Guest post by Foundation Group
The classic nonprofit struggle of raising funds with limited resources can complicate an organization’s ability to meet its fundraising goals. As a nonprofit leader, you know this means you’ll need to leverage every opportunity to grow your nonprofit.
But before you strategize new fundraising campaigns or marketing ploys, go back to the basics: your nonprofit’s bylaws. These internal operating rules provide a strong foundation for your nonprofit’s growth, especially when they:
Establish clear governance expectations.
Maintain operational consistency.
Allow for adaptability and flexibility.
Aside from their vital role in obtaining 501(c)(3) status, your bylaws can also guide your board’s decisions. Let’s take a closer look at how your bylaws can set your organization up for success.
Establish clear governance expectations.
At the heart of every nonprofit is a charitable purpose and a plan to meet that need. To accomplish these goals, the organization’s governance must align with its mission. After all, a nonprofit’s governing leaders are the decision-makers that drive action.
To keep your nonprofit on the right path, establish clear guidelines for leadership and decision-making processes, such as:
Board member rules. Consider how many people will be on your nonprofit’s board. How will board members be selected and appointed, and how long will their terms of service last? According to eCardWidget, nonprofit boards are the driving force behind both big decisions and the delegation of day-to-day tasks. Your bylaws should explicitly include guidelines for how your board will be structured and how it should approach and delegate decisions to maximize efficiency.
Voting procedures. When decision-making for your nonprofit, how will votes be handled? Your bylaws should address what types of meetings can be held, the number of people needed for a quorum, and how many votes will be required to pass an initiative.
Establishment of committees. Effective leadership delegates wisely to maximize the efficiency of their efforts. Although your nonprofit may have started with a small group to serve as your board of directors, your leadership team will inevitably need to grow and specialize as your nonprofit grows. Include a provision in your bylaws for subcommittees, giving power to the board for their creation and dissolution so that these teams can be assembled on an as-needed basis without having to repeatedly amend the bylaws.
Your bylaws should also include control provisions that take into account the balance of authority. For example, instead of granting reserved powers to one stakeholder, you might require supermajority votes. That way, you can be sure no one authority figure has significant influence over the organization.
2. Maintain operational consistency.
There’s validity in the saying that practice makes perfect. Once you’ve determined a formula for success, you can continue on that path to carry out your nonprofit’s strategic plan. Your bylaws should provide a clear sense of direction for how the organization will operate. That way, you’ll stay on course by following standardized procedures, such as:
Bookkeeping. Not only is bookkeeping essential to your nonprofit’s existence, but it can greatly impact your ability to grow since it can guide certain financial decisions. Determine how bookkeeping data and records will be managed, from board meeting minutes to important financial records. Your nonprofit’s accounting responsibilities are a huge undertaking and will grow in complexity as your nonprofit grows. Whether you hire a nonprofit bookkeeping expert or manage your records in-house, you’ll have concrete expectations for orderly and complete books.
Managing conflicts of interest. Having to address a conflict of interest can be a hindrance to your nonprofit’s growth, especially if it interrupts your daily operations and important projects. To smooth over these obstacles, follow the conflict-of-interest policy established in your bylaws. This might include details about how to define and identify conflicts of interest, as well as consequences for violating the policy.
Practicing transparency. How does your nonprofit practice accountability with the public? Transparency can increase nonprofit support since your community will be more likely to engage with a credible organization. Your bylaws should clearly define what information and documents are open to the public, as well as any materials that should remain confidential. You might also establish a process for sharing this information with interested parties.
With a consistent process for important operations, your nonprofit can carry out its strategic initiatives in an organized and smooth manner.
For example, your bylaws might include a section about bookkeeping that states your organization will keep a record of all actions taken by board directors and committees. According to Foundation Group’s guide to Form 990 filing, recording this information throughout the fiscal year can help ensure your Form 990 filing goes smoothly at the end of the year since you won’t be scrambling to put these details together.
3. Allow for adaptability and flexibility.
If you want your nonprofit to grow, you have to give it the room to do so! Include provisions for amending your bylaws in the future so that they remain flexible with the ever-changing needs of your growing organization. Answer the following questions:
Who has the authority to propose changes to the bylaws?
Who will be responsible for approving the changes?
What percentage of a vote is needed to pass an amendment?
Be sure to include that all changes should remain consistent with your Articles of Incorporation. Any amendments made to your bylaws should enhance your nonprofit’s operations, not compromise its eligibility for 501(c)(3) status. Small adjustments can help your nonprofit pursue new opportunities in the future that weren’t foreseeable when the bylaws were originally constructed.
The most important way to ensure your bylaws support your nonprofit’s growth is to simply know what’s included! These internal guidelines are official, legal documents that your nonprofit is bound to follow. Your familiarity with them can help ensure you follow them closely and give you the insight needed to adjust them as necessary.