On Nonprofits
©
January 2006
29
“Must Have” Items for
Your Bylaws
Q:
My Board is working on bylaws
revisions. I've been charged
with looking into the “must
haves.” What would be
on your list?
A:
I’m so glad you asked
this question. One of my biggest
complaints is that too many
nonprofits use a set of “off-the-shelf”
bylaws without thinking through
what their real needs are.
Even worse is that many of
these adopted templates are
designed for for-profit corporations
and are, therefore, not even
fully relevant.
I
have come up with 29 items that
I would at least seriously consider
covering in your bylaws. What
you say about each will reflect
the unique culture of your organization.
There is no right or wrong approach.
I do suggest, however, that
you keep your language as unrestrictive
as possible to allow you to
act with the greatest flexibility.
-
Indicate
the name of the organization.
-
Identify where the organization
is located.
-
Define your membership,
if you have or if you envision
a membership.
-
State if there are any bona
fide requirements for board
membership – e.g.,
geographic or organizational
representation.
-
Spell out the directors’
duties of care, loyalty
and obedience.
-
State the offices to be
filled, the basic responsibilities
of each office – any
officer should have a specified
duty – and how the
offices will be filled,
i.e., appointed (by whom)
or elected.
-
Determine how emergency
situations are to be handled
if they occur between board
meetings. (Note: executive
committees may not be the
answer since they tend to
take on additional decision-making,
creating an inner circle
on the board.)
-
Indicate how nominations
will be handled, i.e., by
whom – e.g., nominating
committee, governance committee
– when and how.
-
Indicate whether the (paid)
chief administrative officer
will have a vote.
-
Spell out any allowable
compensation of board members
– e.g., reimbursement
of expenses or fulfilling
a needed job at fair market
value.
-
List the standing committees.
The trend is to keep the
number of such committees
to a minimum and encourage
the use of ad hoc committees
as needed.
-
Specify the make-up of your
committees, for instance
if you will allow non-board
members to participate.
-
Determine the frequency
of board meetings, considering
the fact that the board
is accountable for all activities
and actions. (If meetings
are too infrequent it may
be difficult for board members
to stay current and maintain
their interest.)
-
Indicate whether
there will
be an annual
meeting and,
if so, who
participates,
who votes
and when it
will be. (I
would allow
a window of
at least a
month rather
than tying
the organization
to something
like the ‘second
Tuesday of
January.’)
-
Specify how
“special
meetings”
are to be
handled –
e.g., notification,
who may call
such ameeting.
-
Indicate what constitutes
a quorum (refer to “Terrie
on Nonprofits” January
2006).
-
Indicate how voting will
be done.
-
Determine what decision-making
protocol will be used –
e.g., Robert’s Rules,
Roberta’s Rules.
-
Make
clear under what conditions
and how a board member or
an officer may be removed
from office.
-
Spell out how vacancies
will be handled.
-
Determine the size of the
board. Current practices
suggest a board that is
small enough to sit around
a table and discuss substantive
issues, but large enough
to meet the needs of the
organization. Consider expressing
the size in a range rather
than as a specific number
so that you can hold out
for the best directors and
not feel pressured to fill
slots.
-
Consider
if term limits will be employed.
If so, what will they be?
Will officers have their
own term limits?
-
Clarify whether attendance
at board and/or committee
meetings will include participation
via phone or computer. If
so, consider a policy clarifying
whether a board member must
attend any number of meetings
in person prior to participating
via the technology or whether
he or she will be limited
to the number of times he
or she can use the technology
in this way.
-
Indicate whether the organization
will indemnify the board
and/or provide Directors
and Officers Insurance.
-
Clarify that directors can
trust certain sources of
information such as a financial
officer only to the degree
that they act in good faith,
which sometimes still requires
the directors to raise questions.
-
Indicate any required policies
– e.g., documents
retention, conflict of interest,
contracts, deposits, monitoring
compliance, whistle-blower
protection, etc.
-
State when/how frequently
the bylaws will be re-evaluated.
They should be reviewed
on a regular basis to ensure
that they remain consistent
with the organization’s
needs and current best practices.
-
Specify any prohibited transactions
– or at least refer
to the need to steer clear
of any behaviors that could
lead to the revocation of
the organization’s
nonprofit status.
-
Suggest how the organization
will be dissolved if it
should become necessary.
Once
you’ve finished revising
your bylaws the key will
be to live them!
Terrie
Temkin, Ph.D. is an internationally recognized governance
and planning expert. She is president of NonProfit
Management Solutions, Inc., a principal in CoreStrategies
for Nonprofits, Inc., and a longtime member of AFP.
Contact her at terriet@nonprofitmanagementsolutions.com,
954-985-9489, or 866-985-9489.
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