Non-Profit Bylaws

These are the rules you will live by in the nonprofit world.

When you are working on starting a nonprofit, one of the first things that should be on the “to do” list is to put together the bylaws of the corporation. These bylaws are going to be the foundational policies and procedures in which the organization will operate.

For existing organizations, the bylaws are not a “one and done” type exercise. As organizations grow in their services that are being provided and/or their organizational complexity, a set of bylaws that can be both flexible, yet clear on direction and authority are going to be necessary. For organizations that already exist, it is good practice to have your board, or at least your Governance Committee, review the bylaws at least annually.

But, why do we need bylaws?

Well, you need bylaws, because generally, the state says you need to have them. Each nonprofit corporation is chartered and organized by the state in which they are organized in. If you dig around your state’s law code, you will find whole sections or chapters dedicated to Nonprofit Corporations, how they are established, the general rules which they need to operate under and how they are governed, etc.

In Ohio (where I am), Chapter 1702 of the Ohio Revised Code is entirely devoted to Nonprofit Corporations. In fact, Section 1702.10 of the Ohio Revised Code deals specifically with establishing bylaws (or Code of Regulations) and Section 1702.11 talks about the contents of what the bylaws should have. More than just the state, federal regulators (like the Internal Revenue Service) requires bylaws in order to have tax-exempt status. In other words, it’s a pretty important document.

So, what should they include?

Well, there is no one basic set of bylaws out there. Each one is a little different, but having a comprehensive template is always helpful. and as I have written more bylaws than I can shake a stick at, I’ll give you an idea of what a good outline of bylaws should look like.

Walking Through the Bylaws

Preamble - For the organizations I have started, I have always put this as the preamble: This Non-Profit Corporation is chartered by the Secretary of State of the State of Ohio and further established for the purposes of acting as a duly chartered Non-For-Profit Corporation as described in Chapter 1702 of the Ohio Revised Code.

It’s basic language that lets the reader know that the nonprofit is established by the law and has it’s charter and is ready to operate.

Article I - The Title of the Corporation

What is your organization named? Whatever it is, it should match whatever is on your certificate from the Secretary of State

Article II - Offices

Where is your organization headquartered? It’s nice to put this down so that individuals know where to send official correspondence.

Article III - Purpose of the Corporation

Here you can get into broad strokes of what your organization is actually doing to serve the community.

Article IV - Board of Directors

Here is where the number of directors, class of directors, election of directors, powers of directors and all the information about the board of directors resides.

Article V - Meetings

This where the schedule of meetings are set, how special meetings are called, notice requirements to board members and general membership, quorum, voting by proxy and all items related to meetings.

Article VI - Officers

This section explains who the officers of the board are and the roles they have in conducting organizational business.

Article VII - Executive Director

If the organization has a paid executive director, it’s helpful to have a separate section of the bylaws show that. It talks about how the director is hired and fired and also outlines the responsibilities of the Executive Director to the organization.

Article VIII - Financial Management

All items related to required audits, determination of the fiscal year, required balanced budget, borrowing, spending limits and other financial items should go in this section.

Article IX - Regulatory Priority

This is an important section that states that any amendment to federal or state laws that may impact the corporation will have precedence over what the bylaws state. Plainly stated, you want to make sure your bylaws are always in step with the law, the section helps you do that.

Article X - Dissolution

What happens when the corporation no longer exists? Well, if you aren’t clear in your bylaws, it is generally up to the courts. Putting this section is gives you some flexibility in how to wind-down the organization.

Article XI - Liability, Indemnification and Inurement

This section is legal jargon to make sure that individuals aren’t liable for any reasonable action they take in the best interest of the organization.

Article XII - Emergency Regulations

What happens if there is an emergency? How will that be handled? Actually, there is state law on the books that handles such a situation and this section outlines those procedures on the books.

Article XIII - Amendments

How do we change these bylaws? This section goes through that process.

Article XIV - Ratification

It is always helpful to note the dates on when the original bylaws were approved along with the dates any amendments were approved as well.

Whew! That is a lot of stuff to go through and it may seem like drinking from a firehose, but it’s all critically important information to ensure that your organization is run and run well. Of course, if you have comments or questions on these sections, please feel free to reach out.

Also, I am not a lawyer, and I am not here to give legal advice and yes, bylaws are type of legal document. However, if you can work with a lawyer and get the basic frame of bylaws completed, that will save you time (and money). You don’t need a lawyer to start a nonprofit, however, if you can find a lawyer to look over some of these items once you have completed your own set, it certainly can’t hurt.