When forming a new nonprofit there are really two must-have documents you need to get the dream off the ground. Those two documents are articles of incorporation and bylaws. Of course, there are other important documents you will need, but it’s good to tackle first things first!
Recently on the blog we explored the state and federal requirements and best practices for articles of incorporation. Now, let’s learn about bylaws!
What Exactly Are Bylaws?
Undoubtedly you’ve at least heard of or read through a set bylaws. But, what does this document do? Effective bylaws should do the following:
- serve as the internal operating rules of a nonprofit.
- specify processes like the election process of directors and operation of meetings.
- resolve any uncertainty between board members on issues of correct process.
Do Bylaws Need to be Filed or Adopted?
Unlike articles of incorporation, bylaws are not filed with any government entity like the Iowa Secretary of State. However, Iowa law does require that the initial bylaws of a nonprofit be adopted by its board of directors.
A nonprofit’s bylaws should address the high level governing decisions that founding board members deem non-negotiable for the organization’s success. Here are a few provisions that great bylaws often include:
- Purpose for organization
- Board structure
- Official meeting requirements
- Terms of board service for officers
- Officer position descriptions
- Procedure for officer/board member succession and removal
- Provisions for membership (if any)
- Voting rights
Another essential element that can be mistakenly forgotten is a paragraph for amending the bylaws in the future. Times change and the circumstances of how your organization can do the most good can shift. In such a case your board will want to rely on the procedure for amendments outlined in the bylaws to reflect the transition.
Regularly Review and Reference
Again, an organization’s bylaws are like an internal roadmap if there’s any question of structure or procedure. As fiduciaries of the organization, board members should re-read the bylaws at least annually for sustainable good governance. Of course, brand new board members should be provided with a copy as a part of their board orientation.
What About All the Other Documents I Need?
At this point you may be skeptical that you just need two documents–articles of incorporation and bylaws. What about all the other documents you’re certain you need to have? It’s a valid question and to obtain and maintain qualified tax-exempt status there’s certainly more “paperwork” to be done:
- For IRS charitable exemption status you’ll need to file Form 1023.
- During operation, you may also need to annually file some version of Form 990.
- Plus, I highly recommend all nonprofits have at least these 10 important policies in procedure documents!
So, How Do I Go About Drafting Bylaws
There is much more to be said on bylaws as they can and should be tailored to your individual organization. It’s a wise investment to enlist a professional (like an attorney well-versed in nonprofit law!) to draft quality, comprehensive bylaws personalized for your nonprofit’s needs, mission, and goals.
Questions? Want to learn more about turning your dream of an organization that makes a significant impact or positive change? Grab my complimentary Nonprofit Formation Guide and then contact GFLF for a free consult!
