Not-for-profit organizations are organized in much the same way as other corporate forms. What makes not-for-profits different is that they possess a tax-exempt status with the Internal Revenue Service and their state tax organization. The tax-exempt process takes more time to finalize than forming a regular corporate organization, and the process is different. You still have to name the organization according to state laws; paperwork and fees have to be filed with the state, and you have to create and file articles of incorporation with the state. Corporate bylaws spell out all of the important facts about how the not-for-profit corporation will function on a day-to-day basis.
Articles of Incorporation vs. Bylaws
The articles of incorporation essentially make up the constitution of the organization. There are specific items that have to be included in the articles of incorporation in order for the organization to receive tax-exempt status. One of the requirements is a "statement of purpose and statements indicating that the organization will not engage in prohibited political and legislative activity and that all of its assets will be dedicated to its exempt purpose under 501(c)(3)."
Bylaws explain how the organization will be run on a daily basis, and by whom. Think of the bylaws as the job description of the president, the board of directors, and of the organization itself. Unlike the articles of incorporation, the bylaws do not have to be filed with the state, but they can be. A current record of the bylaws does have to be kept within the company.
The Articles in the Bylaws
Not-for-profit corporation bylaws are broken down into sections called articles and are each numbered and titled separately. Each article discusses the details of a different aspect of the corporation. Possible article titles could include Organization; Members; Board of Directors; and Officers.Then each article is broken down further into different named and numbered sections that explain the details of that article. The contents under each section can delineate the responsibilities of the members and management, explain details of the business, and/or define terms within the bylaws. Create bylaws that are as detailed as possible. It is better to cover too much ground than not enough.
Though not required, it is wise to include an article in the bylaws that will allow the bylaws to be amended, or changed. It is also wise to require the executive director, president, and vice president to be in attendance at all board meetings. These meetings are required to be held regularly. This will give the executive team of the organization a chance to fill the board in concerning their efforts on the organization's behalf.
Certification of the Bylaws
The bylaws must include a statement of certification at the closing of the document. The certification statement may read something like this: "These bylaws were approved at a meeting of the board of directors by a two-thirds majority vote on (Date)." Include in the bylaws the number of, or percentage of, the board of directors that have to agree on amendments for them to be added to the bylaws. The last item needed is a signature line for the corporate secretary to sign and date the document.
There are literally hundreds of different free sample bylaw templates for non-profits available on the Web. Look at the bylaws of already-established not-for-profit corporations, their structure, their wording, and their sections. This will help you form your own corporate bylaws. Have a professional editor look through the document and correct any errors that may be present. Have a local corporate lawyer look the document over to be sure the contents are legal. Only a lawyer is qualified to judge the legality of your bylaws. He or she may give you advice on how to make your bylaws better, deeper, more extensive, and legal.
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Learn the bylaws for a non-profit organization in this free business startup video from our management expert on non-profit organizations.