Your Nonprofit’s Bylaws
Those Golden Rules May Need More Than Polishing
Has your organization outgrown its bylaws? Sometimes, as a nonprofit expands and matures, the guiding rules set when it was just a twinkle in the eyes of its founders need to be revisited and brought up to date.
Revising your organization’s bylaws involves more than just altering the language of rarely visited documents. The process provides you with an opportunity to look closely at how your nonprofit is evolving and whether such developments are consistent with your original mission.
Serving as Your Nonprofit’s Architectural Framework
Bylaws are the rules and principles that define your organization’s governing structure. They serve as your organization’s architectural framework. Although bylaws aren’t required to be public documents, making them available to the public can boost your organization’s accountability and transparency.
Bylaws may cover such topics as the broad charitable purpose of the organization, the size and function of your governing board, the election, the terms and duties of your nonprofit’s directors and officers. They also usually cover your nonprofit’s basic rules for voting, holding meetings, electing directors and appointing officers. And, without being too specific, your organization’s bylaws should provide procedures for resolving any internal disputes, such as the removal and replacement of a board member.
Forming a Bylaw Committee
Before you attempt to revise the bylaws, make sure you have the authority to do so. Most bylaws contain an amendment paragraph that defines the procedures for changing these rules.
Consider creating a bylaw committee made up of a cross-section of your organization’s membership or constituency. This committee will be responsible for reviewing the existing bylaws and recommending revisions to your governing board or to members for a full vote.
It’s important that your bylaw committee focus on your nonprofit’s mission and not organizational politics. A bylaw revision is appropriate only if you want to change your nonprofit organization’s governing structure, not to cater to a pet project of one of the organization’s leaders.
Revising What’s Important
If your nonprofit is incorporated, you’ll need to ensure that any proposed bylaw changes conform with the organization’s articles of incorporation, which spell out its nonprofit’s purpose and outline its allowable activities. For example, the purposes clause in your bylaws must match that in your articles of incorporation. Any new provision or language changes in your bylaws, which run contrary to the objectives and ideals included in the organization’s incorporation documents, could invalidate the revisions made.
Wanting to change the rules about how you operate suggests that the organization may have drifted from its original purpose or chartered a new direction. Bylaw revisions that indicate it has strayed from its initial mission can jeopardize the organization’s federal tax-exempt status. By all means, make sure any bylaw amendments remain consistent with the organization’s tax-exempt purpose. And, be sure to notify the IRS if they represent a “structural or operational” change, by reporting adopted amendments on your Form 990.
In addition, review your state’s statute that governs nonprofits, because it may contain mandatory provisions that affect your bylaws. In the absence of bylaws, when faced with issues about your governance, your state may dictate a proper course of action. If you don’t coordinate your bylaws with such a statute, you may unwittingly hinder your governing board’s ability to operate.
An Accurate Reflection
Through the years, your nonprofit is likely to experience a number of changes. Its constituency and support may grow and its goals and priorities may shift. Your professional advisors can work with you to amend your bylaws and make sure they accurately reflect your organization as it exists today.
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