3 Important Reasons To Review Your Nonprofit’s Bylaws

A dear friend by the name of Kent Stroman recently authored and published what I consider a must-read book for every nonprofit CEO and Board Member: “The Intentional Board – Why Your Board Doesn’t Work and How to Fix It.”

Kent covers so much extraordinary ground regarding board governance. However, one key concept caught my eye when coupled with the numerous board experiences I have had personally: having your nonprofit bylaws being known and understood by everyone in a leadership role.

I encourage all of you interested in this topic to obtain a copy of Kent’s book so you can explore much more in depth with one of the best experts on nonprofit governance.

Governance Begins with Bylaws

Let’s begin by a quick comparison to the business or commercial world. Almost all forms of business entities begin with an operating agreement. The operating agreement provides the day-to-day operational rules that must be adhered to.

A corporate attorney most likely created the operating agreement. Because of the attorney involvement there is often times a lack of understanding or confusion regarding those rules by the business’s leadership team.   

This type of confusion is often the case in the nonprofit world, too. Case in point: there has not yet been a nonprofit board that I have been part of where the bylaws were made available, unless a change was being considered. Even in those cases only a small section was often revealed.

This is a shame because the bylaws are where governance begins. Kent states it rather succinctly by saying:

“Bylaws should state what must always be and what never should be. Everything else is fair play and need not be addressed.”

So let’s explore the three most obvious reasons for a more widespread understanding of bylaws by every nonprofit leader.

1. Bylaws Equal Game Rules

Virtually nobody would try to play chess, golf, Monopoly or any other game without first going over the rules of play.  

When we consider the vital work being achieved by virtually all nonprofit boards, should we dare think of having any member of the board not aware of the rules of governance?

Knowing the rules allows any board to operate more efficiently and effectively. So why not make a copy of the bylaws a portion of any board orientation packet?

Hopefully, the answer to the two questions above is a resounding yes!

2. Operating Without Knowledge is a Potential Liability

Not knowing the rules of governance is where most violations begin. In some cases, the violations continue for long periods of time because of the lack of awareness. 

Such violations may be minor or they may lead to organizational liabilities that could be detrimental or even unlawful. For example, the proper handing of all monies trusted to you nonprofit requires governance rules to be followed as intended. We have all read about situations where money related violations have occurred. I wonder how many of them could have been avoided if the bylaws were understood by everyone in a leadership capacity.

3. Understanding Leads to Success

It is hard enough for most nonprofits to achieve their highest levels of mission results based upon limitations in funding, volunteer participation and an ever changing array of board members moving in and out of their term of service, without any further handicapping.

If every new and existing board member is fully aware of the organization’s bylaws, higher levels of results should be able to be achieved in the shortest amount of time. This allows introduction of strategic ideas and motions to enable action in the most efficient manner possible. Every minute of every meeting could be used to its fullest.   

What an outstanding concept!

Many other reasons certainly could be outlined for a more widespread understanding and direct knowledge of your charity’s bylaws. If you can think of a few please let us know in the comment area below. 

Let’s hope the three obvious ones above grease the skids for higher levels of mission results for as many nonprofits as possible.

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Jay Love

Jay Love

Chief Relationship Officer at Bloomerang
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman.
Jay Love
By | 2017-10-09T19:07:43+00:00 October 10th, 2017|Nonprofit Boards, Nonprofit Management, Nonprofit Sustainability|

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