No matter the company’s size, every nonprofit organization requires a written set of regulations to outline how they are governed. These rules are known as bylaws.
Bylaws are legally binding rules that recognize how the company board should operate. These regulations are usually unique to each company. That being said, they often follow a similar structure and layout.
Within this article, we will be discussing the following topics:
- Why have bylaws for nonprofit organizations?
- Best practices for nonprofit bylaws
- Common provisions of bylaws
- Sample nonprofit bylaws
Read on for more information.
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What is the purpose of nonprofit bylaws?
Bylaws are vital for guiding the actions of the board of a nonprofit organization. Not only do they dictate protocols, but they also help resolve conflicts and disagreements.
These bylaws for nonprofit organizations prevent many problems simply by clarifying the rules and expectations of the board of directors.
Best practices for nonprofit bylaws
When deciding on bylaws for nonprofit organizations, there are numerous factors to consider. To make these considerations easier for you, we’ve listed some nonprofit bylaws best practices below.
1. Get professional help
Bylaws are legal documents that need to be correct in the eyes of the state. Most organizations hire lawyers with experience in these types of documents to avoid any potential issues with local laws.
2. Make your bylaws public
When an organization makes their bylaws public, they encourage trust among their donors and beneficiaries. When the public has access to these documents, the organization seems more transparent and reputable.
3. Include only relevant and stable information
Nonprofit bylaws should only contain fundamental rules for the organization. We do not recommend including information that changes on a regular basis. This type of information is better suited to your procedures or policy manuals.
4. Make sure your bylaws match your organization’s goals
Any good organization will ensure its bylaws line up with its identity and mission as a business.
5. Be realistic with your expectations
Good nonprofit bylaws only include realistic provisions. Again, this comes from understanding your board of directors. If they do not adhere to certain provisions (think deadlines), you are better to omit the bylaw altogether.
6. Review your bylaws regularly
It is good practice to review your nonprofit bylaws every two years. Unfortunately, board officer terms make it difficult for the board to enforce bylaw revisions. Therefore, the duty should fall under the responsibilities of the executive director. Remember: bylaws should reflect your organization in the present and always remain relevant.
Common provisions of bylaws for nonprofit
It is a good idea to follow a checklist of standard provisions when drafting the board of directors bylaws:
- Name and purpose
- Election, roles, and terms of board members and officers
- Membership issues (responsibilities, member eligibility, due, rights)
- Meeting guidelines (frequency, quorum)
- Board structure (maximum number of board members, standing committees, if any)
- Compensation and indemnification of board members
- A defined role for the chief executive
- Conflict of interest policies
- Possible amendment of bylaws
- Dissolution clause for the organization
Tip: In addition to the common provisions of bylaws for nonprofit organizations, it is essential to have a nonprofit risk management plan. This plan helps identify potential risks and establishes strategies to mitigate them, safeguarding the organization’s interests, resources, and reputation. By proactively addressing risks, nonprofits can ensure long-term sustainability and effective governance.
Sample of nonprofit bylaws
To help structure your bylaws, we have provided the following sample for nonprofit bylaws:
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