Why do you want to invest time and energy in your Nonprofit Bylaws?
You want smooth operations
You value transparency and accountability
You do what is required
You want protection & clarity
1. Your Operating Manual
Bylaws serve as an operating manual for your organization.
Your organization Bylaws address the principles, frameworks and, in some cases, policies for the overall governance of the organization. Bylaws do not address the day-to-day operations details that the executive directors and employees oversee. Bylaws often contain key policies regarding conflicts of interest and duties of loyalty. They are intended to be a rule book that provides answers when problems or questions arise, such as what are the qualifications for board members or an Executive Director or how can an errant board member or Executive Director be removed.
Bylaws generally cover topics such as:
· Board size and function
· Directors and Officers roles and duties
· Rules and procedures for meetings, elections and appointments
· Conflict of interest policies and procedures
· How grant funds will be distributed
· Other essential corporate governance matters
2.Transparency and Accountability for Grantors, Donors and Community
Consider making bylaws available to the public.
Your board will pay careful attention to the Bylaws contents as they prepare to make the Bylaws a public document. Your willingness to distribute or publicly post your Bylaws increases your accountability and transparency to the public – including potential funders and partners.
3. Bylaws are Required
Bylaws are initially developed during the incorporation phase of the nonprofit.
In fact, the organization does not formally exist until the Bylaws have been approved by the board. The state where your organization incorporates regulates nonprofit Bylaws rather than the federal government. Furthermore, your city may have additional regulations for nonprofits. For instance, California Corporations Code has a section dedicated to nonprofits that contain a multitude of default rules while states such as Washington and Delaware allow for great flexibility in constructing Bylaws.
4.Protection & Rule Book
Bylaws serve the organization to provide a consistent guide to directors and to assure continuity of operation in line with the original intended purposes, mission and values.
Bylaws also provide the organization with protection when things go wrong – provided the Bylaws are clear, understood and followed.
Too often, nonprofits will include provisions within their Bylaws that are unnecessary or complicate authority or process rather than streamlining governance. Complex Bylaws can be difficult to uphold. For instance, if your Bylaws state that the board members will meet the first Monday of every month the Board would need to formally amend the Bylaws to change the meeting to any other day.
As Kathryn M. Vanden Berk’s states in her article Avoid Board Deadlock with Comprehensive Bylaws , you can implement the following basic practices to protect your organization and avoid disagreements:
Stay Organized: make sure a current version with a most recent revision date at the bottom is readily available to all board members and directors.
Go Digital: the best way to stay current and to make a document available is to go digital.
Provide to the Board: all board members should be given a copy of the bylaws as part of an orientation packet and updates should be distributed after any revisions have been made to the Bylaws.
Identify a Parliamentarian: look for someone who is attentive to details and extremely familiar with Rules of Order.
Focus on the fundamental rules within your Bylaws.
You can cover policies, procedures and information that will change frequently through your nonprofit’s policies and procedures manual or in board resolutions.
“Rules of Order’ are necessary to govern board meetings and other official functions and are often based upon the parliamentary procedures according to Robert’s Rules of Order .
Board officer terms can make it hard for the board to track revisions. So, it should be the responsibility of the Executive Director to track revisions. Keep in mind, if Bylaws are not upheld during a dispute, board members could be held liable for breaching their duty to the organization.
Review Bylaws frequently and revise them as needed. Remember, you will want an attorney who isn’t a member of the board to sign off on any substantial revisions to your Bylaws.
Speaking of Revisions, Let’s Talk New Technology
Do your Bylaws recognize your organization’s use of technology?
As technology allows us to host online meetings, share documents on the cloud, and provide certified electronic signatures, we are all doing business differently. Some organizations recognize web forum board meetings within their Bylaws. Most organization’s address whether or not and how decisions can be made by email.
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Have you had situations where your Bylaws were too limiting or weren't strong enough? How did you change your Bylaws to ensure the situation didn't happen again?