The Nonprofit FAQ

Can nonprofits use proxies when voting?

Putnam Barber prepared this introduction: People ask this question a lot when trouble arises in the governing of a nonprofit or association. "Proxies" are written instructions that transfer one person's right to vote in an organization to someone else. People often want to know whether proxies can be used to send a substitute to a board, committee or membership meeting. There may or may not be a section in the organization's bylaws that covers this topic. Sometimes these sections are very complicated, specifying the procedures for proxies in great detail. Whatever it says in the bylaws, though, it will be a good idea for anyone concerned about the use of proxies in some specific situation to look first to the nonprofit corporation law of the state where the organization is incorporated (and maybe the state where the meeting will be held as well—if they are different). State laws often distinguish between the board of directors and the membership. Proxies are more frequently permitted at membership meetings than at board meetings. Board committees—if they are acting for the board—will usually be covered by the rules for a board of directors. If the business at hand is casual and informal, as when a committee is basically brainstorming and working on recommendations that will be given formal review another time, then no great care need be taken about whose voices are heard. In many circumstances, everyone would agree the more the merrier. But if the organization is dealing with a major controversy, or about to take a drastic step (like selling a major asset or spinning off a significant program activity), the research about exactly how proxies can be used—if at all—should be done with great care in advance. And the resulting procedural decisions should be clearly explained to everyone in advance, when the announcement of the meeting is made, if only to avoid misunderstanding and bad feeling. It is also true, though, that people who disagree with a decision may have an easier time getting a court to intervene if the required procedures have not been followed even when the court would not accept a complaint based on the substance of the decision itself. It is a good idea, if state law permits it, to have a procedure for proxies at membership meetings. If proxies are not allowed, it may not be possible to find a time and place for a meeting that is convenient for enough members, and there may not be a quorum (the minimum number of members required to conduct business). Often, the secretary of the corporation will solicit proxies along with the announcement of the meeting, asking that members who cannot attend allow their votes to be cast at the discretion of the secretary. That works better, of course, when there is no controversy in the air. Sometimes opposing groups will both collect proxies from people who see the issues differently, and the decisions will largely have been made—by a count of the number of proxies each side has collected—before the meeting even starts. The rules about board meetings are usually stricter, and many states prohibit proxies at board meetings entirely. (Sometimes there's an exception if the bylaws provide for representation by an elected official who can send a substitute.) The idea is that board members cannot perform their duties without listening to the discussion at the meeting as well as reviewing the written materials. Reviewing the proxy rules in the bylaws from time to time, to make sure they are still consistent with the way the organization sees itself, is a good idea. Posted 9/24/05 -- PB