
A non-charitable not for profit corporation can pay its directors a reasonable amount, provided that its articles or by-laws don’t restrict such payments. The board of directors typically makes decisions with respect to compensation. The director being considered to receive compensation should excuse himself/herself from any such discussions as he/she would have a conflict. There is no specific duty to notify the members of such a decision, but such amount should be reflected in the financial statements and members can always raise questions.
In a incorporated non profit corporation, registered under Ontario, who has the final say. Is it the Board of directors OR general members.
Example, if Board of directors, voted to have a radio station(A) service, but the members want Radio station(B) service, which one is implemented?.
Example, If the Board has more power than members, can the board, dismiss the President?(even though members wanted him as President? OR can the board sack 75% of the members, if they wish.
You would have to look to the Ontario Corporations Act and the corporation’s by-laws to determine which decisions require director approval and which require member approval. Generally, day to day operational decisions would be decided by the directors or delegated to staff. Subject to the by-laws, the board could remove an officer or a member. Only members can remove a director.
The bylaws of a Not for Profit incorporated under the Canadian Act will be presented shortly to members for their approval. There are several articles and expanded sections that have lead some members to conclude that the Board is setting the stage to change the organization from open membership, to a closed membership corporation. In this case, what are the rights of the members? Should not the Board be transparent and advise the members of their intentions?
The corporation must give members entitled to vote at a meeting of members notice of such meeting and if special business is to be transacted, the notice must state the nature of that business in sufficient detail to permit a member to form a reasoned judgment on the business and state the text of any special resolution to be submitted to the meeting. If the members don’t like the proposed changes, they can vote against the motion to confirm the new by-laws. A special resolution (i.e. a resolution passed by a majority of not less than two thirds of the votes cast on that resolution) of the members is required to make any amendments that affect membership rights and/or conditions. Further, a member entitled to vote at an annual meeting of members may submit to the corporation notice of any matter that the member proposes to raise at the meeting (such as a proposal to make, amend or repeal a by-law) and discuss the said proposal at the meeting.
For the NFP started by teens, they would like to be the voting members. What is the minimum age to become a member? Is it a problem if some (or all) of the members are part of the same family?
The provincial and federal not for profit acts don’t restrict the age of members. The incorporating document or bylaws could set a minimum age for members. Directors must be at least 18 years old. The federal and provincial acts don’t prevent related individuals from being members at the same time.
Thanks for such a clear answer. One complementary question if I may ask.
We plan to have three specific members in the voting class. We don’t plan to add more members but probably there should be a procedure for the future in case a member becomes unavailable. Can we state in the bylaws that members can add more members with a special resolution? Do the current laws provide this right to anyone else (for instance directors)?
Procedures for membership must be set out in the by-laws, if it is not already set out in the incorporating documents (which is rare). Membership conditions can be completely customized for the corporation.
I have 3 questions.
1) In this link https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs05006.html under “right to vote” members are granted certain rights like voting as a class to make a proposal which requests certain amendments be made to the articles or by-laws even if they’re classified as non-voting members in the by-laws. My question is, the BOD can still reject this proposal right? Or is that proposal made to the government?
2) if a member provides certain services for the non-profit can the non-profit pay the persons as members? Or does the non-profit have to “hire” the member then pay them as “employees”?
3) Can a director go into a partnership with the non-profit in a joint-venture as long as the other directors approve? Or will that still be a conflict of interest?
1) The link that you provided only applies to federal not for profit corporations incorporated under the Canada Not-for-profit Corporations Act (the “CNCA”). Under the CNCA, only members entitled to vote at an annual meeting of members can submit a proposal to the corporation. If the member proposal is made in accordance with the CNCA, then the corporation is required to include the proposal in the notice of meeting that is sent to the members. The government does not get involved in member proposals.
2) A member may receive compensation from a not for profit corporation for services provided. Whether the member is an employee or an independent contractor is a whole separate discussion based upon the specific circumstances of the arrangement.
3) A director can contract with a not for profit corporation that is not a charity operating in Ontario. The director would have a conflict of interest with respect to any discussions or decisions surrounding the arrangement. In most circumstances, the best course of action is for the director to resign as a director if he/she is going to contract with the corporation, but the specific circumstances of the corporation and the contract would need to be examined.
Thank you so much for your quick responses. just had a few follow up questions:
1) in your response you mentioned “only members entitled to vote at an annual meeting of members can submit a proposal to the corporation” however in the article it says “This right to have a separate class vote applies even where a particular class does not otherwise carry a right to vote in the articles” so there seems to be a contradiction. did they make an error?
2) are there any resources online where I can learn about creating contracts and any other legal requirements to hire members for my not-for-profit as contractors?
1) There is no contradiction or error. I was referring to a proposal being submitted by the members. The article is referring to a resolution being voted on at a meeting of the members. They are two different things.
2) Sorry, I am not aware of any resources online.
Question: does the board of director for a not for profit corporation required to provide minutes of all their meeting to the membership.
I am a member of a small not for profit with 20 members. The members want to receive cash money from the association funds when his/her spouse die funeral expenses. Is this illegal under CRA rules?
If the not for profit organization is a registered charity then you would not be able to do this. If the organization is not a registered charity then CRA will not usually express an opinion on the activities of the organization. The Articles of Incorporation / Letters Patent of the organization would need to be reviewed to determine whether this activity would fall under the purposes / objects of the organization and whether the additional provisions would restrict this activity.
Is there a minimum number of members a non-profit must have? Do directors count as members?
The minimum number of members is 1. Directors do not count as members. However, directors could also be members, depending on what the membership provisions in the by-laws provide for.
Question under ONCA: If a member in a Voting Class is denied their vote because of non-payment of dues (this is laid out in the bylaws) does this require the NFP to have a different class of membership to move them to or is this simply a form of discipline and they would be considered to still be in the Voting Members class but with restrictions to their rights?
Thanks very much in advance
The ONCA specifically provides that all members of a membership class which has voting rights (or all members if there is only one membership class) have the right to vote at a meeting of the members. The ONCA does not mention the denial or removal of a member’s right to vote at a meeting of the members in any circumstance. Given the foregoing, my interpretation of the ONCA is that all voting members can vote at a meeting of the members and that this right can’t be restricted by the directors. Therefore, in order to prevent a voting member from voting at a meeting of the members, the directors’ only option is to terminate their membership. The easiest way to handle this is for the by-laws to provide for automatic termination of membership if dues are not paid within a certain number of days of them becoming due. If the directors want to allow for a case by case determination rather than rely on automatic termination, then they need to make sure that the by-laws and their actual conduct follows the fairness provisions in the ONCA. If the fairness provisions in the ONCA are not followed, then one could argue that the person is still a member and any denial of their rights to notice of, attend, and vote at a meeting of the members is a violation of the by-laws and/or ONCA by the directors.
Could you provide a non-circular definition of a member. Your current definition is this: “A member of a not for profit corporation is a person who has been admitted into membership in the corporation.” A Canadian government web site does the same thing: “A member of a corporation is a person who has been admitted into membership in the corporation and who has a number of rights by virtue of membership in the corporation.” What is membership? Also, if a corporation is a legal person, how can a legal person have members? Thanks. I’ve been trying to solve these problems for a while.
Thanks so much for the article and your reply to each question .
My question is , Ontario NFP corporation registered as a charity and runs a private school for tuition fees
Parents enter into a contract with the school . Would you please elaborate on student
There can be multiple classes of membership (e.g. regular, student, honorary, etc.)
Please focus on student
An Ontario Not-for-Profit Corporation can customize its membership provisions however it wishes, including having multiple classes of membership. Therefore, you will need to look at the Articles of Incorporation (if the corporation was incorporated or articles were amended after October 19, 2021) and the by-laws of the corporation to figure out what the membership provisions are.
Thank you for this post and thread.
Above it is stated that a member can receive compensation from a non profit corporation.
Does this also include registered charities?
As an example, the person who incorporated the non-profit is the only member. As the society stars to generate income, this person then becomes the executive director. Would the dual role of only member and executive director employment emerge as an issue when applying for charitable status?