A nonprofit’s bylaws serve as the governing document for the organization. This important document dictates how decisions are made within the organization. We frequently get questions from both newer nonprofit organizations (How do I put together the bylaws?) as well as more established nonprofits (I’m not sure we’re following the bylaws. How do we update or fix our bylaws?)
Are bylaws really necessary? Is this legally required?
Ohio’s nonprofit corporate law uses “bylaws” and “regulations” interchangeably. Under Ohio law, the incorporators (the people who establish the nonprofit corporation by filing Articles of Incorporation with the Secretary of State) may adopt regulations or bylaws that govern the organization, how its affairs are conducted, and how its property is managed, but nothing in the law requires an organization to do so. If your organization does not adopt bylaws, then you are subject to the rules established in Ohio law for governing the organization. Unless you and your board members are intimately familiar with the revised code, then this isn’t really recommended.
Federal law does not require specific provisions in your nonprofit’s bylaws, but you will be asked whether the organization has adopted bylaws when you apply for tax-exempt status. If you haven’t, then you may need to explain how the organization will be governed without this critical document! You will also need to report significant changes to your bylaws when you file your annual 990 information return.
What should your nonprofit bylaws include? Checklist for Your Nonprofit Bylaws
When drafting or updating your nonprofit’s bylaws, you need to strike a balance between being comprehensive while maintaining some flexibility and not overly complicating matters. For example, if you are a relatively small nonprofit, you probably don’t need several committees and a complicated approval process for making decisions. But you might want to include language in the bylaws allowing the board to establish committees at a later date as the board sees fit.
Similarly, if you are a more established nonprofit that is going through the process of updating the bylaws, consider whether you have sections in your bylaws that have long been ignored--committees that are no longer functioning, meeting dates that no longer work, the lack of a provision authorizing the Zoom meetings you’ve been having, etc. Ideally, your bylaws should address whatever governance issues may arise without needing to be amended on a frequent basis.
Remember that your nonprofit bylaws are a legal document. When internal disputes arise among the board or members or between the board and the executive director, the bylaws can suddenly become a weapon, especially if decisions have been made in a manner inconsistent with the bylaws. The directors have a duty to act in good faith and in the best interests of the organizations. It’s difficult to say that you’ve met this standard if you haven’t been acting in accordance with your own bylaws. And directors can be held personally liable (including money damages) for actions they take that deliberately injure the organization or that recklessly disregarded the best interests of the nonprofit.
As the organization grows and matures, keep track of revisions, amendments, and updates to the bylaws. With volunteer board members that come and go over time, it is incredibly easy to lose track of which version of the bylaws have been approved, or even the procedures for adopting amendments to the bylaws.
If you have questions about your nonprofit’s bylaws or other governance issues, then