Category Archives: What belongs

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.

Bylaws: all in or not?

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.

law book shelfThere 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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