Regardless of how quickly or slowly your nonprofit organization grows, all organizations are likely to evolve since their founding. As such, it’s even more likely that your original bylaws are outdated, rendering them ineffective. A major issue considering they’re the rules and foundational principles that define your organization. Discover the 5 other critical reasons you may need to start the NPO bylaw review process below.
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What are nonprofit bylaws?
Nonprofit bylaws are the foundational rules that help organizations run effectively. The purpose of your nonprofit bylaws is to ensure you guide the board’s actions and decisions in a meaningful and valuable way.
As a result, Bylaws are in place to protect the nonprofit organization’s future from potential issues by setting clear guidelines and rules about authority rights and expectations amongst the board and employees. For example, bylaws include rules about factors like:
- Size and function of the board,
- Basic guidelines for voting
- Meeting and minutes guidelines
- How to elect directors
- How to appoint officers
Why is it important to review your bylaws?
Chances are your bylaws are outdated. They probably haven’t been reviewed in years, reference outdated technology like fax machines, use the word ‘he’, and don’t reflect the latest provincial and federal requirements. That’s why it’s necessary to review and update your bylaws on a regular basis.
With a fully updated set of bylaws, your organization should be able to easily answer questions like :
- “how do we remove a board member?”
- “how often shall we meet as a board?”
- “how do we deal with unexpected vacancies on the board?”
- “what are best practices for terms of director positions?”
- “how large or small should our board be?”
More so, reviewing your bylaws helps remove outdated wording and procedures and implements a consistent tone and use of words throughout.
What happens if an organization doesn’t follow its bylaws?
Organizations that neglect to follow and adhere to their bylaws risk harming the foundation of how their entire organization functions. Doing so puts the board, individual members, and overall nonprofit organization at great legal risk – something that your insurance likely won’t cover.
More so, it encourages a breakdown in the organizational hierarchy, considering that any one member of the nonprofit is essentially free “to do as they please.” As a result, organizations risk looking like they’re rigged or unethical and quickly lose constituents and local community support.
5 Critical Reasons To Start The NPO Bylaw Review Process Today
Discover 5 critical reasons you may need to start the NPO bylaw review process below:
1. Confirm compliance
While most violations happen due to a lack of awareness, particularly those that continue for a long time – some can lead to significant organizational liabilities that could be deemed unlawful (e.g. not handling finances as described in the bylaws.)
2. Remove outdated terminology
Think of your nonprofit bylaws as if they were the frame of a house – they must support the organization’s mission, vision, and policies while still being flexible enough to change as its environment grows. How your organization operates now won’t be the same in a year – that’s why you need to ensure they’re flexible. If they’re not, you’ll run into operational inefficiencies, and the organization’s impact will slow down.
3. Establish clear responsibilities
Nonprofit bylaws describe the board of directors’ legal duties and the following standard of care for honouring those duties – and if every member knows them fully, organizations can achieve a lot in a short amount of time. More so, it’s already difficult for nonprofits to juggle funding limitations and volunteer involvement while also avoiding pitfalls from board members who are not clear on essential responsibilities.
4. Outline operational procedures
The board can only make an actional impact if they have the guidelines on how to do so; that’s why if you haven’t reviewed your bylaws, members won’t know crucial operational procedures such as:
- How often to hold regular meetings,
- When and how to hold urgent meetings
- How to select directors
- How to approach voting
5. Modernize Voting Procedures
Voting is a central component that ensures the legitimacy of your organizational action. There are a lot of factors to consider when voting, and if your organization doesn’t have an appropriate framework, it’ll likely be ineffective. By reviewing your bylaws, you can ask essential questions about the structure and culture of the organization to create relevant voting bylaws, such as:
- Should voting be in-person or virtually (phone and email)?
- Is proxy voting allowed?
- Does each person/entity only get a single vote, or is the greater weight applied to one type?
How often should nonprofits review bylaws?
Although there is no official standard for reviewing your bylaws, every two years is the recommended benchmark for ensuring they accurately reflect the organization’s inner workings and remain relevant to what you’re trying to achieve.
However, with that said, here are some clear indicators it’s time to update your bylaws:
- You’re unsure if your bylaws comply with provincial and federal requirements.
- You don’t know when your bylaws were last updated.
- The Bylaws still reference outdated technology or terminology.
- Instead of being a helpful tool, they are getting in the way or holding your back
Do you review your bylaws every two years?
Organizations engage AMC for Nonprofit Bylaw Reviews because we’re nonprofit specialists, having worked with over 450 organizations across Canada since 1987.
We update the bylaws of multiple nonprofits every year, so you can be sure that we’re up to date on the latest requirements, regulations and evolutions when it comes to bylaws.
Contact us today and ensure your organization operates at a legal, professional and trusted level.