Category Archives: About bylaws

Taming the Bylaws Monster

Did you ever notice that no one seems to look at the bylaws of an organization when everything is running smoothly? Then one fine day a board member, who has missed four of the last six meetings, makes some embarrassing public pronouncement. Now what? This is only one of the areas where your agency’s bylaws can help. They will tell you what your organization can do or what it must do in this and many other situations.

Keeping your bylaws up to date is a critical, strategic task. But it often gets pushed down to Priority #93 and ignored totally in the press of daily business. Many people feel that they don’t understand their bylaws at all, so they avoid even looking at them. They may also believe that in order to make the bylaws “right,” a lawyer — and all that attendant cost — is required.

Simply put, the bylaws are a system for governing the internal affairs of an organization. They are a living document that grows with the organization and prescribes its functions and limits. While bylaws cover a pretty standard collection of topics, the specific rules are particular to each organization and reflect its mission and values.

For example: a quorum is the portion of a voting body that must be present to conduct the business of an organization. The definition of that portion is a standard part of all sets of bylaws. But did you know that the actual percentage is not standard?

The U.S. Constitution, the bylaws of the United States, sets out the legislature’s quorum in Article 1, Section 5 … “a majority of each [house] shall constitute a quorum to do business.” That means at least 51 senators, a simple majority out of 100.

But if your organization is new or small and you’re relying on the board’s input to make most of the decisions, then perhaps you might decide that 3/5 or even 75% of voting members must be present. All of these choices are legal. But the one that’s right for your group might not be right for mine.

When it’s time to review your bylaws, start by making a list of the changes that have been proposed or that are simply being talked about. For example, maybe term limits are being discussed as a way to get new blood onto your board. Write down why you think these changes are needed. What other systems or structures of the organization will be affected by this change?

In my experience bylaws are rarely light reading, but they are in English. Plan enough time to read and digest them. Look for the sections with which your new plans might intersect. Talk with other people about what is in the best interest of the organization. Finally, draft the changes and prepare for the voting process for their adoption.

About the author:
K. Kerchner McConlogue, CPCC, PCC is a Baltimore-based coach in private practice who also works to map the future of organizations. For more information about how to update your bylaws go to www.fixmybylaws.com.

(c) 2006 K. Kerchner McConlogue, CPCC, PCC

About bylaws

Bylaws are not a static document.

Sometimes the rules need to be revised. Things change. Opportunities and threats present and must be addressed. It’s like adjusting the family rules to make them appropriate for your good-kid who just got his driver’s license. Those old rules about not crossing the street without holding a grown-up’s hand just don’t make sense any more.

Asking the what-if questions

When you’re writing the bylaws you have to ask all kinds of what-if questions. No one expects anything bad to happen. You don’t, pre birth, plan for what to do when bad kids encourage your baby to take drugs or steal a car. But in the early days of an organization, somebody has to ask, “What will you do if you have a board member who never comes to meetings?” or “What will you do if the organization fails?” You surely can’t plan for everything, but you should plan for some things.

In new groups, a dedicated group of people, who were committed to the ideals, vision, and purpose of the organization, get together to really think ahead about how they want things to work. It is like participating in the birthing of a baby – decorating the nursery, naming the child, thinking about what rules they’d like to have when the kid goes to school or wants to quit. It’s all about the grand vision for the future. Everything is possible.

Reread and rewrite

Then every couple of years you have to reread the document and consider it in the current state of the organization. Here again you have to ask questions about how your rules are working for you and find where they might be improved.

Conflict of Interest as part of the bylaws?

I had a note from a reader:

Kerch – I just bought your book and look forward to working through it. I have a question. Are you aware of new rules that require nonprofits to have a privacy promise and/or a conflict of interest agreement incorporated in the bylaws?

Thanks for buying the book..and thanks for the question.

I am not aware of any new rules about conflict of interest policy on the federal level. However, your state may have them. You should check with a local attorney.

Or you could write the policy and include in your bylaws that the policy must be signed by board members annually or at the start of their term.. or what ever you choose.

According to the fed website this morning, the “policy” itself is not required to be part of the bylaws.

Line 5a.     A “conflict of interest”   arises when a person in a position of authority over an organization, such as a director, officer, or manager, may benefit personally from a decision he or she could make. A Sample Conflict of Interest Policy   is included as Appendix A.

Adoption of a conflict of interest policy is not required to obtain tax-exempt status. However, by adopting the sample policy or a similar policy, you will be choosing to put in place procedures that will help you avoid the possibility that those in positions of authority over you may receive an inappropriate benefit.

Good luck with your project. And if you have any other questions, please holler.

What belongs in the bylaws

Einstein said: Make everything as simple as possible but not simpler.

Same goes for bylaws of your nonprofit organization.

You need enough structure in your bylaws to enable to organization to function well, but not so much as to hamstring its work.

If you leave something out of the bylaws:

  • It might be interpreted to mean that the thing is not necessary.
  • It might also mean that the board does not have the power to do that thing.
  • It might mean that there is no reason not to do the thing.
  • Or it might introduce ambiguities.

For example, what would happen if you  leave out any mention of hiring staff?

  • Does that imply that your organization doesn’t need it?
  • Or that the board may not hire staff?
  • If there’s nothing to say they can’t hire someone, then maybe the board will just decide to do it.
  • And then, perhaps, the hiring will be challenged as outside the scope of the board’s role.

For another example, what if we’re talking about dues or fees?  Or new committees?

You can’t plan for every single condition. So think about how you want the organization to run. Consider the plans from the positive.

Be clear about what your organization wants and needs.

How much detail is enough?

Some flexibility is essential.

In my opinion, if every step in a process is spelled out, it must either be central to your mission and, therefore, important to include or … probably not necessary.

Put necessary and detailed rules for the day-to-day running of the organization  in a policies and procedures manual.

Know the rules

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.

How do I find out what my state requires to form a nonprofit?

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