Excercise Nonprofit bylaws.
locate three examples of nonprofit bylaws.
What are the common bylaw articles?
How easy is it to read each set of bylaws?
Review the sample bylaws in “Nonprofit Animal Law” by Mead.
Assume you have volunteered to supply a newly formed animal-related nonprofit with a set of bylaws. Make up a name for the organization.
Create a set of bylaws for the organization. Submit the bylaws by the due date of the exercise.
Chapter 4 in Nonprofit Animal Law by Mead.
Bylaws of X
Article I. Name and Purpose
Section 1: Name:
The name of this Organization is X. (Organization)
Section 2: Purpose:
The Organization is organized exclusively for charitable, religious, educational, and scientific purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code.
Article II. Membership
Section 1: No Members:
This Organization elects not to have members. The Organization uses the title of Donor to financial supporters. The Organization uses the title of Volunteers to those giving their time to help the Organization. Donors and Volunteers do not have voting rights on the Board of directors because they are Donors or Volunteers.
Article III. Powers
Section 1: Direction of Powers:
The Board of Directors controls the Organization. Board action takes at least a majority vote of the Board member. Some Board actions described in these bylaws require a 60% vote.
Section 2: Private Inurnment:
The property of this corporation is irrevocably dedicated to charitable and humane purposes and no part of the net income or assets of this corporation shall ever inure to the benefit of any director, officer or member thereof or to the benefit of any private person, except that this corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payment and distributions in furtherance of the purposes set forth in these articles.
Section 3: Discrimination:
The Organization will not discriminate based on race, religion, creed, marital status, disability, military status, sex, sexual orientation, or gender identity.
Section 4: Lobbying:
No substantial part of the activities of this corporation shall consist of carrying on propaganda, or otherwise attempting to influence legislation, and the corporation shall not participate or intervene in any political campaign (including the publishing or distribution of statements) on behalf of any candidate for public office.
Notwithstanding any other provisions in these articles, this corporation shall not carry on any other activities not permitted to be carried on (1) by a corporation exempt from federal income tax under § 501(c)(3) of the Internal Revenue Code of (2) by a corporation contributions to which are deductible under § 170(c)(2) of the Internal Revenue Code.
Article IV. Structure of the Board
Section 1: Board Role, Size, Compensation:
The Board is responsible for the overall direction and policy-making of the Organization. The officers run the day to day operation of the Organization. The Board can have up to seven (7) and no less than three (3) members. The Board members receive no compensation for their duties as a board member other than reasonable expenses. This provision does not preclude a director from being compensated for work done for the Organization outside of their duties as a Board Member.
Section 2: Meetings:
The Board shall meet at an agreed-upon time and place. A vote of 60% of the Board may change the time and place of a Board meeting.
Section 3: Action Without Meeting:
Actions required or permitted to be taken by the Board may be taken without a meeting with all board members’ unanimous consent.
Section 4: Electronic Mail, Telephone Meetings:
Electronic mail and facsimile shall be considered equivalent to any communication otherwise required to be in writing. Board members shall also be permitted to participate in meetings telephonically and through electronic meeting platforms.
Section 5: Terms:
All Board members shall serve unlimited year terms.
Section 6: Quorum:
A quorum of the Board is at least 60% of the Board members present at the beginning of the Board meeting.
Section 7: Notice:
An official board meeting requires that each Board member has written notice two (2) weeks in advance. The unanimous consent of all Board members removes the requirement for a notice of a Board meeting.
Section 8: Officers and Duties:
The Board authorizes the creation of the offices of President, one or more Vice Presidents, Secretary and Treasurer. Board members are permitted to hold other offices in the Organization. The Board is not obligated to fill all of these officer positions. The officer’s duties are as follows:
The President is in charge of all of the Organization’s day to day activities.
The Vice President is the President’s delegate. If there is a single Vice President, that Vice President will take over the President’s duties if the President position is open or the President is unable to perform the Presidential duties. If there is more than one Vice President, one of the Vice Presidents shall be considered the Executive Vice President. The Executive Vice President will take over the duties of the President if the President’s position is open, or the President is unable to perform the Presidential duties.
The Secretary is responsible for keeping records of the Organization. This includes Board meeting minutes, Board meeting notices, and assuring that corporate records are maintained.
The Treasurer manages the financial affairs of the Organization. The Treasurer is responsible for all funds, properties, and securities held by the Organization. The Treasurer will report the Organization’s financial condition to the Board at least once a year.
Section 9: Vacancies:
When a vacancy on the Board exists, the Secretary may receive nominations for new members from present Board members at least two (2) weeks before a Board meeting. The Secretary will send out the names of nominees to Board members with the regular Board meeting announcement. The Board will vote on new Board members at the next Board meeting.
Section 10: Resignation, Termination, Absences:
Resignation from the Board must be in writing and received by the Secretary or Chairman of the Board. A Board member may be removed from the Board for any reason by a 60% vote of the remaining directors.
Article V. Inspection Rights
Section 1: Inspections:
Every member of the Board has the right to examine and make copies from the Organization’s books, minutes, and bylaws.
Article VI. Fiscal Year
Section 1: Fiscal Year:
The fiscal year shall be the calendar year. The fiscal year for the Organization shall end on December 31.
Article VII. Indemnification
Section 1: Indemnification:
The Organization may indemnify anyone acting on behalf of the Organization. The Organization is not required to provide this indemnification.
Article VIII. Dissolution
Section 1: Dissolution:
Upon the dissolution of the corporation, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the corporation is then located, exclusively for such purposes or to such Organization or organizations, as said Court shall determine, which are organized and operated exclusively for such purposes.
Article IX. Amendments
Section 1: Amending the Articles of Incorporation and Bylaws:
The Board may amend the Articles of Incorporation and Bylaws of the Organization. Amendment requires approval by at least 60% vote of all Officers of the Board.
The Board approved these Bylaws on (Date)
Conflict of interest policy section
A natural conflict of interest between an individual and nonprofit is not necessarily detrimental to the charitable organization. For example, it benefits a nonprofit if someone related to the nonprofit wishes to give the nonprofit favorable lease terms on a piece of property. Nonprofits do not need to prohibit conflicts of interest. The goal of these policies is to make sure that all conflicts of interest are exposed. This allows those watching out for the nonprofit’s interests to see if the transactions entered into between the nonprofit and those close to the nonprofit are fair to the organization. Nonprofit policies are all about transparency and disclosure. To quote the IRS, “A conflict of interest policy is intended to help ensure that when actual or potential conflicts of interest arise, the organization has a process in place under which the affected individual will advise the governing body about all the relevant facts concerning the situation.”
The Internal Revenue Service is interested in whether a new nonprofit has drafted a conflict of interest policy. There is not a formal requirement in the tax code that requires a conflict of interest policy. But a conflict of interest policy will help keep a nonprofit organization from violating aspects of the tax code. The IRS asks in the application form for a new nonprofit if the organization has a conflict of interest policy that is consistent with a sample in the 990 form instructions. If the answer is no, the entity needs to answer additional questions centered around conflicts of interest.
Appendix A: Sample Conflict of Interest Policy – IRS Instructions for Form 1023
The purpose of the conflict of interest policy is to protect this tax-exempt organization’s (Organization) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations.
1. Interested Person
Any director, principal officer, or member of a committee with governing board delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person.
If a person is an interested person with respect to any entity in the health care system of which the organization is a part, he or she is an interested person with respect to all entities in the health care system.]
2. Financial Interest
A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:
a. An ownership or investment interest in any entity with which the organization has a transaction or arrangement,
b. A compensation arrangement with the organization or with any entity or individual with which the organization has a transaction or arrangement, or
c. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the organization is negotiating a transaction or arrangement. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial.
A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.
Article III Procedures
1. Duty to Disclose
In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board delegated powers considering the proposed transaction or arrangement.
2. Determining Whether a Conflict of Interest Exists
After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.
3. Procedures for Addressing the Conflict of Interest
a. An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest.
b. The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.
c. After exercising due diligence, the governing board or committee shall determine whether the organization can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest.
d. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the organization’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.
Instructions for Form 1023 -25-
4. Violations of the Conflicts of Interest Policy
a. If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
b. If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
Records of Proceedings
The minutes of the governing board and all committees with board delegated powers shall contain:
a. The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing board’s or committee’s decision as to whether a conflict of interest in fact existed.
b. The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.
a. A voting member of the governing board who receives compensation, directly or indirectly, from the organization for services is precluded from voting on matters pertaining to that member’s compensation.
b. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the organization for services is precluded from voting on matters pertaining to that member’s compensation.
c. No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the organization, either individually or collectively, is prohibited from providing information to any committee regarding compensation.
Each director, principal officer and member of a committee with governing board delegated powers shall annually sign a statement which affirms such person:
a. Has received a copy of the conflicts of interest policy,
b. Has read and understands the policy,
c. Has agreed to comply with the policy, and
d. Understands the organization is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax- exempt purposes.
To ensure the organization operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
a. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s length bargaining.
b. Whether partnerships, joint ventures, and arrangements with management organizations conform to the organization’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurement, impermissible private benefit or in an excess benefit transaction.
Use of Outside Experts
When conducting the periodic reviews as provided for in Article VII, the organization may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.