Members of Minnesota nonprofit organizations have a variety of legal rights established in the Minnesota Statutes. These rights are especially important when the members have a dispute with their organization’s board of directors.
The following are a few examples of some of your rights as a member of a nonprofit organization in Minnesota.
1. You Have a Right to Fair and Reasonable Process Before Losing Your Membership.
A nonprofit Board of Directors usually cannot simply terminate your membership in the organization, regardless of what your organization’s bylaws say.
The Minnesota Nonprofit Corporation Act requires a specific process to be followed. Under Minnesota Statutes section 317A.411, subdivision 1, “[a] member may not be expelled or suspended, and a membership may not be terminated or suspended except pursuant to a procedure that is fair and reasonable and is carried out in good faith.”
“Fair and reasonable” is defined in Minnesota Statutes section 317A.411, subdivision 2:
A procedure is fair and reasonable when it is fair and reasonable taking into consideration all of the relevant facts and circumstances. In addition, a procedure is fair and reasonable if it provides:
(1) not less than 15 days’ prior written notice of the expulsion, suspension, or termination, and the reasons for it; and
(2) an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension, or termination by a person authorized to decide that the proposed expulsion, termination, or suspension not take place.
2. You Have a Right to a Board That Operates in Good Faith, With Good Intentions and Prudence.
Officers, directors, and other managers of a Minnesota nonprofit are legally required to comply with the Minnesota Nonprofit Corporation Act. The Act establishes their duties (known as “fiduciary duties”) to the organization and its members:
Officers. Under Minnesota Statutes section 317A.361, subdivision 1, “[a]n officer shall discharge the duties of an office in good faith, in a manner the officer reasonably believes to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”
Directors. Under Minnesota Statutes section 317A.251, subdivision 1, “[a] director shall discharge the duties of the position of director in good faith, in a manner the director reasonably believes to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”
If officers or directors intentionally violate the law or their fiduciary duties, there is a good likelihood these actions were not in “good faith,” “in the best interests of the corporation,” or “with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”
3. Your Organization Can Be Reimbursed by Leaders Engaged in Willful or Reckless Misconduct.
Under Minnesota Statutes section 317A.257, subdivision 1, a director, officer, trustee, member, or agent of the organization can be held personally liable for willful or reckless misconduct.
4. You Have a Right to Attorney General Supervision and Investigation of Your Organization’s Leadership.
Under Minnesota Statutes section 317A.813, “[t]he attorney general has the powers . . . to supervise and investigate corporations . . . and to bring proceedings to secure compliance.” Members may file a request with the Office of the Minnesota Attorney General to supervise and investigate the organization. The Attorney General has broad legal powers to deal with nonprofit organization leaders who have violated the law.
Involving the Attorney General is not always the best option. In my experience representing members and boards, the best option is for the parties to try to work out their differences and get the organization back in compliance with the law. Involving the Attorney General is often the last resort.
You Have Other Legal Rights as Members
This is an incomplete list of rights available to members under the Minnesota Nonprofit Corporation Act. A board of directors has many other legal duties, which in turn establish legal rights for members: the right to have a board who complies with their legal duties.
If your rights as a member of a nonprofit organization have been violated, the best advice is to consult with an attorney experienced in nonprofit law.