Bylaws are the rules and procedures that any organization uses to establish its board, directors, and members, and to conduct its operational and administrative affairs.
Nonprofit bylaws begin with the title of the organization’s name and include sections for name and purpose, membership, annual meeting, board of directors, officers, committees, voting, and amendments. Statutes may also include sections on conflict of interest policies, prohibited activities, and tax policies, such as the administration of gifts and distributions and disbursements. Nonprofit bylaws are the rules for running the organization and, as such, should be written in a way that guides the board of directors in running the organization, without being overly restrictive. They present the basic structure and are not a list of all the policies and practices of the organization.
The nonprofit charter should define the responsibilities of the company’s board of directors.
Nonprofit bylaw sections are indicated by article number and paragraph number. The first article of the statutes of the non-profit organization must indicate the name and location of the headquarters of the organization. Article 2 must indicate the general and specific objectives of the constitution of the organization or entity. For example, a general purpose of a non-profit organization established to assist families who have had a child diagnosed with cancer might be “management of donated funds for charitable purposes.” A specific purpose in this case may be “to enrich the lives of children with cancer and their families through educational, supportive and therapeutic activities”.
The definition and requirements for membership are outlined in the membership section of the nonprofit bylaws. Rules for termination or layoff, required dues, regular or special meetings, required notice, and member responsibilities are explained. The following is an article on directors and their power and responsibility. This article includes the number of directors, the conditions for the positions and the process for the election of directors, as well as the duration of the position, resignation or dismissal and provision of vacancies. The voting requirement and number of directors constituting a quorum are also described: A quorum is the designated number of directors necessary for the board to legally take action.
The following article of the nonprofit bylaws sets forth the number and positions of directors and their selection, responsibilities, and whether there will be designated salaries for directors. Following this section, the statutes would define fiscal policies, for example, how donations will be managed and how distributions will be made. Included in this section may be a subparagraph explaining investment guidelines. In addition to this item, the board would include a section on committee formation and committee formation and responsibilities.
While there are specific laws governing nonprofit organizations at the local and national levels in the United States, the Board may choose to include a section on what constitutes prohibited activities. This is generally a recommended addition, as nonprofits found to be in violation of the law may see their nonprofit status discontinued. In general, a section on conflict of interest policy is also recommended.
Generally, the last articles of the nonprofit bylaws include any other financial matters or general policies to follow, as well as an article that describes the procedure for changes to the bylaws. Complete bylaws could indicate the date and location of the corporation’s records and bylaws, and would be signed by an authorized member of the board or an officer of the organization. Non-profit statutes are filed with the local or regional authority and must be available for inspection by members, officers, directors and the public during reasonable business hours.