Instructions for Your Nonprofit Bylaws
By: Adrienne B. Haynes
Tags: Formation, Business Law, Nonprofit, Bylaws, Documentation

Nonprofit Law Series

By Adrienne B. Haynes, Esq.

Managing Partner, SEED Law

When you start a nonprofit corporation, most states will require the preparation of bylaws with specific provisions about how these entities must be governed. In this document, the members or board of directors outline the charitable purpose of the organization and detail how the leadership will govern. A nonprofit is not owned by any one person, but governed by a collaborative team of members and board of directors.

In the bylaws, the provisions should respond to your state’s corporate laws and ensure that key information is not only documented in your mental hard drive as leadership team. This process allows the board to come to a consensus about the management and operations of the operation and ensure that the nonprofit can focus on the pursuit of its charitable purpose. Some of the considerations will include:

· Will we need members?

· What are board terms and qualifications?

· What are the roles on our executive committee?

· How will we ensure the financial health of the organization?

· Will we hire external parties to help lead the organization?

· How are decisions made as a leader or leadership team?

· How are new owners brought in?

· How can owners transition out?

· What happens one’s ownership stake in the disability, divorce, or death?

Once approved by board resolution, the document can be filed for safe keeping and regular reference.

To remain in good standing, a nonprofit’s leadership team should also prioritize timely responses to required State and Federal filings, including annual registration reports and the IRS annual information report on Form 990. Your registered agent will receive the notice and reminders, and these dates should also be calendared so that the necessary information is on hand to prepare a response. If a for profit or nonprofit corporation is or has been administratively dissolved, this can result in personal liability for organizers who continue without an entity and loss of funding.

In addition to the bylaws, a nonprofit organization may consider additional agreements, such as conflict of interest policies, independent contractor agreements, waivers and client services agreements to document other relationship details. When you have all of the “i’s dotted and t’s crossed”, it’s important to have all of the business agreements reviewed every 2–3 years to ensure that they are still consistent with the law and with the way that the organization operates.

This article is an overview of nonprofit law considerations, including compliance considerations and does not cover every legal right or obligation, consideration, exception, or restriction. These decisions are complex and should be well researched and discussed with a professional before being made.

To schedule a consultation with a SEED Law attorney, you can give us a call at (816)945–4249 or schedule your consultation today here.

Additional Resources:

State Links for Exempt Organizations, https://www.irs.gov/charities-non-profits/state-links (last visited Apr 22, 2020).