Bylaws. Every nonprofit has them.
Have you read yours?
Chances are, you haven't. Don't worry, though. A lot of people haven't.
In fact, a lot of people join nonprofit boards without truly understanding the
roles and responsibilities of boards or what it means to govern.
If you want to be part of an effective board, it starts by being an educated and engaged board member. And that means understanding your nonprofit's key governance documents.
Nonprofit boards follow Federal and State Laws, then your Articles of Incorporation, then your Bylaws, then your own internal Policies.
Your nonprofit's Articles of Incorporation will state the organization's purpose and include basic contact information. They will also provide plan for the distribution of assets, if the organization should dissolve or cease to exist.
Articles of Incorporation rarely change. In fact, for most nonprofits, they're a static document.
Bylaws, however, are different. Bylaws can and should be changed, especially as the nonprofit grows and matures.
What are Bylaws?
Think of Bylaws as the "house rules," defined by the board for your nonprofit. Bylaws are legally binding.
And while your Bylaws aren't a public document (like your IRS Form 990), they also aren't confidential. You can share them, for instance, with a prospective board member who asks to review them before joining your board.
How are Bylaws used?
Bylaws are used to guide the board's actions and decisions. They also provide basic structure for how the board will operate. Think of them as a roadmap.
Your bylaws should be descriptive, but not overly prescriptive. For instance, your bylaws might say the board will meet monthly. However, you don't want your bylaws to say the board will meet monthly, on the first Wednesday of the month, at 9AM.
What should Bylaws include?
There's no one-size-fits-all template for nonprofit Bylaws. However, there are some recommended best practices including:
- Minimum and maximum number of board members.
The IRS recommends that you have a minimum of 3 board members who are unrelated by blood or marriage. (Note: Some states will specify the minimum number of board members. Check your state's laws.)
- Terms and term limits.
Terms and term limits are considered to be an essential governance practice.
- Titles of officers, how they're appointed and their term.
Boards are required to have at least three officers: President, Secretary and Treasurer.
- Procedure for removing a board member or officer.
By having this provision in your Bylaws, no one person has this unpleasant task if and when it becomes necessary. Instead, it becomes a vote and an action by the entire board, per the "house rules."
- The authority to create and dissolve committees, how committee members are appointed and their powers.
Boards should avoid defining too many standing committees in the Bylaws. Instead, define how ad hoc committees will be created and used.
- Minimum number of board meetings a year.
The federal requirement is one meeting per year. However, your board should meet more often to ensure that it's meeting its legal and fiduciary responsibilities.
- Number of members required for a quorum.
Use a percentage, instead of a number, since the number of board members you have will change. (Note: Some states will specify the minimum number required for a quorum. Check your state's laws.)
- How an emergency or special board meeting may be called.
There may be an urgent need to call a meeting before the next scheduled board meeting. Be sure your Bylaws state who has the authority to call a special meeting. (Note: Some states require that when notice of a special meeting is given, a purpose of the meeting is also given. Check your state's laws.)
- Process for virtual meetings.
In today's digital age, and especially for boards with members in multiple locations, it can be effective to have meetings online instead of in-person. (Note: Some states have restrictions on what type of business can be conducted. Check your state's laws.)
- Indemnification of members.
A statement that limits the board members' personal liability.
- Amendment of bylaws.
A statement of how bylaws can be amended. For example, you might state how notice of the amendment will be given, the manner of voting and the quorum for the proposed amendment(s).
WHAT SHOULD YOU DO NEXT?
Compare your Bylaws to this checklist. Do your Bylaws include all of these basic provisions?
- Minimum and maximum number of board members
- Terms and term limits
- Titles of officers, how they're appointed and their term
- Procedure for removing a board member or officer
- The authority to create and dissolve committees, how committee members are appointed and their powers
- Minimum number of board meetings a year
- Number of members required for a quorum
- How an emergency or special board meeting may be called
- Process for virtual meetings
- Indemnification of members
- Amendment of bylaws
If something is missing or needs to be changed, bring it to the attention of your Board Chair or Governance Committee, so it can be reviewed and discussed with the board.
And remember, your Bylaws are a legal document. They need to align with your Articles of Incorporation as well as comply with your state's laws.
So, before you ask your board to approve it, be sure to have any new language reviewed by an attorney. This will ensure that changes are in legal compliance.
Bylaws are a living, breathing document. They should be reviewed regularly and updated from time to time.
It's a best practice to review your Bylaws every two years. This helps to ensure that they are relevant for your nonprofit in its current phase of growth.
BoardSource reports that 57% of nonprofit boards have reviewed their organizations' Bylaws within the last 2 years.
Will this be the year that you review, and possibly revise, yours?
Contact me if I can help you assess your current bylaws and other board practices.
Laura Rhodes received a Certificate in Nonprofit Board Education from BoardSource in 2016. She conducts board education and engagement sessions, retreats and trainings for nonprofits across the U.S.
Send a message to start the conversation and learn how Laura can help you and your organization.
Photo thanks to James Sutton at Unsplash