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Bylaws Checklist
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The very mention of bylaws in a board meeting is usually met with dread. It typically means either that a conflict has risen to the point where the bylaws must be consulted, or it means that someone is pointing out an area of noncompliance that has gone unnoticed for years. This Checklist points out the necessary elements in bylaws.
Because regulations about nonprofit bylaws are done individually by state (rather than the federal government) there is quite a bit of variation. For example, in Ohio and New York, nonprofit boards must have a minimum of three members, but in California the minimum is one. It's important to obtain the applicable state laws and make sure that the bylaws are in compliance. In addition, some cities have further regulations for nonprofits. Ask your city attorney's office for guidance. For example, some states and cities have different rules for nonprofit organizations for which the board automatically includes an elected official or government employee as a result of that individual's election or employment.
Three overall guiding principles for nonprofit bylaws:
A. Don't put too much in the bylaws. If you specify a board committee in the bylaws, for instance, and there hasn't been such a committee in a few years, someone could claim that you are in violation of your own bylaws. Or, along the same lines, if the bylaws state that meetings will be held on the third Wednesday of each month, you can't change to Thursdays without a change in the bylaws.
B. Remember that if trouble erupts -- such as internal conflict or attacks from others -- the bylaws will become very important. So make sure they are reviewed approximately every three years. Because board officer terms make it hard for the board to keep track of bylaw revisions, have this duty included as a responsibiity of the executive director.
C. Immediately attach (by staple if necessary) any changes made to the bylaws to the copy kept by the executive director. Too often everyone forgets about changes to the bylaws.
Here is a checklist to ensure the most important provisions are included in your bylaws.
1. Indemnification. A statement that limits the personal liability of board members.
2. Whether the organization has members (such as members of a neighborhood or professional association) and, if so, what their rights are. For example, in a true membership organization, members have the right to elect officers. Even if you don't have members with legally enforceable membership rights such as voting rights, you can still have people called "members," but the distinction should be clarified in the bylaws.
3. Minimum and maximum number of board members. Example: minimum of five and a maximum of fifteen board members. Some states specify a minimum, and some specify a formula for a minimum and maximum, so check your state's law.
4. The number required for a quorum. A quorum is the minimum number of board members who must be present for official decisions to be made. For example, if an organization currently has fifteen members, and the bylaws state that one-third of the members constitutes a quorum, then official decisions can only be made at board meetings where five or more members are present. Note: Many states specify the minimum required for a quorum; for example, in California a quorum may be as low as one-fifth of the board.
5. Terms and term limits. Example: two years, with term limits of three consecutive terms (making a total of six years); after a year off, a board member may be permitted to return. Similarly, terms can be staggered so that, for instance, one-third of the board is up for reelection each year.
6. Titles of officers, how the officers are appointed, and their terms. Example: appointed by majority vote at a regular meeting of the board; an officer term is for one year with a maximum of two consecutive officer terms.
7. Procedure for removing a board member or officer. Example: by majority vote at a regularly scheduled meeting where the item was placed on the written agenda distributed at least two weeks ahead.
8. Conflict of interest policy. Alternatively, many bylaws simply state that there will be a conflict of interest policy but keep its exact wording out of the bylaws.
9. Minimum number of board meetings per year. Example: four, with one in each quarter.
10. How a special or emergency board meeting may be called.
11. How a committee may be created or dissolved.
12. What committees exist, how members are appointed, and powers, if any. It may be easiest not to specify committees in the bylaws at all; instead, permit the board to create and dissolve standing and temporary committees as it sees fit. As a result, the bylaws need not be changed each time a committee is created or changed.
13. Conference calls and electronic meetings. Example: votes by e-mail or web forum are prohibited. Meetings may be held by conference call if all members can simultaneously hear one another. As Internet usage grows, some boards are adding sections to the bylaws that describe how to hold a board meeting on the Internet, or whether and how decisions can be made by e-mail.
Each board member should be given a copy of the articles of incorporation, the IRS and state determination letters, and the bylaws. Some organizations also post their bylaws on a password-protected section of their website.
Every few years, review the bylaws. Occasionally, individuals are invited to join boards without much scrutiny and are later found to be disruptive and destructive. Too often the board looks to the bylaws to see how to remove such a person, only to discover that the bylaws were written twenty years ago (and seldom looked at since) and have no such provision. Appropriate changes to the bylaws should be recorded in the board minutes, added to copies of the bylaws, and, in some cases, reviewed by an attorney experienced in nonprofit law.
Also in Blue Avocado:
- Can Nonprofit Boards Vote by Email? by Gene Takagi & Emily Nicole Chan
- Boards Should Only Have Three Committees! by David Lapiana
- Board Terms: One Year - Three Years - Two Years by Jeanetta Issa
- Board Meetings by Phone: Legal? A Good Idea? by Jan Masaoka
- Sarbanes-Oxley and Nonprofits: Bogeyman in the Boardroom? by Jan Masaoka
Comments
Based on my experience, bylaws should also specify:
- how, when, and by whom board members are elected/appointed (for both regular periodic terms as well as to fill vacancies created by resignation, removal, etc.);
- the procedure for resigning from the board or from an office;
- that failure to fulfill minimum board obligations may be accepted by the board as a de facto or implicit resignation.
My strongest recommendation about Bylaws is that you engage a PROFESSIONALLY CREDENTIALED parliamentarian to assist you with any bylaws issues -- including a review. These individuals are professionally trained and credentialed and are the true EXPERTS in their field. Not using a professional parliamentarian can be costly in the long run -- particularly if you are taken to court and the court wants an expert witness.
Two comments: First, I want to recommend two books. (1) "Managing the Nonprofit Organization" by Peter Drucker, and (2)"Managing a Nonprofit in the Twenty-First Century" by Thomas Wolf. These are the only 2 books that I know about focussing directly on nonprofit organizations and management.
Second. I wish someone would write coherently about the names of the Board officers. In most states, corporations have a President, Secretary, and Treasurer with restrictions on these. Boards have Chairs, Secretaries, and Committee Chairs. They do not have Presidents or Treasurers. In my experience, these titles are seldom used properly and the difference between Board officers and corporation officers is ill-understood. Finally, there is the management-speak officers, the "Cs", i.e., CEO,COO, CFO, etc. This should be sorted out.
Thanks for the book recommendations.
Re: board officer titles. I've been on nonprofit boards at local, regional and state level almost continually for 25+ years as well as working for nonprofits for over 20 years, and have seen only one board that didn't have someone titled "Treasurer". I agree that the President/Chair is confusing, but one of my nonprofits has a President and two board officers and no Chair, so it's a case of different strokes.
The bylaws for the nonprofit I currently work for (and was a previous board member for) specify that the position is Treasurer/CFO. This is to comply with the state requirement that the board have a Treasurer.
The board does have a Finance Committee but it is not specified that the Treasurer chairs the committee.
Peter Drucker is great and I also recommend Peter Brinckerhoff for nonprofit management! As a fundraiser, one item that should definitely be conveyed to board members is their requirement for donating to the organization. Kim Klein states, " Each board member gives money and most of the board members help raise money," (2000, p. 28). If the board is expected to donate, the board members should know this upfront. This stipulation may determine whether or not a member will be as dedicated to your organization.
A critical procedural recommendation -- ALWAYS put the date of latest revision at the end of the by-laws document.
When another revision is made don't remove the prior date, add the new one so you end up with: "7/04; 11/08; 3/10."
That way if various Board members are referring to contradictory language from the "official" by-laws it is clearer to see which language comes from the most recent and therefore, current edition of by-laws.
I once tried to mediate a Board ruckus regarding how to elect officers. The knot finally unravelled when I realized everyone was reading from different versions of the by-laws. Problem was, none of the versions were dated so no one would concede which was the valid version. Avoid this scenario at all costs!
I also like to put a very brief summary of the changes that were made with each revision at the bottom. For example:
"Revised 4-20-10 -- changed number of board members (Article III) and latest acceptable meeting date for annual meeting (Article V)."
That provides a "history" to the document.
I always thought that one of the reasons for the existence of bylaws was to serve as a "roadmap" for the agency. Therefore, you would want to be more specific, so you had a document to refer to, in case of questions.
Seems to me that other important provisions would be Duties of Board Members, Compensation, Agency Fiscal Year, and how to enact Amendments to the Bylaws.
Another book on non profit management is "The Board Member's Book" by Brian O'Connell. It is available through the Foundation Center. It deals with the role of board members, the relationship with staff, and fund raising.
As to bylaws, a good place to look is Nolo Press which has put out many books on "do your own" law. It has books on forming and operating a non profit plus a lot of other information.
Andy Anderson
Listen for Life Foundation
how do you find the by laws by state?
Every state has an office in charge of charitable organizations, but these offices have different names in different states. Call the State Attorney General of your state and ask which office is the right one to consult regarding bylaw requirements for nonprofit, tax-exempt organizations. Good luck!
Small nonprofit organizations that I am familiar with do not know what are in their own by-laws. The by-laws may have been written as an original requirement, but no one on the current Board knows what they are and if they need to do anything about them. There are wonderful suggestions here for books and contacting agencies, however if no one from the Board wants to learn anything new, they will just continue in the state of confusion that they are in.
It's even true for larger organizations. I know one $7.5 million organization that does not have a copy of its by-laws. It's possible to get a copy of the by-laws that were last filed with the organization's state, but often they have been substantially updated since then but no one has a copy. This particular organization was founded in 1968 and the document they have says "1972 DRAFT."
What are the reasons or examples for a special 'emergency' meeting and the process necessary to call for such a meeting?
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