Nonprofit organizations in North Carolina must operate in compliance with federal and state laws. These laws are designed to ensure that the mission of the organization is fulfilled, that the operations of the nonprofit are legal and transparent, and that the public is protected from fraudulent practices. Organizations must develop a set of bylaws to regulate and manage their activities.
Chapter 55A of the North Carolina State Code is known as the North Carolina Nonprofit Corporation Act. Section 55A-2-06 specifically pertains to bylaws. It states that the board of directors must institute bylaws and must provide for "regulating and managing the affairs of the corporation that is not inconsistent with law or the articles of incorporation."
Nonprofit bylaws typically address areas including: board selection and composition, term limits, qualifications, powers, duties and responsibilities, indemnification of board members, property holdings, meetings and committees, bank accounts, fiscal reports and audits, conflicts of interest and amendment and dissolution procedures.
You cannot expect to receive Internal Revenue Service (IRS) nonprofit exempt status under section 501(c)(3) unless you comply fully with its stringent requirements. This will require completion of IRS Form 1023 and inclusion of supporting documentation, including a strong business plan, articles of incorporation and bylaws.
It is important that nonprofit board members, officers and staff are indemnified against any liabilities arising from any legal action against the nonprofit, providing they have acted in good faith. Indemnification insurance is available for corporate entities, nonprofit and otherwise. Indemnification does not allow members, officers and staff to be free from prosecution, if they have acted wilfully or unlawfully.
Setting up a nonprofit, complying with legal requisites and formulating bylaws is complex and time consuming, and if you are not experienced in the process it is easy to miss vital steps. Assistance is available from the North Carolina Center for Nonprofits, a nonprofit organization itself, which serves nonprofits in the state by providing education and advocacy.