Non-Profit Bylaws

By John Cromwell

The bylaws of a non-profit organization guide its directors, officers, and employees on how to conduct themselves and the business of the organization. If the non-profit wants to maintain its tax-exempt standing, these bylaws must be drafted subject to standards established by the tax code and applicable state law. Although bylaws may be amended, it is important that the rules are drafted well to ensure that the non-profit runs smoothly.

The bylaws of a non-profit organization guide its directors, officers, and employees on how to conduct themselves and the business of the organization. If the non-profit wants to maintain its tax-exempt standing, these bylaws must be drafted subject to standards established by the tax code and applicable state law. Although bylaws may be amended, it is important that the rules are drafted well to ensure that the non-profit runs smoothly.

Non-Profits Defined

Non-profits are a class of organizations that have a special legal designation exempting them from taxation. These organizations are organized around a principle such as assisting others, promoting a cause, or supporting a professional class. All funds that these organizations raise are used to further their causes. Examples of nonprofits include churches, Harvard University, and the National Football League.

Ready to form a nonprofit? Get Started Now

Bylaw Content

The bylaws define how a non-profit works toward its goals. Bylaws are drafted and adopted when the organization is created and can be amended as needed. Although the organizations are free to conduct their business as they see fit, the bylaws must conform to the regulations of the state in which the organizations are located. The bylaws discuss issues such as the duties of directors and officers; the procedures for board meetings; the process of electing directors and choosing officers; and establishing how the organization’s funds will be used.

Tax Code Limits

The bylaws must conform to the restrictions placed on non-profits as defined by the tax code. All non-profits are prohibited from transferring any benefit to any individual or organization that helped create or currently manages the nonprofit. This means that board members or people who have a vote on how the non-profit conducts itself cannot receive distributed profits or services from the organization for which they did not pay market rates. Specific classes of non-profits have additional limitations. For example, 501(c)(3) organizations are prohibited from influencing legislation or supporting any campaign for or against any political candidates; 501(c)(3)s are required to only be organized for a specific charitable purpose, as defined by the tax code and the IRS.

Bylaw Considerations

When drafting your organization’s bylaws, ask others for advice and get insight from individuals who are going to be a part of the non-profit. Consider reviewing comparable organizations’ bylaws. Bylaws are private documents and do not need to be disclosed to the public. However, given the public standing of these organizations and the fact that they often receive public donations, making the bylaws available would increase transparency and could increase an organization’s reputation.

Ready to form a nonprofit? Get Started Now
How Can a Church Lose Its 501(c) Status?

References

Related articles

The Requirements to Start a Non-Profit Business in South Carolina

Nonprofit businesses provide important services for communities, such as giving support to low-income families or raising awareness of important social issues. While you can do these things as an individual, organizing as a nonprofit allows others to help you operate your charity and encourages donations more effectively. Typically, South Carolina nonprofits are organized as nonprofit corporations.

Legal Obligations for Hiring an Executive Director of a Nonprofit

Hiring an executive director is an important step for any expanding nonprofit. In addition to practical considerations in finding a good match for your organization, you must also consider the role and duties of the board of directors in selecting an executive director. Additionally, both the federal and state government provide rules on compensation of nonprofit employees.

Rules & Regulations for Non Profit Foundations

Nonprofit foundations that meet certain requirements are eligible for special tax treatment by the IRS under Section 501(c)(3) of the Internal Revenue Code. Donors to such organizations enjoy tax benefits as well. Most nonprofit organizations must apply for 510(c)(3) status before taking advantage of its benefits. Under certain circumstances, however, the IRS may revoke a nonprofit foundation's status.

Doing the right thing has never been easier.

Related articles

How to Run Your Own 501(c)(3)

Running a 501(c)(3) tax exempt nonprofit requires you to adhere to both state and federal law. Tax exempt status is ...

Non-Profit Vs. Incorporation

When we think of corporations, the image that comes to mind is usually a for-profit venture. However, nonprofits can ...

Conflict of Interest Policy for 501(c)(3)

Tax exempt nonprofits serve to promote a particular public good. Sometimes, however, individuals involved with the ...

Rules for 501(c)3 Corporations

Many charities pursue 501(c)(3) status because it allows organizations to avoid certain taxes and accept tax-deductible ...

Browse by category
Ready to Begin? GET STARTED