What can a Nonprofit Member’s Inspect under RCW 24.03A.215?
Under Washington law, statutory members of nonprofits (let’s call them big “M” members – “Member” or “Members”) have legal rights and obligations under RCW 24.03A Article 6. One Member right is the right to inspect the books and records of the nonprofit that the Member belongs to. But what all do Member’s have a right to inspect?
Below explores the Member’s right to inspection, what can be inspected, and the limitations on the inspection.
Member’s Right to Inspection
Under RCW 24.03A.215, a Member has the right to inspect records when the Member delivers to the nonprofit an (1) executed notice that states the records the Member wants to inspect and, if the records are covered by RCW 24.03A.215(2), a statement regarding the purpose of the inspection with reasonable particularity and (2) the notice is provided to the nonprofit at least 5 business days before the Member wants to inspect and copy the records. The inspection may occur during regular business hours at a reasonable location determined by the nonprofit.
RCW 24.03A.210(2) “Governance Records”:
- Articles of Incorporation;
- Restated or amended Articles of Incorporation;
- Restated or amended Bylaws;
- All communications to the nonprofit’s Members in the last 6 years;
- All financial statements furnished to Members in the last 6 years under RCW 24.03A.225;
- A list of the names and business address of the nonprofit’s current directors;
- A list of the names and business address of the nonprofit’s current officers; and
- The most recent Annual Report delivered to the Secretary of State.
RCW 24.03A.215(2) “Operating Records”:
- Minutes and records required to be maintained under RCW 24.03A.210(1); which includes:
- Meeting minutes of all Member meetings;
- Meeting minutes of all Board of Director meetings;
- A record of all actions taken by the Members by unanimous written consent;
- A record of all actions taken by the board of directors by unanimous written consent; and
- A record of all actions taken on behalf of the nonprofit by a committee of the board.
- Accounting Records; and
- Membership list prepared with the names and addresses of all Members, in alphabetical order and showing the number of votes each Member is entitled to cast. While membership list use is limited under RCW 24.03A.240, it is still best practice to have an additional written restriction when releasing the list for inspection purposes.
Limitations on the Right to Inspection
While a Member is entitled to review and copy the records listed in RCW 24.03A.210(2) and RCW 24.03A.215(2), the Member does not have a fully unrestricted right to view everything. RCW 24.03A.215(3) and (4) provide some limitations on the right to inspection.
RCW 24.03A.215(3) (“Confidentiality Restrictions”) allows a nonprofit to withhold from the inspection:
- Records that contain information protected by attorney-client privilege or related work product (think emails with the nonprofit’s attorney, working drafts of documents, and attorney notes);
- Member’s addresses who participate in a statutory address confidentiality program or similar programs;
- Records, if disclosed, that could reasonably result in hardship to the nonprofit or a third party (typically parties closely associated with the nonprofit); and
- Any information required to be confidential under the law.
RCW 24.03A.215(4) (“Motive Restrictions”) provides limits only for the Operating Records in RCW 24.03A.215(2) based on the Member’s motive. The Motive Restrictions do not apply to the Governance Records. The Member may only inspect if:
- The Member’s demand is in good faith;
- The Member’s demand is for a proper purpose;
- The Member states the purpose with reasonable particularity and the records the member desires to inspect;
- The Member agrees in writing to reasonable restrictions to use or distribution of the records (think NDA); and
- The requested records are directly connected to the Member’s purpose.
Outside of the above restrictions, the nonprofit cannot abolish or limit the Member’s right to inspection. Further, RCW 24.03A.215 does not impact the right of a Member or a court to inspect records as part of litigation or examination.
To summarize the above, Members of a nonprofit have the right to inspect the Governance Records and Operating Records of the nonprofit that they belong to. In order to inspect, the Member must provide the nonprofit notice of the Governance Records and/or the Operating Records with a purpose and list of the requested records 5 business days before the Member wants to inspect the records. The nonprofit may place limits on the inspection based on confidentiality and, for Operating Records, motives behind the request.
Because the Members have a right to request and inspect documents, nonprofits should have a policy and procedure to address such requests. Read more about how a nonprofit can build a process for addressing the Member’s right to inspection in our other blog posts.
Please note this blog is for general information purposes only and should not be relied upon as specific legal advice. To answer your specific questions or to learn more consult with an attorney who has experience in nonprofit law or contact The Apex Law Group at firstname.lastname@example.org or Tara Vitale at email@example.com. This article, or contacting The Apex Law Group, does not in any way form an attorney-client relationship. You might also like to read, Big M v. Little M members blog.