Nonprofit Bylaws: A Beginner’s Complete Guide
Everyone has to play by the rules, including nonprofits. Nonprofit bylaws establish procedures, structures, requirements, and guidelines for how it operates. In other words, it keeps everyone accountable for their actions and prevents conflict and confusion.
Avoid the temptation to copy and paste old sample bylaws from the internet. While these can provide a good starting point, it’s better to tailor your laws to your nonprofit organization. After all, we don’t want your nonprofit bylaws to end up like “the code” in Pirates of the Caribbean—loose, misinterpreted, and broken more often than not.
We’ll help you escape mutiny and disagreement by walking you through everything you need to know about nonprofit bylaws as this is a facet of your overall nonprofit business plan. Below, we’ll get into what these are, why these matter, and how to write your own.
What Are Nonprofit Bylaws?
Nonprofit bylaws (aka bylaws and articles of organization) explain how your organization operates. These rules explain the election process for board members, board meeting guidelines and frequency, compensation disclosures, indemnity clauses, and more.
Simply put, it’s an operating manual for running your nonprofit.
While your bylaws don’t have to be publicly accessible, many organizations share them to increase nonprofit transparency and trust. Donors, constituents, and supporters like to know what happens behind the scenes.
The nonprofit board of directors is responsible for compiling your nonprofit’s bylaws. Ideally, it did this thoroughly when forming the organization. If not, don’t panic—you can amend your bylaws at any time, although we recommend reviewing and making edits periodically.
Then, there’s the law.
Federal law doesn’t require any specific language in bylaws, but some states have specific requirements. For example, New York has audit requirements, restrictions on who can be the board chairperson, and nonnegotiable procedures for managing conflicts of interest.
Other states have more lenient requirements. For example, Colorado doesn’t require nonprofits to organize bylaws. However, if nonprofits don’t establish rules, the state will subject the nonprofit to general ruling and organization laws.
Why Do Nonprofits Have Bylaws?
Nonprofit bylaws are essential to your formation and longevity. Without these preestablished rules, there’s no guidance for how individuals should conduct themselves. There would also be no way to hold the organization or leaders accountable for their actions.
Here are a handful of reasons nonprofits need bylaws:
- Legal reasons: Bylaws are a requirement in some states.
- Decision-making: Bylaws define how your organization makes decisions, such as holding meetings, fulfilling terms of office, and electing board members.
- Conflict prevention: Bylaws present the rules clearly, eliminating confusion or individual disagreements.
- Protection: Bylaws limit personal liability of board members, protecting them from financial loss or harm.
Common Sections to Include in Your Nonprofit Bylaws
There’s no one-template-fits-all way to write your nonprofit bylaws. However, aside from states having requirements for what you need to include, you’re free to add further clarification in other areas beyond that.
Here are a few common sections to get you started:
Name of Organization
Start with your nonprofit’s name and purpose. Your purpose will identify whether you’re a charity, religious group, research organization, or educational institution. Then, broadly state your nonprofit’s objectives and the activities it’ll use to operate (e.g., fundraising, volunteer events, and impact activities).
Outline the details around membership in your nonprofit. Specifics could include:
- Eligibility for joining the board
- Required fees
- Procedure for electing board members
- Voting rights for members
- Approval process for changes to bylaw amendment
- Criteria for membership termination
Detail how many board members need to be present for a quorum. However, some states have required minimums, so ensure you follow the state guidance before establishing your rules.
Then, establish how often you’ll meet. This might be a minimum of once a year, but check to see if your state requires more. You’ll also need to define when the board of directors, chairperson, or executive committee can call a special meeting for emergencies or anything that can’t wait until the next meeting.
Deciding who you need on your nonprofit board is essential to the success of your nonprofit. Solidify how many board members you’ll allow, including a minimum and a maximum. Again, some states have requirements for board structure, so follow the state regulations when designing your bylaws.
Define the officer roles of your board of directors. Roles might include president, vice president, secretary, and treasurer. Then, outline the responsibilities for each role. For example, your president might preside over all meetings while your vice president takes over in the president’s absence.
Indemnification of Board Members
Indemnification refers to how you’ll protect your board members and members from financial harm due to their role. For example, your nonprofit bylaws outline might include how you’ll pay legal fees if they’re involved in a lawsuit.
Books and Records
State how you’ll keep financial books and records of your meetings. This includes detailing where you’ll store these and how members or the public can access them.
Record how you’ll make amendments to your nonprofit’s bylaws. Then, add each bylaw amendment to this section to record every change you make and its impact.
Add a dissolution clause that states how you’ll distribute your assets if the nonprofit organization dissolves.
8 Tips & Best Practices for Writing Your Nonprofit Bylaws
1. Get Legal Help
Bylaws are legal documents, and there are plenty of nuances and state-specific requirements that make writing them a bit tricky. We recommend working with a professional to draft your nonprofit bylaws. They’ll know the state restrictions and help you avoid getting into legal trouble.
2. Keep It Simple (Think Guidelines Rather Than Strict Rules)
Strict bylaws can make it hard to stay in accordance. Instead, write bylaws that operate as guidelines. For example, you might state that there’ll be a minimum of 10 board members and a maximum of 30 rather than requiring exactly 15. Or you might suggest an annual board meeting rather than a regular meeting on the first Tuesday of every new year.
3. Personalize Bylaws to Your Nonprofit
Many nonprofits will have a lot in common regarding organizing and operating. However, every organization is unique. So customize your bylaws to your nonprofit’s special circumstances, purpose, and members.
4. Make Your Bylaws Public
The law doesn’t require nonprofit organizations to make their bylaws public, but we believe it provides accountability and transparency. When you share them with your donors and supporters on public record, you give them a behind-the-scenes look at how and why you make decisions.
5. Pay Attention to Semantics (These Matter)
The words “shall” and “may” often get confusingly tossed around in bylaws, but these aren’t interchangeable. Shall means mandatory, while may means an option. For example, if your treasurer shall establish the budget, they’re the only ones that can do it. However, if your treasurer may establish the budgets, they might do so with permission from the board.
6. Be Realistic
Be careful not to overcommit your board members. For example, don’t require a monthly meeting if you know it’ll be an unnecessary burden. The same goes for demanding an unrealistic quorum if you know you’re unlikely to get that many voting members present.
7. Review and Update Regularly
Your bylaws should be living, breathing documents—not like the Constitution of the United States. That includes revisiting your laws every couple of years and revising what’s not working. For example, consider changing your laws to require quarterly meetings if you struggle to have monthly meetings.
8. Train Board Members
Bylaws are only good when accessible and implemented. So train your board members on all the items outlined in the document. You may even consider making it a regular part of an annual meeting to review essential bylaws together and answer questions.
Build Better Giving Experiences With Classy
Creating bylaws for your nonprofit can be tricky, but managing your donations doesn’t have to be. Classy makes it easy to build donation pages, process payments, host virtual events, and raise more money for your nonprofit.
Our all-in-one fundraising platform lets you create high-performing campaigns, analyze metrics, and manage your supporters from one piece of software. It does all the nitty-gritty, time-consuming work for you to focus on what matters most: making an impact.
Request a demo to get a walk-through of how Classy can transform the fundraising experience at your nonprofit.
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