Legal Question in Business Law in California

Hello. I am interested in starting a Non Profit Org. 501(c)3 but organizing the structure to mimic a traditional public US corporation. Would it be possible for a Non Profit to offer a type of stock to its donors (say 1 share for each $100 donated), making it essentially a donor owned organization? Obviously a Non Profit cant offer equity or profit sharing, per say, but the idea is to issue the stock in order to allow the donors to participate in the decision making proccess.

Thank you very much for your help.


Asked on 12/10/10, 1:12 pm

1 Answer from Attorneys

You cannot do exactly what you are proposing, but there are many 501c(3) organizations that are member controlled in a manner similar to shareholders of for-profit corporations. The Sierra Club and the Consumers Union (publisher of Consumer Reports) are two high profile examples. The members elect the board of directors, just as shareholders elect the directors of for-profits. Then the directors run the company. I'm pretty sure you cannot issue more votes for more donation dollars, however. I am fairly certain that it must be one vote per member.

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Answered on 12/15/10, 1:42 pm


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