Non-profit organizations pursue noncommercial goals, such as education, hunger and disaster relief and scientific research. Non-profits such as churches and trade organizations have members who may elect directors and privileges to use the organization's facilities. Other organizations, especially those offering their services to the public at large, often exist without members. Non-member and member non-profits have bylaws, which control the operation and structure. Many bylaw provisions are common to both types of non-profits, though the major difference lies in how the board of directors are chosen.
Statement of Purpose
A non-member, non-profit demonstrates in its bylaws the intent to be exempt from paying income taxes. Typical bylaws state that the organization has only charitable, religious, scientific and educational purposes as defined by Section 501(c)(3) of the United States Internal Revenue Code. The non-profit should specify particular purposes or activities, such as providing free legal or medical assistance. Bylaws also list as purposes and activities the acquisition and transfer of property, fundraising and investing of money to support the organization's achievement of its mission.
Declaration That Organization Does Not Have Members
Bylaws of non-member organizations normally state that the organization has no members. The Minnesota Council for Nonprofits publishes sample bylaws that define the organization's members as the directors. Both types of provisions limit control of the organization's structure and affairs to the directors and officers.
Election and Removal of Directors
Boards of directors of a non-member, non-profit elect and remove board members. The bylaws may set the number of directors and the amount of time which a director may serve. The Minnesota Council of Nonprofits suggests maximum terms of three years. Organizations may stagger terms so that the organization does not need to fill all board positions at one time.
Qualifications and Requirements of Directors
Bylaws may set qualifications, such as residency and attendance at meetings. Bylaws should seek diversity among directors to represent the interests and needs of those served by the organization. The Chicago Lawyers' Committee for Civil Rights Under the Law, Inc. advises that non-profits not have persons under age 18 as directors, except as non-voting, advisory committee members. Minors cannot enter into enforceable contracts and cannot be held to the legal obligations of directors.
Compensation of Directors
Nonprofit bylaws often prohibit directors from receiving compensation. However, bylaws may permit the non-profit to reimburse directors for expenses, such as travel in attending meetings. The Minnesota Council for Nonprofits, Inc. recommends that organizations not pay members of the board of directors for service, but pay only professional staff members.
Bylaws may establish committees to handle or oversee specific activities, goals and issues. Committees allow the board to delegate and disperse workload. Free Management Library lists finance, ethics, executive, event and fundraising as examples of committees. The board of directors choose committee members, which may include directors and non-directors.
Bylaws designate president, vice-president, secretary and treasurer as officers of the organization. The board of directors select officers to perform the daily operations of the organization, such as signing contracts, selecting employees or volunteers and paying and receiving money. Bylaws may refer to a chief executive officer and chief financial officer in lieu of or in addition to president and treasurer. In states such as Georgia, the same person may hold the offices of president and secretary.
Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August 1996, Raines has handled cases involving business, consumer and other areas of the law.