Your not-for-profit has likely grown and evolved since it was founded. Have your bylaws kept pace? Bylaws are the rules and principles that define your organization — and, if you haven’t revisited them recently, they may not be as effective as they could be.
Rules and procedures
Typically, bylaws cover such topics as the broad charitable purpose of an organization. They also include rules about the size and function of the board; election terms and duties of directors and officers; and basic guidelines for voting, holding meetings, electing directors and appointing officers.
Without being too specific, your bylaws should provide procedures for resolving internal disputes, such as the removal and replacement of a board member. If you’re not familiar with the bylaws, you should get up to speed fast.
What if you need to change your organization’s bylaws? First, make sure you have the authority to do so. Most bylaws contain an amendment paragraph that defines the procedures for changing them. Consider creating a bylaw committee made up of a cross-section of your membership or constituency. This committee will be responsible for reviewing existing bylaws and recommending revisions to your board or members for a full vote.
The bylaw committee needs to focus on your nonprofit’s mission, not its organizational politics. A bylaw change is appropriate only if you want to change your nonprofit’s governing structure, not its operating procedures.
If your nonprofit is incorporated, ensure that any proposed bylaw changes conform to your articles of incorporation. 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 contrary to the objectives and ideals included in your incorporation documents may invalidate the revisions.
Bylaw provisions that suggest you’ve strayed from your original mission also can jeopardize your federal tax-exempt status. So make sure your bylaw amendments are consistent with that tax-exempt purpose. If changes are “structural or operational,” report the amendments on your Form 990.
Know what they contain
Your board and staff need to be familiar with exactly what your nonprofit’s bylaws contain — and what they don’t. If they’re incomplete or don’t reflect your organization’s current mission, it’s time to revise them. It’s also very important to reassess the productivity of your accounting team and the efficiency of your accounting software so they too support your current mission. Get in touch with Cordia Partners’ team to learn more. Contact us or visit www.cordiapartners.com.