Non-Profit Bylaws

What are non-profit bylaws?

Non-profit bylaws are a document that is used once a non-profit organization has been incorporated. They are used to define the structure and operations of the organization. Bylaws are essentially the rules for how the organization will be governed and describe many of the non-profit's activities, such as annual meetings, the composition of the Board of Directors, and voting procedures. Most states require the creation of Bylaws at the same time, or not long after, the incorporation of an organization.

What are the different types of non-profit organizations?

There are many types of non-profit organizations that may be incorporated in the U.S. However, the most common type of non-profit organization is known as a 501(c)(3). A 501(c)(3) organization is whose purpose is charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals. To find more information about other types of non-profit organizations, please consult the Internal Revenue Service (IRS).

What is the difference between non-profit bylaws and corporate bylaws?

Though both documents are used for newly incorporated organizations, they are used by different types of organizations. Non-profit bylaws may only be used by not for profit organizations. As a result, they do not contain any information about profits or shareholders. Corporate bylaws are used by for-profit organizations, like LLCs or S-Corps. They address division of profits and the rights of shareholders.

Is it mandatory to have a non-profit bylaws document?

Yes, it is mandatory to have non-profit bylaws. Almost all U.S. states require that non-profit organizations create and adopt bylaws as they are being incorporated. Further, the internal revenue service (IRS) requires that if a non-profit is seeking tax-exempt status, they submit a number of organizational documents, including their bylaws.

What is a "board of directors"?

A board of directors is a group of people who are elected or appointed to supervise the strategic direction of a non-profit. The people selected as directors come from the overall membership of the organization.

What is "quorum"?

Quorum is a term for the percentage of board members who must be present at a meeting in order for the business to conduct business. This is to ensure that important decisions are not made while very few members of the board are present.

What are "officers"?

Officers are individuals are selected to manage aspects of the day-to-day operations of the organization. Common officer positions include the secretary, treasurer, and president.

What must non-profit bylaws contain?

Valid non-profit bylaws must contain at least the following mandatory clauses:

• Identifying information: The non-profit bylaws describe the organization, including its name, the state in which it was incorporated, and the specific type of non-profit organization it is.
• Meetings: The non-profit bylaws outline when, where, and how the organization will hold meetings, including a definition of what constitutes quorum and how much notice must be provided before a meeting is held.
• Directors: The non-profit bylaws describe the directors of the organization, including how many there are, how long a term is, whether they are compensated for their work, and how they can be removed from the organization.
• Officers: The non-profit bylaws specify information about the organization's officers, including their roles, responsibilities, and any compensation.

In addition to the above mandatory information, the following additional information may be included:

• Indemnification: There is the option to include in the bylaws an indemnification clause saying directors and officers of the organization will be protected from liability for their actions related to the organization and their position therein. This indemnification may also be applied to employees and agents of the organization.
  
  

What are the prerequisites for non-profit bylaws?

Non-profit bylaws should be created in tandem with or not long after the organization creates their articles of incorporation. The articles of incorporation are usually filed with the state before the bylaws are finalized, since the non-profit must exist as a legal entity before it can adopt and operate under bylaws. Both of these documents will eventually be filed with the IRS to become an official non-profit organization with tax-exempt status.

Who is involved in non-profit bylaws?

Non-profit bylaws involve a non-profit organization and its directors, officers, and other members. The only organizations that may create non-profit bylaws are those that do not make any sort of profit and are, therefore, eligible for tax-exempt status.

What should be done once the non-profit bylaws are written?

Once this document has been completed and reviewed, it should be printed out, certified, and signed. Generally, if a president or secretary of the organization has already been determined, those individuals are responsible for certifying and signing all corporate documents, including the Bylaws. However, if those roles have not yet been filled, a third party known as an incorporator may sign this document in their absence. The bylaws are then brought to a meeting of the board of directors, where they are officially adopted by the board.

This is only one step in the creation of a non-profit organization. Once the organization has completed and filed their articles of incorporation and written and adopted the non-profit bylaws, they should apply for tax-exempt status with the IRS. They should also ensure compliance with any additional state-specific requirements for non-profits, such as registering as a charitable organization with the state.

Which laws are applicable to non-profit bylaws?

Non-profit creation and structure is generally a matter of both state and federal law. Most states require the creation and filing of Bylaws at the same time as or not long after the creation of the Articles of Incorporation. Organizations must also meet specific requirements under the federal Internal Revenue Code to file as a 501(c)(3) non-profit organization.

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