The creation of a non-profit organization requires completing several important steps. Once your non-profit has been incorporated, often the next step is to draft the organization’s bylaws. The bylaws are one of the most important documents for your organization. They are the rules that will govern the conduct and duties of the non-profit’s governing body, typically known as its board of directors (“BOD”) (although some states use alternate terms, such as Washington which refers to a “board of governors”).
What Should Bylaws Include?
Well-drafted bylaws serve as a roadmap for how directors comport themselves and how the BOD can legally take action and set policy on behalf of the nonprofit. In addition, good bylaws provide assurance to outsiders – such as the government, current and potential donors, and the public at large – that the non-profit is operating responsibly, transparently, and ethically
Bylaws must be drafted to comply with the statutes governing non-profit corporations in the organization’s state of incorporation.
Standard bylaw provisions address:
- The composition and selection of directors (often including the maximum and minimum number of directors) and how the number within that range is set
- Whether, in addition to directors, there will be voting members (i.e., people or organizations that are not directors but have the right to vote on the election of one or more directors)
- The terms of office of directors, whether there are terms limits (i.e., maximum successive years or terms a director may serve)
- Removal of directors and the filling of vacancies
- Rules of conduct of BOD and committee meetings
- Quorum and voting requirements (e.g., majority vote or higher for the BOD to act)
- The frequency of BOD meetings
- How board meetings are called or “noticed,” how notice of meetings is given,
- For organizations with voting members, similar provisions regarding the membership structure, member meetings and member rights
- Officers and their duties
- Authorization of BOD committees as well as advisory committees
- Standards of conduct for directors including their fiduciary duty, avoidance of conflicts of interests and restrictions on self-dealing
- Insurance and indemnification of directors
- Maintenance of records and required reports
- The process for amending the bylaws
Information to Exclude
Bylaws should not include the non-profit’s policies, nor should they include information regarding the nonprofit’s day-to-day operations or employment matters.
When and How to Amend Bylaws
Once bylaws have been adopted, they should be reviewed at least once a year to ensure they are compliant with changes in the law as well as the way the board does or desires to conduct its affairs (within the limits imposed by relevant state law) to keep them current with both the organization’s operations and any changes in the law. If recommended changes are voted on and approved consistent with the bylaws’ amendment process, those changes amend the bylaws. Anytime bylaws are amended, the BOD may vote to “restate” the bylaws. Doing so can ensure that all directors are always using the most current bylaws. (The caption of restated bylaws should include their effective date.)
Get Your Nonprofit Started the Right Way
Putting in the time and effort to create a solid foundation increases a non-profit BOD’s likelihood of success while managing risk to the organization as it operates. Bylaws should be carefully tailored to address concerns specific to your organization as well as satisfy legal requirements at both the state and federal level. If you would like assistance with your organization’s bylaws, contact us online or by phone at (818) 623-9898. We are bylaw experts, often drafting or revising a dozen sets of bylaws every month.