What is the difference between nonprofit articles of incorporation and bylaws?
Articles of Incorporation – Your Founding Document
Articles of incorporation legally “create” or “found” your nonprofit corporation. Some states call this document the “articles of formation” or “certificate of formation.”
The articles are filed with the State and become a public document. They define what the corporation will do and who will be initially responsible for the management of the corporation.
What are the Bylaws?
Bylaws are your organization’s operating manual. They set out the rules that govern the internal management of an organization.
Nonprofits that seek 501(c)(3) tax-exempt status from the IRS need to have bylaws in place, since the IRS asks for a copy of its internal governing documents to be included in the application packet.
You must keep a copy at the nonprofit corporation’s principal place of business. A copy of the bylaws, signed by a corporate officer, must be submitted when applying for federal tax-exemption.
What should be included in nonprofit bylaws?
Bylaws are specific for each organization, so you will draft them to meet your own nonprofit’s needs. Since each state has slightly different corporate laws, a nonprofit attorney can help you tailor the bylaws to meet the organization’s mission, while following state nonprofit laws. But, generally, your bylaws may include provisions on the following:
- Management & Governing Body: The bylaws will set out who has management authority of the nonprofit. Is the nonprofit managed by members, by a board of directors, or by a combination of the two?
- Directors and Officers: Bylaws often state the roles and duties of directors and officers, including the titles and specific responsibilities of the officers, qualifications for directors, the number of directors, certain classes of directors, terms for the directors and officers, and the method for electing and removing directors and officers.
- Meetings: Bylaws will include information about annual and/or special meetings, including the frequency and place of meetings, the type of notice required, and whether directors may vote by written proxy.
- Voting: Bylaws set out how directors and/or officers are nominated and elected. There may be bylaw provisions on removal and substitution, as well.
- Provisions for Membership (if the corporation has members): Bylaws may describe qualifications for membership, method of selection, dues and fees, voting rights, and the frequency and place of membership meetings.
- Checks & Balances: Bylaws should include structures for checks and balances, including the signatures required for execution of legal documents, signatures required for checks, and other controls over financial transactions and transfers of corporate assets.
- Committees: Bylaws may describe the types of committees, responsibilities of committees, and qualifications for serving on a committee.
- Amendments: Bylaws should set out how to amend the bylaws in the future.
- Conflicts of Interest:Â Some bylaws include state requirements on how corporations should handle conflicts of interest.
