Over the past few years, increasing numbers of nonprofit membership organizations around the United States have amended their Bylaws and voting policies to authorize and conduct director and officer elections and to vote on other matters of membership interest by so-called “e-ballots.” Trade associations have led the way. An e-ballot is nothing more than a written ballot which will be delivered to, and returned by, voters via electronic means. Perhaps the primary motivation for conducting elections in this manner is to increase voter turnout, particularly for organizations who have members scattered to far reaches of the state or the country, and who may have great difficulty (whether due to means or desire) in attending meetings in person. Proponents of electronic membership elections also cite increased efficiency, a more streamlined voting process, less paper, and less hassle as important reasons for paperless elections.
The idea of allowing members to vote on directors and other matters by written ballot is nothing new in the world of nonprofit governance and has long been blessed by the Oregon Nonprofit Corporation Act (the “Act”). Unfortunately, paper elections often were as much trouble to administer as conducting the election in person and caused additional printing, postal and other expenses which were prohibitive for organizations with limited funds. Due the proliferation of interactive member-only websites with increased security to protect the integrity of an election, as well as effective and efficient means of communicating with members via e-mail and other social networks (Facebook Linkedin, Twitter, etc.), electronic balloting is on the rise. You will soon be asked by your Board (if you have not been already) why your association is not conducting its elections in this manner.
To help you and your organization craft appropriate Bylaws provisions and policies and to plan for future elections using e-ballots, we would like to introduce you to the “Five Cs of E-Balloting.” To conduct the most efficient, most secure, and most successful elections possible, we strongly recommend that you devote substantial time to consider each of the Five Cs.
1. Communicating with Members about their e-ballots
As with any important matter facing the membership effective and informative communications with members is critical. In this context, communications with members about elections and issues to be voted upon using an e-ballot, as well as educating members about the process that will be used to conduct the electronic voting, are crucial to ensuring a satisfactory outcome and minimizing negative feedback from disgruntled members. The tools at your disposal are many and include online debates between candidates or proponents of issues, candidate e-statements, an electronic voters guide, and other tools to help members make informed decisions. Importantly, Oregon law also requires that written ballots and solicitations to members contain certain information, which is further discussed below.
2. Content of e-ballots
The Act (ORS 65.222) contains specific requirements governing the contents of written ballots and solicitations for votes by written ballot. Specifically, an e-ballot must set forth each matter to be voted upon, and must provide an opportunity to vote for or against each proposed action. That is simple and obvious enough, but the solicitations accompanying the ballot must alos: (i) indicate the number of responses needed to meet quorum requirements; (ii) state the percentage of approvals necessary to approve each matter other than election of directors; and (iii) specify a reasonable time by which a ballot must be received by the organization in order to be counted. The failure to meet these statutory requirements could cause a disgruntled member to challenge the validity of an election, particularly if that member is on the losing side of that election.
3. Casting e-ballots
While the Act is silent on the use of email or other electronic mediums as the means by which a member may cast an e-ballot, conducting elections and votes in this manner is clearly allowed. The primary issue is how to establish reasonable time lines for casting the ballot and ensuring secrecy and security when a member casts his or her vote on a controversial matter or hotly contested election. Remember that while conducting an election or vote electronically may be a relatively new medium, the rules set forth in the Act governing voting by members continue to apply, including the use of proxies (ORS 65.231), preparing membership lists (ORS 65.224), voting entitlement by members (ORS 65.227), quorum requirements (65.241) and other matters.
4. Counting e-ballots
As with the rules governing members rights in casting their vote discussed above, the Act governs the process used to count and accept votes by members, particularly the rules governing the organization’s acceptance of votes cast by members (ORS 65.237) and quorum requirements (ORS 65.241). Of course, you also will want to carefully consider many other issues relating to tallying the vote, including means to ensure accuracy, efficiency, secrecy and security. As you can imagine, many private companies have entered the market to meet your e-ballot needs and can provide software and technical support to greatly ease the burden on staff.
5. Covering your e-bottom, so to speak (otherwise known as CYA)
As you can see, there are many issues to consider, both legal and practical, when considering whether to conduct electronic voting. To protect the Board of Directors and the organization’s staff from second guessing by the membership (to the extent possible in a membership organization), it is crucial that the organization develop thorough and well-thought-out amendments to Bylaws and to carefully craft a policy to govern the electronic voting process. This is particularly important when it comes to conducting elections for directors and officers. Such elections often involve more than two candidates for one position which can trigger considerable confusion in determining the number of votes needed to prevail (i.e., 50% + 1 versus a plurality), the need for one or more run-off elections, and ensuring that the organization has met its quorum requirements. These and many other issues need to be considered and resolved before sending e-ballots to members.
As a final note, we urge you not to forget the value of live debate and discussion on issues of importance to the membership. While conducting elections and votes electronically has many benefits, the value of debating hotly-contested issues face to face cannot be understated. If you have any questions or would like assistance in developing your policies and procedures for electronic voting, please do not hesitate to contact the author.