"Is It Time To
Update Your Bylaws?
Let's update
our bylaws!!! Boy, doesn't this sound like fun? Almost as
much as an update of your financial policies, right? I completely
understand. Policies are not why most of us came to the nonprofit
sector. And, if it's not broke, why fix it?
The problem is this: making sure our policies are up-to-date and in
line with best practices
is,
in fact, part of a steward's job and, our bylaws are our most
important governance policy document.
So how do we tell if it's time for a review and update? If any or all
of these are the case.
- It's been five years since your last
review/update.
- New best practices have become common and are
not yet included in your bylaws.
- There has been a significant change in your key
funders requirements of your organization governance.
- There has been a recent change in your state or
provincial statute regarding nonprofit management and governance.
- You feel that your actual practices are not
reflected in your bylaws.
In the first instance, it's pretty easy to measure, assuming that you
included the adoption date on your bylaws when you last voted on them.
The second item, though, has vexed many nonprofits in the past seven or
eight years in the form of Sarbanes-Oxley (SOX) regulations. SOX,
instituted for large public firms but not required for nonprofit in the
formal statute, has become the de-facto benchmark for many nonprofits
and their funders. Key provisions that most nonprofit shave adopted
include an independent audit committee and bidding their audit work at
least every five years.
Should you adopt SOX practices? Well, they're smart but expensive for
many of the smallest nonprofits; those who can't afford audits every
year, for example. But the basic checks and balances are very well
thought out. If you possibly can, go with the basic tenets,
particularly the audit committee and regular auditor bidding
What else might trigger your bylaws review?....."
