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Bylaws Review Is More Than Just Reviewing The Bylaws

Coordination with the documents of incorporation, state statutes, federal exemptions and organizational visions is mandatory for a complete bylaws review.

Bylaws are generally considered to be a set of rules and principles that govern the structure and operation of any organization. Bylaws are not to be confused with operating plans, strategic goals, objectives or other management target oriented documents. The key concept is that the bylaws define the governing structure, an architectural framework for an organization.

Bylaws should be general in nature, rather than a detailed operational manual. Yet, they should be detailed enough to address all organizational issues. They should be a flexible, working document, but rigid enough to provide institutional stability and serve as a guidepost for management. The achievement of this delicate balance is a challenge for the drafter.

Review/Rewrite Process

Any review or rewrite of the bylaws should begin with an examination of the authority to do so. Most bylaws contain an amendment paragraph. This defines the procedures for addressing bylaw changes and the ratification thereof. Often times, a review of the amendment process, taken in the context of the political realities of the organization, will discontinue the project.

Before starting drafts of language changes, one should examine the purpose of the bylaws review. Is the rewrite anticipated to coordinate the document with operational realities or change the governing structure of the organization? The latter would be an appropriate function of a bylaws review, wherein the former may suggest that the organization has drifted from its original mission and purposes. In this case, the remedy may be a reorganization of the operation rather than a review and rewrite of the bylaws. The management mission of the organization's leadership, balanced against any political considerations, should be factors for consideration in any bylaws review.

Remember Your Mission Statement

Coordination of the bylaws and the stated purpose of an organization is mandatory. If the organization is incorporated, the articles of incorporation set out the purpose for the being of the entity. The certificate of incorporation, or other similar document issued in the state of incorporation, will certify the purposes and allowable activities of an organization. Any bylaw provisions to the contrary will not be valid and may mislead management and others inappropriately.

If an organization has a nonprofit, tax-exempt status granted by the Internal Revenue Service, the determination process will identify a tax-exempt purpose upon which the exemption was granted. Bylaws and any amendments thereto should conform to and be consistent with the tax-exempt purpose. Failure to do so may risk the loss of the tax-exempt status.

The state law where the organization is incorporated should also be reviewed. This statute is the controlling document for all aspects of the existence of the organization. It may provide for mandatory provisions to be contained in bylaws or it may set the rules where the bylaws are silent. Failure to coordinate the bylaws with the applicable state statute may unwittingly provide operational handicaps to management.

Clearly a review of the bylaws is more than just reviewing the bylaws for language changes. Coordination with the documents of incorporation, state statutes, federal exemptions and organizational visions is mandatory for a complete bylaws review.

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