A corporation’s internal policies are governed by its bylaws. Also, for NGOs, the location and timing of shareholders’ and directors’ meetings as well as the criteria for voting are determined by nonprofit bylaws. During the first board meeting, the corporation’s directors are expected to adopt the bylaws.
By and large, some resources can provide direction on how to draft bylaws. Likewise, an organization can choose to hire an attorney to assist in the process.
- Nonprofit bylaws must be constantly reviewed to ensure they are up to date
- By adhering to its bylaws, a board can defend itself against legal claims
- Nonprofit bylaws constitute the second-most crucial document for a Nonprofit
What are nonprofit bylaws?
Nonprofit bylaws are legally enforceable guidelines that govern the activities of an Nonprofit organization. They define the organization’s structure and direct the board of directors on how to conduct all operations.
Nonprofits must maintain copies of their bylaws, but unlike changes to the articles of incorporation, bylaw changes do not need to be submitted to the secretary of state. Also, the content and structure of all bylaws may be the same. However, correctly prepared bylaws should be particular to each organization and adapted to the nonprofit’s requirements.
The importance of nonprofit bylaws
As a charity, your bylaws serve as the foundation of your organization, giving it structure and also working as a manual. Hence, the importance cannot be overemphasized. Here are a few reasons why nonprofit bylaws are considered a crucial component of nonprofit organizations.
1. Bylaws are the keys to your nonprofit’s effective operations
The purpose of bylaws is to address organizational governance. Likewise, nonprofit bylaws are the second-most crucial document for a Nonprofit. The bylaws are a Nonprofit’s operational manual and can be used to assess how well the organization operates. Crucial information regarding the organization, such as the number of board members necessary for a quorum and the maximum tenure of a board member are outlined in the bylaws. In simple terms, anyone seeking the organization’s information can consult the nonprofit’s bylaws.
2. Nonprofit bylaws can help to resolve variance
Bylaws can assist in settling conflicts when friction between stakeholders with conflicting interests begins to emerge. Hence, nonprofit bylaws must specify how adjustments can be made and whether they must be approved by the board, the membership, or a third party. For the most part, some boards may demand a super-majority vote to enact any bylaw revisions to ensure a strong consensus in favor of doing so (at least 66 percent).
3. Bylaws can protect nonprofits from legal provocations
By adhering to its bylaws, a board can defend itself against legal claims. Although bylaws are not public records, nonprofits that make them available to the public improve the organization’s accountability and transparency. In addition to the aforementioned, bylaws should comply with all applicable federal and state laws.
In summary, nonprofit bylaws perform a whole lot of functions. Hence, they are a crucial source of information for the board, officials, and personnel.
Nonprofit bylaws must be constantly reviewed to ensure they are up to date. This also applies to organizations that have been in operation for a while. Furthermore, the focus should be on the organization’s smooth operation. And bylaws that have been well-drafted initially should be so adaptable that routine revision can be avoided.
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