Article Archives >> Ready Reference >> May 16-31, 2006
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Bylaws Function as “Constitution”
Of Nonprofit Corporations
Regulation of corporate governance demands
as much care and thought as the Constitution of a country
Bylaws of a nonprofit Corporation should not simply be taken “off
the shelf” and adopted by the organization. The Articles of
Incorporation and the Bylaws essentially form the “Constitution”
of the organization and establish the rules for governance. Like
all Constitutions, they should be considered carefully.
In most states, the state nonprofit corporation law provides minimum standards and default procedures if the Articles and Bylaws are silent on many issues. But the Bylaws can be used to spell out specific provisions and are particularly important in establishing the rules about who controls the organization.
Unlike a business corporation, in which, in very simplistic terms,
the one who buys the most stock controls the organization, the Bylaws
of a nonprofit corporation spell out the essential relationships
of the participants. They are the power document of the organization.
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Article Archives >> Ready Reference >> May 16-31, 2006
