Saint Paul, MN asked in Business Law for Minnesota

Q: Can the bylaws of a national 501c3 org control the election mechanism of a chapter 501c3 organization?

A national organization is seeking to change their national bylaws to control the manner in which all their chapters conduct local chapter elections. What are the relevant issues here? Is there a risk of the corporate veil between these two organizations being breached? Does the chapter risk becoming determined to be a "controlled entity". Are the bylaws of a national organization even enforceable upon a chapter corporation? What factors would make them unenforceable?

Related Topics:
2 Lawyer Answers
Robert Kane
Robert Kane
  • Eagan, MN
  • Licensed in Minnesota

A: Since it's an ongoing relationship, the local chapter would most likely have to abide to any rule or policy changes implemented by the national organization. Otherwise, the local chapter would have their membership revoked.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›

A: A national 501(c)(3) organization's bylaws can influence the operations of its chapters, but the enforceability depends on the relationship defined between the national organization and its chapters. If the chapters are separate legal entities, they would generally have their own bylaws, but they might also have affiliation agreements with the national organization that could allow certain overarching rules to apply.

One risk in exerting too much control over a chapter is potentially piercing the corporate veil, which could expose the national organization to liabilities of the chapter. Another concern is that the chapter could be viewed as a "controlled entity" under certain tax rules. The enforceability of a national organization's bylaws upon a chapter often hinges on the legal and contractual relationship between them. Factors that might render them unenforceable include violations of state corporate laws or conflicts with the chapter's own governing documents. For a clear understanding of this intricate relationship and potential legal implications, it's essential to consult with an attorney familiar with nonprofit law in your state.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.