When setting up a non-profit organization, many people overlook the importance of crafting nonprofit bylaws that are customized to the organization’s unique needs. As the leader of this entity, you have the power to design specific rules that best fit the non-profit’s mission and vision. Be thoughtful in your approach to writing nonprofit bylaws. Some entities take years coming up with the perfect words and choices, and for good reason. This is the only time for you to explicitly (and legally) state how your business will operate, so do not be afraid to take your time. At the same time, don’t fall into the trap of iterating forever. At some point, you need to put those bylaws into action.
We’ve put together some tips to help you craft the best possible set of nonprofit bylaws for your organization. That said, we highly recommend involving a non-profit attorney in the process, at least to review what you’ve written and ensure your intentions are clearly expressed.
- DO: Carefully consider and explain the governance structure. Will your organization be board-driven or member-driven?
- DO: Create control provisions. Who will exercise the most control over the organization? Will third-party votes appoint board members? How will reserved powers and super-majority votes function? Consider how each of these outcomes would affect the non-profit, and then choose thoughtfully.
- DO: Establish voting procedures and term limits for directors and officers. Do staggered terms or successive terms fit best? Additionally, choose how directors will be removed or replaced when needed.
- DO: Explain how you will handle conflicts of interest. This is an especially important bylaw as it can affect your tax-exempt status. How will you manage transactions between a corporation and an insider? Establish detailed procedures and stick to them.
- DO: Establish clear member provisions. Members are different than board members, and their power should be reflected as such. Carefully consider and choose the exact powers and provisions that are given to members in order to have clear boundaries and expectations.
- DO: Have a qualified non-profit attorney review your bylaws.
- DON’T: Write extensive descriptions of committees. Give your committees room to grow and change. When detailing committees, include only evergreen information at a high level.
- DON’T: Over-engineer your bylaws. Avoid language that might need to change frequently. Over-explaining bylaws now can get you into hot water later. Amending bylaws is time-consuming, and your time and energy should be committed to the leadership and operations of the organization.
- DON’T: Include processes and procedures that will be too onerous to follow. Exclude anything that members are likely to falter on or ignore. For example, if a hyper-specific deadline is missed, this may invite challenges based on technicalities.
- DON’T: Restrict your activities to such a narrow focus that your organization can’t evolve over time. Focus on a broad charitable purpose clause that allows room for growth. Narrowing the focus too much may produce a conflict with the articles of incorporation.
- DON’T: Reference Robert’s Rules of Order. These rules were made for large boards and require more than a motion and a second. Robert’s Rules of Order may muddy the waters for your non-profit” avoid any set of generic requirements that aren’t catered to your needs.
Writing bylaws for your non-profit is an opportunity for you to establish the ground rules, rather than relying on your state’s standards. If you’ve done your research and created a strong, workable plan for your non-profit organization, you’re ready to form a legal entity and apply for tax-exempt status. Download our free guide to the basic steps you’ll need to take and set your organization up to succeed for years to come.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors about significant gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.