One of the most critical responsibilities when starting up your own nonprofit is completing the initial paperwork accurately and fully. While this process might just seem like filling out a few legal documents that only lawyers care about, you should be paying close attention to their structure and content. These initial legal documents, sometimes referred to as the Foundational Documents, form the basis of your organization.
While there is no formal structure for Foundational Documents, they can include:
- Mission Statement, Vision Statement, and Statement of Values
- Articles of Incorporation
- Beliefs/Statement of Operating Principles
Some of these titles are self-explanatory, but a few warrant further explanation. In this post, we will cover Bylaws and Articles of Incorporation in greater depth. Keep in mind, this is not an academic exercise about some documents you’ll see one time and then just shove into a binder, never to be seen again. Rather, this is an essential tutorial on mastering how to begin building the very foundations your organization will stand upon.
Lets talk about the bylaws for nonprofits. Bylaws are internal, private documents establishing rules that govern board procedures. They usually establish committees, board structure, financial guidelines, term limits, and many other policies. They do not need to be filed with any governmental body, but must be complied with and kept up-to-date.
There is no formal content or structure, though for simplicity’s sake, they may look very similar to one another. Their only requirement is that all state mandated information is be correctly provided
The trend for some time has been to reduce the amount of content contained in the bylaws, being certain to retain all legally required information. The reason for doing so is purely for convenience. Changing bylaws for nonprofits is usually a cumbersome process, as it should be. So, only those topics that remain consistent end up appearing in these documents. Instead, boards create Board Policy Manuals to house processes and procedures which can then be changed much easier and as conditions dictate.
For example, the bylaws will often hold that there be certain standing committees in place (like an Executive Committee, a Governance Committee, or a Finance Committee). Subsequently, a Board Policy Manual will describe each committee’s unique purposes, how often to meet, how the committees are to be filled, how to designate or elect a committee chair, and how many should serve on a committee
Bylaws for nonprofits differ from Articles of Incorporation. Whereas bylaws are internal documents, Articles of Incorporation are public documents and must be filed in the state where the agency is domiciled. The Articles are used to establish your organization’s as legal identity in your state.
Some information from the bylaws are is also required in the Articles. Name, address, purpose as well as identification of its your organization’s legal agent for receiving legal documents must appear in both places. Its format may vary from state to state and they are filed with the state’s Secretary of State office.
While you may not need to reference any of these documents too often, this is the first place attorneys, auditors, government officials, and others will go when there is a problem. It is critical that these be created completely, accurately, stay up to date, and are closely followed by staff and leadership.