I've been asked the meaning of the term "members" as used in the formation of a not for profit organization. See item 6 in the PA nonprofit articles of incorporation in the below link.

(P.S. lest anybody think otherwise, this is a specific legal term, not the just the common use applied to individuals belong to an organization and who pay dues)

Does anybody know of a good online source to explain the differences between incorporating with or without "members". I seem to recall that there was a pretty big advantage one way over the other but can't remember where I got the explanation.

Thanks in advance

PA NON PROFIT ARTICLES OF INCORP.
Superheater@rrmail.com

Actual governance of a non-profit is a matter of state law. Since most non-profits also want to be tax exempt the IRS is always in the back ground. I'm in Texas and I've drafted articles of incorporation for non-profits both with and without members. In Texas you can also have different classes of members. I think it depends what type of organization one is seeking to create which should be used.

If we are talking railroad museums the arguement generally, and it has been well discussed on this board, is "more professional", "is it a club or is it a business" and "elected board or self prepetuated".

In my opinion neither is superior and which model is used depends on the facts and circumstances


tcox@parknet.pmh.org

> Tom, thanks for response but I think you are ahead of me. I missed the prior RYPN discussions, I think. What's the definition of "member"? Do you know of any links (nolo, cornell law?) that discussion of the effects of having vs. not having, if the definition doesn't render the decision academic.

In Pennsylvania, it doesn't appear that there are allowances for multiple classes.

The individuals involved value simplicity and flexibility as organizational attributes.



Superheater@rrmail.com

Members always vote one way or the other on the big issues. If you don't give members the power to vote by ballot on seriously divisive issues, and to elect the governing board of directors, then they will eventually "vote with their feet" and with their checkbooks. We believe in democracy; its a messy process, but its also an important safety valve. If big decisions are made by the majority vote of the people who dedicate their time and money to the group, then the remainder will generally pitch in and get on with the job. Boards which ignore this fact put the long-term health of the whole organization at risk. We all tend to focus on the historic railroad items in our organization's collection, but without a dedicated group of volunteers to support the organization is all areas (front office, maintenance, operation, restoration, management, fundraising, newsletter, etc) all of this will eventually be scrap metal.

It is unwise to get dedicated volunteers and contributors so disgusted with the organization that they go elsewhere; many of these people never return. Recent discussions on "Interchange" have illustrated this point all too well.

Does any group put an annual dollar value on the volunteer hours? How much per hour for various job categories? Is this really comparable to the total cost (labor+benefits+overhead+G&A) that you would have to pay a really dedicated paid employee with seniority in your area? It would be interesting to compare the real value of volunteer hours to the rest of the budget.

- Doug Debs
- doug.w.debs@fcimg.com

> Members always vote one way or the other on
> the big issues.

That always raises the question of ...Do all members get to vote? Do you want folks that pay $20/yr and never come near the place or contribute nothing to the organization to have the same voting rights as the guys and gals in the trenches? This leads you down the path of classes of members ...Active, Inactive, Informational, Corporate etc. etc. etc.

IMHO ... of the lessons learned on this board ...you want to build a successful "business" (usually involving a large investment in dollars and time) not a Rah-Rah choo-choo CLUB. One of the hardest obstacles to overcome in the community is the image of a bunch of train "buffs" that want to play trains. Choose how your board is constituted and how it works carefully to achieve this goal.

lamontdc@adelphia.net

The definition of "member" varies from state to state. In California, there are "Members" (capital M), period. Members (capital M) enjoy a great many rights (voting, examining Corporate assets and records, and so on) as full participants in a not-for-profit corporatation, like a rr museum. Other types of "membership classifications", associate, family, patron, contributing, and so on are essentailly maningless, fancy names. Legally *none* of these are Members (capital M), unless as part of the fancy name (patron for ex.) ALSO includes one, and only one per person, regular Membership.

And, in California at least, the Board of Directors cannot create Members, on the Membership can.

Amen, Doug.
Too bad this fact doesn't sink in with some RR museum groups.

> Members always vote one way or the other on
> the big issues. If you don't give members
> the power to vote by ballot on seriously
> divisive issues, and to elect the governing
> board of directors, then they will
> eventually "vote with their feet"
> and with their checkbooks.

> In Pennsylvania, it doesn't appear that
> there are allowances for multiple classes.

> The individuals involved value simplicity
> and flexibility as organizational
> attributes.

It's a governance issue and about the only thing other than membership fees/dues for the organization is voting rights, which when it comes to railroad museums is a subject that will generate strong opiniions.

At least in Texas membership gives no ownership rights in the organization and in the event the organization disolves the articles of incorporation dictate how the assets will be disposed of and that means to other non-profits and not to individuals personal collections, unless by sale at FMV for the purpose of repaying debts.

If simplicity and flexibility are the part of the goal I would go for no members or members with no voting rights.


tcox@parknet.pmh.org