Purpose of Nonprofit Bylaws
The purpose of bylaws for nonprofits is to offer guidance for board actions. Bylaws give resolution tools when conflict or confusion arise. They are premade guides on what to do instead of solutions from scratch! Nonprofit bylaws are “internal operating rules.” Though not filed with the State, they are essential for 501(3)(c) exemption.
Drafting Nonprofit Bylaws
- Write a first draft of your bylaws.
- Article I. Name and purpose of the organization.
- Article II. Membership.
- Article III. Officers and decision-making.
- Article IV. In this section, the actual purpose of the organization should be mentioned, followed by the required language (Purpose clause) by the IRS.
Bylaw Development Process
- Research and Drafting
- Research first since bylaws differ locally.
- See other organizations’ and know laws.
- Similar organizations give relevant examples.
- Formalization
- If formalized, incorporation or registration also creates bylaws.
- Work with attorneys on differing county and city laws.
Bylaw Best Practices
- Bylaws facilitate conflict resolution at meetings and provide a framework for dispute resolution within and outside the organization.
- Writing bylaws requires planning and attention to detail.
- Establish a dedicated committee for development roles and responsibilities.
IRS Filing and Compliance
Do nonprofit bylaws need to be filed with IRS?
Bylaws offer nonprofit boards guidance. When confusion or conflict arise, bylaws have premade resolution tools instead of made-from-scratch solutions. Though unincorporated nonprofits’ bylaws aren’t filed with the State, they’re essential for 501(3)(c) exemption.
Compliance and Governance
What to include? Ensure accountability and transparency. Keep updated if goals change and check state law compliance. IRS-exempt nonprofits must annually file Form 990, maintain records and minutes, and report bylaw changes. Maintain an IRS-compliant whistleblower policy.
Legal Implications of Bylaws
The IRS requires incorporated nonprofits’ bylaws for 501(c)(3) exemption with Form 1023, though states don’t require filing. California nonprofits should still have bylaws.
Governance Best Practices
Bylaws aren’t public but governments check them for ethical governance. They address governance, meetings, and boards. Most states require nonprofits to follow relevant laws. Adhere to best practices based on size. Each organization differs, but these questions aid inclusive bylaws reflecting overall vision. Replace this template’s explanations with your nonprofit’s answers. As legal documents dictating governance, bylaws reveal organizational psyche. Boards must follow them or face consequences, even personally. Therefore, content and use are extremely serious.