Membership Organizations

The term membership is often defined very liberally; it has many meanings. Before you can answer your question “Should we be a membership organization?” you need to define your term. For example, are members going to be part of the structural element of the organization with controlling interests? Is your organization created solely for the benefit of its members? Is the organization going to function on behalf of its members? Will members be your financial supporters? Will your members be considered subscribers to your services? After determining what membership should mean, continue to define the potential challenges and benefits before you invite members to your organization.

What is an informal membership program?

An informal membership program is a practical way to integrate supporters or subscribers into an organization. Usually for a fee, members receive benefits such as newsletters, resources, priority registration for trainings, etc. These members have no say in the running or governing of the organization. They are normally interested in its mission and find the benefits package useful. This type of a membership program does not need to be defined in the official documents of the organization. For many organizations, it is a way to garner earned income.

What is a membership organization with a public interest?

Many philanthropic associations function on behalf of individual members by advancing a greater cause. Members often financially support the mission or volunteer their time. American Heart Association, Planned Parenthood, or parent-teacher associations are examples, where members do not benefit financially or professionally but gain as part of the targeted public.

What is a formal membership organization?

A formal membership organization is a nonprofit that grants its members specific rights to participate in its internal affairs. These rights are established in the articles of incorporation and defined in more detail in the bylaws. Usually in a formal membership organization, members elect the board and/or the officers; approve changes in the bylaws; and authorize major transactions such as mergers and dissolution of the organization. In short, members have a strong interest and voice in the future of the organization and not only in the tangible benefits that they may receive as members. For example, trade associations and business leagues are membership organizations in which the members rely on the organization to advocate for better business opportunities for their line of business.

Why would you create a formal membership structure?

A membership organization in a way is a ‘service’ organization: It looks after the needs of its members. As an organized force, it has more weight than the individuals it represents. Most formal membership organizations have a 501(c)(6) or 501(c)(4) status, which allows them to lobby without limit. Organizations serving the general public tend to be 501(c)(3) public charities with a limited lobbying allowance but the ability to accept deductible donations. A membership organization is structurally more complicated than a non-member organization, so it is important to understand the burdens and challenges that this choice brings with it.

Structural elements of formal membership 

If you decide to create a formal membership organization, be attentive to these structural aspects:

  • Bylaws. It is necessary to describe the role of members in the articles of incorporation and bylaws. List categories of membership and their specific rights.
  • Board membership. Formal members have significant input in the governance of the organization by electing at least a portion of the board. The board functions as the governing entity for the organization. For any board to be effective, it is important to have a cohesive group of people who work well together. In purely representational boards, where members elect representatives from their own region or sector, consensus building can be challenging. It is important to seek competent candidates and inform members objectively on the qualifications of candidates and the need to elect qualified board members. It also is in the best interest of the organization to provide orientation and training to all new board members. Board members need to see the association as an entity, not as an agent for their particular constituents. Political favors and strict representational quotas may not produce an effective board. Elected board members need to be able to leave their personal and professional agendas behind and make decisions only for the best of the entire organization.
  • Annual meetings. During annual meetings, members cast their votes and elect new board members. It is often impossible to get the entire membership together at the same time so proxy voting is common. Preparing the slates and administering the meeting is a major task in a membership organization. The cost and time involved is one additional demanding feature of this kind of governance.
  • Other challenges. Building and cultivating membership also requires the organization to pay attention to successful member recruitment strategies, fine-tuning general member benefits, and determining a profitable member fee structure.

Changing a formal member structure into a self-perpetuating board structure tends to be a challenging task, as it asks members to give up their power. That is never an easy task. If the membership is not very active or interested in carrying out its authority, it may be very difficult to reach a quorum to have the membership vote on this issue.


Resource: American Society of Association Executives

101 Resource Last updated: June 7, 2016