How to Write Bylaws for a Nonprofit: From Vision to Rulebook

Deloitte emphasizes that effective governance is not only a measure of success for corporations, but it is equally crucial for nonprofits as well. However, it is important to maintain a strict set of rules. Nonprofit bylaws, which we explore in this article, are the cornerstone of governance structures, influencing the relationships among key stakeholders.  

This article delves into nonprofit board governance models, examines the intricacies of writing bylaws for nonprofit organizations, and unravels what should be included in nonprofit bylaws. As a bonus, readers get a nonprofit bylaws checklist example and sample bylaws.

What is a bylaw for a nonprofit? 

Nonprofit bylaws describe how an organization works. These regulations describe the board member election procedure, conflict of interest policy, nonprofit risk management plan, and norms of executive committee meetings. It also includes remuneration disclosures, board members’ indemnification, and other topics. In other words, it’s a how-to guide for running your organization. 

While your organization’s bylaws are not required to be made public, many organizations do so to improve nonprofit openness and trust. In this context, the nonprofit board of directors or executive director is in charge of creating the bylaws for your organization. Ideally, it should have done this extensively while founding the organization. 

What is the purpose of bylaws for nonprofits? 

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. Furthermore, the formulation of a nonprofit’s bylaws serves such purposes as the following:

1. They establish a common set of rules to ensure universal comprehension and adherence.
2. They promote transparency for nonprofit governance best practices.
3. Bylaws facilitate conflict of interest resolution at board meetings and provide a legal framework for dispute resolution within and outside the organization.

How to write bylaws for a nonprofit organization?

Writing bylaws for nonprofit organizations requires careful planning and meticulous attention to detail. To begin the process, it is critical to establish a dedicated bylaw committee composed of professionals chosen for their expertise and commitment. This committee plays a pivotal role in the development process, with each member assuming specific roles and responsibilities to ensure success.

Meanwhile, consider conducting thorough research and benchmarking. This requires a detailed review of legislative requirements in the jurisdiction and an exploration of best practices in nonprofit governance. 

Thus, you will be in compliance with applicable regulations, such as the Nonprofit Corporation Act and the Internal Revenue Code, particularly those pertaining to exempt organizations and the future federal tax code. 

Lastly, the committee must determine how many board members will be appointed in accordance with state laws governing nonprofits. This also ensures that board members approve the bylaws by a majority vote.

Creating bylaws for nonprofit: key elements

Thorough research into key components is central to create bylaws for nonprofit organization. These elements form the foundation of a well-structured and effective governance framework.

1. Organization’s name and mission

The basis of nonprofit bylaws is expressing the organization’s identity and mission. Setting the tone for a well-structured governance system begins with clearly establishing the organization’s name and mission. 

2. Membership structure (if applicable)

If the organization has a membership structure, the roles and rights of its members must be defined. Addressing the membership structure in the bylaws ensures clarity on the organization’s members’ expectations and contributions.

3. Board of directors

The board of directors plays an important role in nonprofit governance. It is critical for effective organizational leadership to define clearly the composition, minimum and maximum number of board members, roles, and the board’s responsibilities.

4. Officers

Describe the duties and responsibilities of the organization’s important officers, especially the vice president, who plays a crucial role. Making each officer’s responsibilities clear guarantees a smooth-running leadership structure.

5. Meetings and decision-making

Deliberate and well-organized meetings are the lifeblood of good government. Incorporate the monthly meetings and decision-making into your bylaws. In specifics of bylaws, outline the norms that convert special meetings into strategic forums, as well as the specifics of your organization’s important annual meetings.

6. Finances and fiscal policies

By securing your organization’s economic policy in the bylaws, you can navigate your finances easier. This section guarantees that your nonprofit’s financial resilience is in sync with its organization’s purpose and Internal Revenue Code.

7. Amendments and dissolution

In corporate governance, adaptability is key. Make room in your bylaws for prospective modifications by including a section on amendments and a charter for a committee. Also, ensure you have a clear nonprofit strategic plan for changing your governance framework and, if required, gracefully terminating your nonprofit’s mission.

Drafting bylaws for nonprofit organizations

The most effective bylaws provide a realistic picture of what your organization is doing now, not what you expected it to do when you first started. The important tool here is to ensure that the language is consistent with the legally binding nature of the bylaws. The following practices guide you on how to write nonprofit bylaws.

1. Writing style and clarity

It’s important to use an easy-to-understand writing style. Avoid using complex words and jargon that might confuse readers. Instead, use simple language that everyone in the organization can easily comprehend. Be clear and specific when defining terms and concepts to prevent potential misunderstandings.

2. Use of clear and concise language

To ensure that your bylaws are effective, it is important to be concise and avoid unnecessary repetition. Thus, each provision should be clearly articulated and serve a distinct purpose. Organize your bylaws logically and include a helpful table of contents for easy reference.

3. Avoiding ambiguities

To provide clarity and avoid confusion, bylaws should define terms precisely and address potential areas of ambiguity. Also, provide examples where necessary.

4. Legal review

Conduct an in-depth legal analysis to ensure that the bylaws are in accordance with all applicable laws and regulations. Check that the wording used is in accordance with legal norms and criteria. Consider hiring a professional attorney to analyze your bylaws and advise you on any potential legal difficulties.

5. Consulting with legal professionals

Seek the guidance of legal specialists, such as attorneys or legal advisors, to guarantee the correctness of the bylaws. Additionally, address any legal issues or advice provided by legal professionals during the drafting process.

Writing bylaws for a nonprofit organization: steps of approval

Nonprofit bylaws are typically approved by the board of directors and, if applicable, by the membership. The proposed bylaws undergo a thorough review and are formally approved by the board of directors, ensuring their consistency with the organization’s goals and legal requirements. Finally, board members sign the bylaws to adopt them. 

Once authorized, a specific timetable for implementation indicates when the new rules take effect and regulate the organization’s activities. In essence, this structured approval process ensures that the bylaws align with the organization’s mission and legal obligations.

Importance of communication in writing nonprofit bylaws

Internal communication is crucial for larger businesses, with 45% of employees recognizing its importance for good management. This highlights the significance of this component for NGOs.

For the smooth operation of a nonprofit, all stakeholders should understand and follow the stated regulations. The bylaws should be presented freely to all parties involved to support this understanding, encouraging transparency and shared awareness. Also, you should publicize the bylaws on the nonprofit organization’s website.

Moreover, comprehensive training sessions for board members and staff also clarify their duties and responsibilities. Integrate bylaws into daily operations to see how they simplify how nonprofit companies operate.

Why it’s important to do period review and amendments

A systematic strategy for periodic evaluation and necessary revisions is required to manage nonprofit bylaws effectively.

Establishing a review schedule

Regularly evaluating the nonprofit bylaws ensures their continued relevance and connection with the organization’s objectives. Consider the following steps:

• Establish a schedule for systematic reviews.

• Determine the frequency in light of considerations such as corporate development, legislative changes, and mission alterations.

• To motivate timely evaluations, use calendar reminders or scheduling tools.

Adapting to organizational changes

Maintaining the integrity of bylaws requires staying attentive to substantial organizational changes. Here’s how:

• Monitor and evaluate changes, such as goal expansions or adjustments.

• Evaluate the impact of these changes on current bylaws and make necessary amendments.

• Proactively revise bylaws to reflect the organization’s current situation and needs appropriately.

Involving stakeholders in amendments

Involving stakeholders is critical to ensure clearly written and widely approved revisions. Consider the following steps:

• Encourage open communication among high-level stakeholders, such as board members, staff, and contributors.

• Collect comments to ensure that suggested changes are consistent with the overall understanding.

• Consider holding seminars or conversations to include stakeholders in the revision process in a transparent manner.

Sample of nonprofit bylaws: checklist and template

It is a good idea to follow a checklist of standard provisions when drafting the board of directors bylaws:

1. Name and purpose 2. Election, roles, and terms of board members and officers 3. Membership issues (responsibilities, member eligibility, due, rights) 4. Meeting guidelines (frequency, quorum)  5. Board structure (maximum number of board members, standing committees, if any) 6. Compensation and indemnification of board members 7. A defined role for the chief executive 8. Conflict of interest policies 9. Possible amendment of bylaws  10. Dissolution clause for the organization

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.

To help structure your bylaws, we have provided the following sample nonprofit bylaws:

How to write bylaws for a nonprofit: best practices 

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 its bylaws public, it encourages trust among its 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 off omitting 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. 

How the board portal can help you write nonprofit bylaws

Board portal technology enables board members to collaborate seamlessly, assisting in communication and document exchange. Indeed, Deloitte identifies three benefits that board portals provide to business and charity board directors: information access, centralized communications, and data security. 

Consider reading our top providers’ reviews to make an informed decision about the board portal vendor. 

In a nutshell, the following board portal features offer practical solutions for how to make bylaws for an organization:

1. Real-time collaboration

The software allows for simultaneous input from board members, lively debate, and quick decision-making.

2. Version сontrol

The board portal ensures that all users are working on the document’s latest version, eliminating the danger of conflicting modifications and promoting document accuracy.

3. Audit trails

The solution allows for quick modification tracking, making it simple to recognize and comprehend changes made to the bylaws.

4. User permissions

The board portal software controls who may see, modify, or comment on specific parts by granting different levels of access to different board members.

5. Notification systems

The platform sends members reminders and updates about document modifications, forthcoming deadlines, or ongoing tasks.

Key takeaways

• Nonprofit bylaws serve as a how-to guide for administering the organization.
  
• Nonprofit bylaws define the organization’s name and mission, outline the membership structure, specify the roles of board members, address financial policies, and incorporate provisions for amendments and dissolution.
  
• Board portal tech streamlines collaboration, communication, and document exchange among board members, benefiting nonprofit bylaw creation and management.

FAQ

1. What are the consequences of not following bylaws?

Noncompliance may result in legal action, the loss of nonprofit status, and potential reputational harm to the organization.

2. How often should a nonprofit review its bylaws?

Nonprofits should review their bylaws at least once a year, with more regular reviews considered during substantial organizational changes to ensure compliance with current legal and operational requirements.

3. Who executes a nonprofit corporation’s bylaws?

Bylaws are normally executed by board members, with the board president or a designated official monitoring implementation.