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Nonprofit Bylaws

All nonprofit organizations need regulations that determine how they are governed. Bylaws are the legally binding rules that outline how the board of a nonprofit will operate. While they are unique to each organization, nonprofit bylaws generally have a similar structure and use.

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What are Nonprofit Bylaws

Nonprofit bylaws are a framework that guides the board’s actions and decisions. They clearly outline rules regarding authority, rights, and processes.

How Are Nonprofit Bylaws Created and Amended?

The board creates bylaws when the organization is established. States have different statutes that apply to bylaws — some dictate specific provisions, while others give more general guidelines. Consult the state regulations from your Secretary of State’s office or your state Attorney General’s office. If your organization operates in more than one state, follow the laws in the state where the organization is incorporated. Once created, consult an attorney to ensure they meet the state’s legal requirements.

Recommendations for Drafting Nonprofit Bylaws

  • Initial Considerations
    • Before you start writing, consider your organization’s mission, structure, and the specific needs of your nonprofit. This will help ensure your bylaws are tailored to your organization.
  • Sample Templates
    • Using a sample template can help you get started, but the final version will still need to reflect your nonprofit’s unique structure and processes.
  • Legal Assistance
    • Consult a lawyer when drafting your bylaws to ensure they comply with state laws and regulations.

Approval and Adoption of Bylaws

Like other policies, bylaws should be reviewed regularly to reflect how the organization works and remain relevant. Keeping bylaws simple in language and content can help ease this process. Some organizations appoint a task force to review and make suggestions for revision, reporting findings to the whole board. If the board votes to amend the bylaws, record the date that they were amended on the policy itself. Report any major structural or authority changes in your next Form 990, as appropriate.

Recommendations for approval and adoption of nonprofit bylaws

  • Board Approval
    • Once your bylaws are drafted, they must be approved by your board of directors. This usually involves a formal vote.
  • State Requirements
    • Some states require nonprofits to file their bylaws with the state. Make sure to check your local regulations.

What Should Your Bylaws Include?

Bylaws are individual to an organization, yet they should include specific issues and processes:

  • Name and location of organization
  • Statement of purpose, as aligned with IRS exempt purposes
  • Officers
    • Election
    • Role definition
    • Terms and term limits of office
  • Board members
    • Election
    • Roles
    • Terms and term limits, if terms are limited
    • Board member removal
  • Structure
  • Committees
    • Standing committees, if any
      • Authority of executive committee
    • process to create task force or new committees
    • If board committee members need to be board members
  • Chief Executive
    • Role
    • Voting privileges, if any
    • Title
  • Board member compensation
  • Indemnification of board members
  • Amendment of bylaws
  • Dissolution of the organization

Hierarchy of Laws

While bylaws are a detailed and immediate source of regulations, they must follow federal and state laws and comply with your organization’s articles of incorporation. If there is a contradiction between the bylaws and these other regulations, that part of the bylaws is invalid. For bylaws to be concise, the board also should create comprehensive policies.

Organizations thrive when they have the right policies and structures in place to support their success, and the guidance of nonprofit bylaws are an integral part of this. Whether you are learning to build bylaws for the first time or reviewing what you have instated, your board can best protect your organization and create greater cohesion within your nonprofit by prioritizing, updating, and adhering to your bylaws.

Common Mistakes to Avoid

Over Complicated Language

Keep your bylaws simple and straightforward. Overcomplicated language can lead to misunderstandings and make it harder to follow the rules.

Lack of Flexibility

While it’s important to be thorough, your bylaws should also be flexible enough to allow for changes and growth.

Ignoring State Laws

Make sure your bylaws comply with state laws. Ignoring these can lead to legal issues down the road.

Nonprofit Bylaw FAQs

What happens if a nonprofit doesn’t follow its bylaws?

If a nonprofit doesn’t follow its bylaws, it can face legal consequences, lose its tax-exempt status, and damage its reputation.

Can bylaws be changed after they are adopted?

Yes, bylaws can be changed. Your bylaws should include a clear amendment process for making updates.

How detailed should nonprofit bylaws be?

Bylaws should be detailed enough to provide clear guidance but flexible enough to allow for changes and growth.

Who should be involved in drafting the bylaws?

Board members, key staff, and legal counsel should all be involved in drafting the bylaws to ensure they meet the needs of the organization and comply with legal requirements.

Do bylaws need to be filed with the state?

This depends on your state’s regulations. Some states require nonprofits to file their bylaws, while others do not. Check your local laws to be sure.

 

101 Resource | Last updated: July 29, 2023

Other Resources: Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Bylaws: Dos & Don’ts, Bylaws: Effective Rules for Your Board (PowerPoint), The Essential Ingredients for Good Bylaws – Charter Boards