The IRS generally will refer, among other things, to the purposes clause in a tax-exempt organization’s articles of incorporation to determine what is a related versus an unrelated activity.Most nonprofits also have a purposes clause contained near the beginning of their bylaws, and many times that purposes clause will differ, in one or more material respects, from the purposes clause in the articles of incorporation, the latter of which is controlling.If the bylaw committee is comprised of individuals that do not represent a full cross-section of your organization’s membership or constituency, they may find some opposition when sending bylaws to the full membership for approval (for nonprofits with voting members) or to the full board of directors.By creating a bylaw committee that fully reflects your organization's population, you are less likely to run into this problem, and you will have more success vetting potential issues early on in the process. Coordinate the actions of your bylaw committee with legal advice.Designated bodies, which hold some, but not all, of the power of members or boards of directors, can be particularly helpful in more parliamentary style organizations. Frequently, organizations inherit bylaws that have been patch-worked together over time.
Bylaws should provide an outline of the governance structure but also should allow some flexibility if and when changes are needed in the future. These often include items such as membership criteria, membership dues determinations, and the operation of committees.In addition, because nonprofit corporation statutes vary from state to state, it is important when drafting new bylaws to review the relevant state requirements as opposed to simply using another organization’s bylaws as a base since, even if the organizations’ missions and operations are similar, the requirements, prohibitions, and default provisions of the relevant state nonprofit corporation acts may be – and often are – different. Make sure your bylaws are consistent with other regulatory documents.Be sure to double-check your bylaws for both internal consistency as well as external consistency (including keeping in line with the articles of incorporation, the state's nonprofit corporation act, and any policy or governance manual). Sometimes, for example, bylaws will contain a provision about removing a board member, but leave out any provision covering how that position gets filled upon removal.The two clauses should be fully consistent and, therefore, an organization might want to include a clause in the bylaws which simply refers to the purposes clause as written in the articles of incorporation.In addition, the purposes clause in the articles of incorporation should be reviewed, keeping in mind that a clause drafted 30 or more years ago may not accurately or fully reflect your organization today. Closely review the meeting and voting procedures for members and directors.Some states explicitly require notification of board member changes while others don't require notice at all.