Helping people figure out the bylaws of their nonprofit organization

Last weekend my family sat down to play a new game,  Cleopatra And The Society of Architects. In general, I hate games. (I have a terrible time waiting for my turn.)  But this one was pretty cool. It has some interesting strategy twists.

What’s that have to do with bylaws?

My daughter had played the game the day before with friends who were intent on figuring it out. She said they had to keep rereading the instructions to figure out how to play. And it took them about two hours.  No doubt there were probably side conversations about the merits of the game in addition to the rules that helped stretch it out. Nevertheless, it took a long time.

When she explained and reread the instructions for us, it went a little faster and she was a little more clear about what was supposed to happen.

We were playing that game for fun on a rainy Sunday afternoon. Imagine if you were trying to decide on the next program of your nonprofit organization.  That could be a problem.

If no one knows the rules, the board spends time every time deciding how to decide. What a waste of resources! On top of that, if one person thinks he/she knows the rules, then you can make bad decisions based on inaccurate information. This is also a recipe for problems.

Board members should read and understand the bylaws. And all members of the organization should have access to the currently approved set. But it’s human nature to avoid tasks that might be onerous or complicated. Bylaws would seem to be both. The best defense for this problem is to make the bylaws as easy to read as possible. Bylaws written in plain English as much as possible are more likely to be read, understood and used by the people in your organization who need to understand and use them.

Tags: About bylaws // Add Comment »

Over the last hundred years or so, people have been trying to run their meetings using Robert’s Rules of Order. They are designed to efficiently run a meeting but not necessarily to facilitate the making of decisions. They can be cumbersome, so many groups often don’t adhere closely to them.

And, perhaps worse, sometimes people spend too much time trying to figure out the rules of running a meeting instead of doing the actual work of the organization.

You might want to consider a different structure.
Check out the book Breaking Robert’s Rules: The New Way to Run Your Meeting, Build Consensus, and Get Results by Susskind and Cruikshank (Oxford University Press, 2006) for an alternative method of running meetings. Their “Consensus Building Approach” works especially well for organizations that are less formally run and more committed to humanizing their work.

Consensus does not mean that everyone always has to agree, but rather that the group makes a decision that everyone can live with.

In addition, it allows the minority of members to have their voices heard during the process. This leads to unification better than having a vocal and dissatisfied minority.

Tags: General board info, Voting // Add Comment »

I know bylaws. But I don’t know the rules in every state. I just found this great book that has—among other great things—an appendix that lists, state by state, what is required to form a nonprofit organization.

It’s possible that some stuff may be slightly out of date, but at least it tells you where to look in your state.

Check out this book by Mark Warda, titled, simply enough, How to Form a Nonprofit Corporation

Tags: About bylaws, Legal isues // Add Comment »

Check out this article by Gene Takagi over at NonProfit Law Blog about board actions by email. While the article is focused on California law, I think the notion of what constitutes a legal digital signature is useful for all.

According to California law, a  digital signature must have all of the following in order to be legal:

Number 3 speaks to a general peeve of mine about email accounts. I have a number of friends who share their email account with a spouse.  So I’m never quite sure who will read what I wrote or who has answered my note. And because I’m talking about actual friends here, it does make it difficult to decide just what kind of personal griping is reasonable.

It’s not like you need to invest big money for an email account. There are plenty of free options: yahoo.com and gmail come to mind instantly.

So if you must be the only one with access to the account in order for the digital headers to count as legal… well, that’s just one more reason to have your own account.

But how does the data remain unchanged?

I’m not sure how to manage this requirement. Probably the safest way is to send email votes to an account set up specifically for  the organization. Then the original info can’t be changed (at least by normal people without special skills!) Use tags or folders to store the replies.

Tags: Voting // Add Comment »

There are laws in many states covering voting by electronic means, by email or other online process. Some states say electronic voting must be unanimous in order to carry. Others don’t have any rules about it.

Check with your state agency that regulates nonprofits.  You can find out who that is at the IRS web site here.

How to include that information in your bylaws

Include the ruling you found out for your state

If there is no law against it, decide how you will handle electronic voting.

If there a different requirement for the number of electronic votes required to make a decision, include that info in your bylaws.

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Building bylaws from scratch or revising an existing set is a tedious but critical task. It’s easy to get tired of the job and just rush through some spots.

It’s all too tempting to imagine that whoever does the job the next time can address those details. However, there is no point in skipping over the easy parts (or the hard parts) and, what’s more, the more complicated parts will be the ones you’ll need in a crisis. Besides as you will learn, finding people to do the job isn’t easy.

What to do?

Get an outside facilitator–or coach–who is not part of your group. They’ll keep your ball rolling. That guy wants the process to end. And on the positive side he knows how far along your team really is and how far there is to go.

Tags: About the process // Add Comment »

I love getting questions from readers.  Helps me to know what problems you’re facing. AND gives me something to poke around more about.  Here’s a question I got today:

I was looking for an example on how one includes in bylaws a ‘vote by proxy’ or ‘voting by email outside of meetings.’ Is it OK for boards to vote by e-mail on issues that can’t wait until the next meeting? How would that be included in bylaws?

Proxy and electronic voting are different things.

In voting by proxy one board member gives a written document awarding the first person’s vote to the second. The first person trusts that the second will vote as he wishes. The problem is that the director voting by proxy doesn’t get to hear or participate in the conversation around the idea being voted on. He may not even know the full wording of a motion. Directors have fiduciary responsibility for the organization. Proxy voting might just yield an unwanted outcome for the director personally.

There are laws in many states covering voting by electronic means, by email or other online process. Check with Attorney General’s office in the home state of your corporation. Some states say electronic voting must be unanimous in order to carry.

If it’s illegal in your state, you should mention that in the bylaws to keep other people from thinking they can do it when it’s not specifically disallowed.

It is likely that electronic voting requirements are different for board votes and membership votes. You should ask the AG about that. Or in any case, check with your group’s lawyer or accountant who manages these documents.

If it’s not illegal in your state then you should include in your bylaws under what circumstances electronic voting is allowed and what percentage is required to carry the motion. It might be a higher percentage that would normally carry.

Here’s a great resource from Pennsylvania Association of NonProfit Oranizations on proxy voting in  nonprofits.

Good luck to all!

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I’m really excited to say that finally finally finally, the workbook that goes with my process for writing or rewriting the bylaws of your nonprofit organization is nearing completion.

I’ve had one round with the editor and preparing for the next one.
Layout is figured out but can’t be complete obviously until the writing is done.
And progress is being made!

Whoopee.. it’s like birthing a baby. So much preparation for such a big unknown.

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So you go to the office supply store to buy paper for your nonprofit organization. You’ve heard that means you don’t have to pay sales tax.  The clerk asks for a copy of your letter from the IRS. And you’re stymied.  Your organization doesn’t make any money so it’s nonprofit, right?

Well, not exactly.

Only the IRS can decide whether your organization falls within their parameters for being a nonprofit organization. And that has to do with a whole lot more than whether or not you make money.

How does this affect your bylaws?

The purpose you list in your bylaws should match those in your Articles of Incorporation (or Charter) that is filed with you state when you incorporate. Assuming you choose to file with the IRS for tax-exempt status, consider carefully what you say in this section.

The IRS uses that information along with a lot more to classify your organization under Section 501(c), or  other Sections, of the Internal Revenue Code.

What people generally think of as nonprofit organizations fall under Section 501(c)(3) of the IRS code. These organizations are “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the preventing cruelty to children or animals.” You can find the exemption requirements for these organizations here.

However, there are other kinds of nonprofits like business leagues, fraternal organizations and veterans associations. For more information on these types of organizations, check the “Requirements for Exemptions” on the IRS website here.

In general, I support the notion that you can draft your bylaws with out a lawyer. BUT this is one of the places that a legal review by an attorney specializing in nonprofit organizations could be helpful in your process.

Good luck all.

Tags: Legal isues // Add Comment »

I love getting emails from readers. They so often point me in a new direction for posts!

Here’s a clip of a note I received this morning:

Most of our all-volunteer board are content to move fairly casually through the business of operating this organization …

One of these board members, however, has a different view of how this or any all-volunteer board should behave. He tends to look to the current bylaws, modestly updated most recently about six years ago, for specific direction regarding roles and decision-making responsibilities. He is fond of quoting statements from the bylaws and then interpreting very rigidly the spaces between the statements as being controlling in their silence. If isn’t allowed or stated in the bylaws, it must not be allowed to exist.

The bylaws are where you should be looking for specific direction. And while there are a couple of issues in the clip of this note I’ll just focus this morning on that last part.

There is no way that any governing group can make a rule for every possible situation. That’s what you’d have when you put everything in the bylaws. The Constitution of the USA is, essentially, the bylaws of the country and it’s only got 27 amendments! If you print out the whole document from this online site, it’s only 19 pages long!

Ah, but the books explaining what they mean–can mean, or are supposed to mean–now THERE are some volumes!

So unless something is specifically disallowed in the bylaws, it means the issue is open for discussion. However, in cases where you don’t want to have to discuss whether or not you have a certain power, you make sure it’s in the bylaws. For example, the bylaws should specifically give the board the power to impose fees. That’s just not the sort of thing an organization would like to have to debate when they need some money!

In a recent set of bylaws I’ve worked on, the only standing committee listed is the finance committee and “such other committees as the President may request and a majority of the Board approves. ”

This organization regularly has committees for a conference, for programs and marketing. But while they are not required by the bylaws they are certainly not disallowed! One year, for a host of reasons, they might decide not to have a conference. That should not require amending the bylaws!

Good bylaws make the running of the organization easier because the big decisions that govern the rules of your game have already been decided.

Likewise, a good policies and procedures manual can be a giant help on stuff that just gets confusing every time you do it… like say elections. By what DATE should the nominating committee start work; by when should they announce a slate? etc. In that situation, each new committee could easily be mistaken about the amount of time the process might take, so outlining it someplace will help them not to have to reinvent the process every time.

Good luck my friends! This process is just about thinking!

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