How To Start a Nonprofit -Step 6: Draft Bylaws
This blog series is dedicated to the steps needed to set up a nonprofit corporation, including steps on applying for tax-exemption with the IRS. Some items are Texas-specific; please contact us to get help in your own state.
Step 6: Draft Bylaws
What are Nonprofit Bylaws?
Bylaws are your organization’s operating manual. They set out the rules that govern the internal management of an organization. The initial board of directors should prepare and adopt bylaws for the corporation simultaneously with the preparation of the certificate of formation or soon thereafter. You are not required to file bylaws with the Secretary of State, but you must keep a copy at the nonprofit corporation’s principal place of business. A copy of the bylaws, signed by a corporate officer, must be submitted when applying for the federal tax-exemption.
What Should Be Included in Nonprofit Bylaws?
- Size: Consider the size of the board and how it will function.
- Directors and Officers: Determine the roles and duties of directors and officers, including the titles and specific responsibilities of the officers, qualifications for directors, the number of directors, the length of terms for the directors and officers, and the method for electing and removing directors and officers.
- Meetings: Decide the frequency and place of meetings, the type of notice required, and whether directors may vote by written proxy.
- Provisions for Membership (if the corporation has members): Draft qualifications for membership, method of selection, dues and fees, voting rights, and the frequency and place of membership meetings.
- Fiscal Year: Set out the accounting period of the corporations (which need not be the calendar year).
- Policies: Include conflict of interest policies and procedures, among others.
- Controls: Consider structures for control, including the signatures required for execution of legal documents, signatures required for checks, and other controls over financial transactions and transfers of corporate assets.
- Committees: Set out the types of committees, responsibilities of committees, and qualifications for serving on a committee.
- Bylaw Amendments: Set up the procedures for amending the bylaws.
- Other essential corporate governance matters.
This series of blog posts describes ten steps to set up a nonprofit organization:
1: Make a Plan
6: Draft Bylaws