By Jane Garthson, Garthson Leadership Centre
April 6, 2009
The dilemma:
Can we have members without charging for membership? Our low membership fees are waived for over half of our members, and the total revenue from fees is not worth the cost and effort of collecting the money. Must people pay for the privilege of voting at the AGM of a society? We have a separate list of donors, but many of them are not interested in membership.
Jane's Response:
Treasurers of small organizations everywhere are loving you for this question!
I am not a lawyer. Most incorporated Canadian nonprofits are established under provincial laws, which vary quite a bit from province to province. The federal government recently introduced substantial amendments to its law governing nonprofits with federal incorporation. (These changes will require action by federally incorporated nonprofits, by the way, so monitor that legislation!) In other words, my thoughts should not be taken as legal advice, and you should check the statute applicable to your society. That said, I have seen lots of Canadian nonprofits define members in ways that don’t involve fees, and I think many of them had obtained legal advice.
You must, of course, comply with your own bylaws until and unless amended, and that may mean continuing to charge fees for now. The bylaw probably does not define or restrict the amount, however, so the board may be free to fix the fee at zero.
What you need is a way of confirming membership so that votes held at AGMs can withstand challenges to their legitimacy. Think worst case scenarios - a disgruntled member, dissatisfied with the results of a vote, sues your organization. Or worse, brings busloads of people to the AGM who have never had any connection with your cause, or who have even been opposing your cause. Because you have no way to refuse them ballots, they get their slate of new board members elected and can completely change or wind down the organization.
If yours is a local organization where people often meet in person, you could have a membership form that is simply signed annually. The signed copies are used to form a voting register. Set time limits to avoid signing up the busloads - e.g., signed membership forms must be received at least two weeks before the annual general meeting. The signatures can be below the mission statement and a sentence stating that they accept the organization’s mission. You could also state some other relevant qualification, which their signature confirms they have, if that makes sense for your organization. For example, a student-only organization could ask new members to confirm that they are registered for post-secondary studies at a university or college.
You could also have people sign up electronically using software designed for subscriptions to online mailings or other such web-based approaches. Or, after people confirm their interest in some manner, the board could approve a roster of members at the last meeting before the AGM. That roster should be duly signed off to confirm it was not changed between the approval date and the vote. A small enough list could even be read into the minutes. Be creative depending on the culture of your organization.
While you are considering this change, remember that some of your members have been cheerfully paying the membership fee. They understand that it takes money to operate a society. Make sure your new membership process makes it very, very easy to donate money as they renew. If you make it easy enough, some will donate far more than the old membership fee, and your revenues may go up instead of down. Now wouldn’t that be nice?
Note: If your organization has charitable status, donations would receive a tax receipt for the full amount. Membership fees to a charity may or may not be deductible, depending on the type of membership benefits. That difference might encourage some to give more.
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