Although a nonprofit’s bylaws form the foundation for the governance of the organization, most of its board members and staff have never laid eyes on the document…or at least not lately.
Bylaws are originally created (and required) when a nonprofit organization is formed. While it is an extremely important document, most nonprofit leaders rarely take the time to ensure that their bylaws conform to current state and local laws, include contemporary language, and accurately reflect the organization’s current practices and processes. It’s frequently only when some sort of problem surfaces, such as a misbehaving director, challenges to the voting process, or how meetings may be conducted, that a board member says, “Maybe we should look at our bylaws and see if they need to be updated.”
Many organizations assign the process of reviewing and updating the bylaws to a special bylaws committee or the governance committee. Jan Masaoka, CEO of the California Association of Nonprofits, suggests that bylaws should be reviewed at least every three years. At Sonoma’s La Luz Center, bylaws fall under the responsibility of the governance committee. When I recently asked Kimberly Blattner, La Luz Center board member, about the process La Luz uses for reviewing its bylaws, she said, “An important beginning is to have a detail-loving board member be the chair of the governance committee. As part of our strategic plan, every committee at La Luz was asked to set goals for their committee and deadlines to reach those goals. This led to a careful rereading of our bylaws and an updating. Otherwise, our bylaws are examined as needs arise and when the committee chairperson changes.”
Bylaws requirements vary by state and not all states agree on what should be included. For example, in California, only one board member is required, whereas many other states require a minimum of three members. To better understand the law before creating or updating a nonprofit’s bylaws, download the California Attorney General’s Guide to Charities at https://oag.ca.gov/charities.
It’s important for bylaws to not be overly prescriptive. You want to have them serve as a sound operational guideline, but not be prohibitive. For example, it may not be wise to include in the bylaws the day of the month that board meetings will be conducted in case you need to change that date in the future. It’s also important that there’s a way to track changes that have been made to the bylaws. So, it’s best to have the organization’s executive director maintain the latest version of the bylaws and oversee the electronic files that include all the versions of the bylaws to date.
All bylaws should stipulate the minimum and maximum number of board members that should be allowed and what the term limits of those board members should be. Some organizations with which I’ve worked have board members who have served on the board for close to 20 years and no longer participate, yet are not removed because the organization’s bylaws have never been updated to include term limits. Procedures for removing a board member should also be included.
The number required for a quorum should be included, as well as titles and terms of officers. In California, nonprofits are required to have a president, a chief financial officer, and a secretary. If there is only one board member, that individual would serve all three roles, so the state Attorney General’s Office recommends, but not legally requires, that there be at least three board members. Bylaws should include that there will be a conflict of interest policy, but it is not necessary to include the specific language of that policy in the bylaws itself.
The minimum number of meetings that the board must have each year, as well as the allowable method for calling an emergency board meeting, should be included in the bylaws. In addition, provisions should be made for if conference calls, online meetings, and email voting will be permitted. It’s also critical for bylaws to describe the way that committees can be created and dissolved and what committees may exist. To ensure flexibility in being able to create and terminate committees, as needed, it may be prudent to avoid naming specific committees in the bylaws. If a nonprofit has actual members, membership rights should be included.
It’s important for all bylaws to include a section that describes the personal liability of each board member. If you have any questions about what that should be or how to state that, check with your attorney. Finally, all bylaws should include a section stipulating how bylaws can be changed and it shouldn’t make it too onerous to do so.
So, as fall approaches, pull out those bylaws, dust them off, curl up with your favorite glass of Sonoma Valley wine in front of the fireplace on a non-spare-the-air day, re-read those bylaws, and start editing.