Photo by Sebastien Wiertz, Flickr Creative Commons
Even experienced nonprofit boards have to pause occasionally and consider the state of their organization’s bylaws. A critical component to any nonprofit, bylaws define the “rules of engagement”, or the ways in which nonprofits conduct themselves as they work to achieve their various missions. What follows are key themes for boards to remember as they revisit their bylaws.
Legal and Procedural Implications
Each state has an applicable statute governing nonprofit organizations. Regardless of where they operate, nonprofits are governed by the statute, or laws, of the specific state in which they’re incorporated. The statute lays out a nonprofit’s rights and obligations, including requirements it must observe to legally conduct business. As a result, a nonprofit’s first order is to ensure that its bylaws don’t run afoul of the statute. This is sometimes easier said than done, as rewriting or creating bylaws requires time and careful attention to detail.
Much of that time and attention must be spent on how provisions interact with each other. If the bylaws provide instruction on how to remove a board member, then another provision should describe how to fill board vacancies. If the bylaws specify that an organization’s members will have elected board officers, then an accompanying provision should describe the election process. These examples are self-evident, but there could—and usually are—others that are more nuanced.
Because the process can be complicated, nonprofits with the resources to do so should consider seeking legal advice during drafting. An attorney can help properly interpret the statute and create a well-integrated set of bylaws, which can prevent problems from emerging later on.
Structural Durability and Flexibility
Bylaws are akin to the frame of a house. They have to be durable and lay out a governance structure that supports a mission, vision, and policies. But at the same time bylaws shouldn’t be completely fixed. Things change, like the people who run the organization or the environment in which it works. How it operates ten years in the future may be quite different from how it operates now. Flexibility is important.
One way to achieve greater flexibility is through bylaws’ content. Bylaws often have specificity in their provisions, but they don’t need to be—and shouldn’t be—excessively detailed. Many details are better off in an organization’s official policies. Examples details better left to policy include how long staff are required to preserve board meeting records, or whether a committee permits proxy voting. This not only keeps the bylaws clear and concise, but also enhances flexibility since policies are typically easier to revise than bylaws. Moreover, recurring debate on bylaws can waste time better spent on the organization’s work.
Another aspect of flexibility is not making your bylaws too difficult to amend. For example, a set of bylaws might only permit amendment at a single point within a year. They might also require significant notice and voting requirements for approval. This creates very narrow conditions that can deter organizations from pursuing desired bylaw changes. Instead, nonprofits should try to create amendment procedures that aren’t overly burdensome to use and fit the culture of their organizations.
Voting—Who and How?
Bylaws that govern voting are crucial. They help ensure the legitimacy of organizational action. Therefore, nonprofits should consider several questions about the appropriate framework for their organization. Must voting by directors be done in person, or can it also be done via phone or email? Should proxy voting be allowed? If the nonprofit in question is a membership organization, should there be a distinction between voting and non-voting members? If the nonprofit has both organizational and individual members, does each unique person/entity only get a single vote, or is greater weight applied to one type over the other? Understanding the structure and culture of an organization will help its leadership arrive at the answers to these kinds of questions.
In addition, nonprofits should review the relevant statute to familiarize themselves with their state’s requirements on voting. As in other areas, bylaws shouldn’t be in conflict with the law.
Amendments and Keeping Current
State statutes usually require member approval for bylaw amendments, if the nonprofit in question has voting members. State statutes may also require separate approval from the board of directors. (In a non-member organization, of course, the board would be the ultimate decision-maker.) Regardless of organization type, it’s common that members and/or directors are required to receive advance written notice of proposed amendments, and the bylaws should specify precisely how much advance notice would be given. Following these instructions is critical, as a failure to do so could invalidate a vote and delay—perhaps significantly—the desired bylaw changes.
An issue related to the amendment process is keeping bylaws current. This applies to all kinds of organizations, but especially those of long duration. They’ve had more opportunity to amend their bylaws, and new boards may find themselves with bylaws that are incongruent to how their organizations actually work. Accordingly, an effective amendment process allows organizations to keep those bylaws up to date. And if truly necessary, an organization could conceivably jettison the existing bylaws and re-draft them.
Keeping these factors in mind will help nonprofits as they navigate the bylaw review process.
