How to Change Bylaws for a Nonprofit Organization

Key Takeaways

• Bylaws are foundational governance documents that require careful review and deliberate updates.
• Changes to bylaws should follow procedures outlined within the bylaws themselves and applicable state laws.
• Nonprofit boards must ensure proper notice, documentation, and voting when proposing bylaw amendments.
• Overly detailed bylaws can hinder flexibility; keep bylaws broad and policies specific.
• Some bylaw changes, such as operational or structural updates, must be reported to the IRS.
• Legal counsel is often essential to ensure compliance and proper drafting of amendments.

If you need to know how to amend bylaws, there are a few things to know first. Bylaws are rules of operation that the highest level of your board or nonprofit must follow. Members of the organization or board can vote to amend bylaws.

Amending Corporate Bylaws

Member's rights should always be protected when amending a bylaw by letting each member weigh-in. Amendments can be discussed at regular meetings or at meetings specifically held to discuss them.

Members must receive a notification about the special meetings that cover:

• The exact wording of the proposed amendment.
• The bylaw before the amendment.
• How the bylaw reads after the amendment is adopted.
• The name of the person proposing the change.
• Why that person proposed it.
• Optionally, whether a committee or board agrees or disagrees with the change.

When it's time to vote, there must be a motion to Amend Something Previously Adopted. The amendment should follow all the rules except for the following:

• The bylaw determines if there needs to be a previous notice and a certain number of votes.
• First- and second-degree amendments must stay within the notice of the proposed amendment. For instance, if the notice says the amendment will raise dues to $10, then the alternatives can't go over that number.
• If the amendment passes, there can't be a second vote on it, but if it fails, a second vote is allowed.
• Multiples of the same question cannot be asked and considered.

Articles, sections, and subsections of an amendment can be changed. Specific changes you can motion for include:

• Cutting out words, sentences, or paragraphs.
• Adding words, sentences, or paragraphs.
• Changing words, sentences, or paragraphs to something else.

A revision is a large-scale change to a bylaw. It can completely replace a set of bylaws with a new set. The revision can be amended before it's adopted.

A resolution describing the changes made if an amendment is passed should be kept with the company's corporate files. Update the official records so that the whole set of bylaws is kept together.

It's almost always better to count the votes out, even if it's close to unanimous.

Legal Considerations and Risks

Before proceeding with amending corporate bylaws, ensure that changes do not conflict with federal or state regulations or your Articles of Incorporation. Any amendment that impacts governance structure, board composition, or voting rights could potentially invite legal challenges if not executed properly. Consult your state’s nonprofit corporation act to confirm compliance requirements.

It’s also important to assess the risk of unintended consequences. For instance, adding overly restrictive language or omitting conflict resolution procedures can create issues down the line. Keep a record of previous versions of bylaws to track the evolution of your governance framework.

Amending Nonprofit Bylaws

Nonprofit corporations should frequently address their bylaws and amend them as the nonprofit evolves, or else they can be liable to lawsuits for not following their own bylaws.

Before nonprofits can amend a bylaw, they must make sure the changes follow their state law.

There are a few other things to consider when amending a bylaw, like the nonprofit's Articles of Incorporation.

You should never copy the bylaws of another organization, because of the following:

• That organization's bylaws might not comply with your state's laws.
• They might not include your organization's default rules.
• Their bylaws might not fit your organization's needs.

It's a good idea to have a lawyer with nonprofit experience review the drafts of new amendments so they can catch any inconsistencies or problems.

The procedure for changing bylaws is covered by the bylaws themselves, things like:

• How many votes you need to pass an amendment.
• What the notice for board meetings must say.
• The differences between voting directors and voting members.

Make sure everyone sees the new set of bylaws after the amendment has passed.

Nonprofits must tell the IRS when they've made “structural or operational” changes, like creating a new program. The list of changes can be sent to the IRS Exempt Organizations Determinations Office or filed as Form 990 or Form 990-EZ.

When amending nonprofit bylaws, look to change noncontroversial things first, like updating your address or email.

Overly specific bylaws can trap an organization, create paradoxes, and require frequent changes.

Steps to Amend Nonprofit Bylaws

Here is a typical process for how to change bylaws for a nonprofit:

1. Review Current Bylaws
   Understand what procedures your existing bylaws specify for amendments, including notice periods, quorum, and voting thresholds.
2. Draft Proposed Amendments
   Clearly define what language is being added, removed, or revised. Use clear, unambiguous language to avoid misinterpretation.
3. Seek Legal Review
   Engage a nonprofit attorney to ensure compliance with state laws and IRS expectations, especially for changes affecting tax-exempt status.
4. Provide Proper Notice
   Send advance notice to board members and/or voting members per the bylaws' requirement. Include full details of the proposed amendment.
5. Hold a Formal Vote
   Conduct the vote during a properly noticed board or member meeting, ensuring quorum and majority/minimum approval requirements are met.
6. Record the Amendment
   Document the changes in meeting minutes and update the bylaws document. Retain a copy of both the amended and prior versions.
7. File with the IRS or State, if Required
   Notify the IRS via Form 990 if the amendment affects structure or operations. Some states also require filing amended bylaws.

Best Practices for Drafting Bylaws

When drafting or revising nonprofit bylaws, consider these best practices:

• Keep It Flexible: Avoid locking your nonprofit into rigid operational details. Instead, leave space for board-adopted policies to manage day-to-day decisions.
• Use Clear Language: Bylaws should be written in plain, formal language that all board members can understand.
• Avoid Over-Specification: For example, don’t define precise meeting days or staff roles that may frequently change.
• Include Amendment Procedures: Clearly outline how the bylaws can be amended in the future, including voting thresholds and notice periods.
• Define Key Roles and Responsibilities: Clarify roles for officers, directors, and members to prevent confusion and power struggles.

Strategic Timing and Purpose of Amendments

Understanding when and why to amend nonprofit bylaws is crucial. Common triggers include:

• Changes in state or federal law
• Organizational restructuring
• Expansion or reduction of programs or services
• Shifts in membership structure or board responsibilities

Consider whether the amendment is tactical (minor clarifications or updates) or strategic (major shifts in governance). Schedule bylaw reviews regularly—ideally every two to three years—to avoid outdated governance language that could cause legal or operational issues.

Discussing and Voting on Amendments

Outsiders, like professional consultants, are good at suggesting changes without seeming personally motivated so that it's easier for a board to discuss them.

A lot of bylaws allow members to vote over email or phone. Voting by proxy, or having someone else come in and vote for you, should never be an option. Board members should be present themselves in case the proposal changes and they change their minds.

Bylaws that require a quorum, or a certain number of people attending the vote, are good because they make sure that a small minority doesn't make all the decisions. Attendance issues should otherwise be dealt with outside the bylaws, so the quorum isn't constantly changing.

In emergencies, an executive committee might be useful for making decisions without the presence of the entire board.

When to Consider a Full Bylaw Revision

Instead of piecemeal amendments, a complete overhaul of bylaws may be warranted when:

• The current bylaws are more than five years old and no longer reflect the organization’s mission or operations.
• Numerous amendments have made the document disjointed or confusing.
• State or IRS regulatory changes have rendered sections of the bylaws noncompliant.
• The board is transitioning governance models (e.g., moving from a working board to a policy board).

A bylaw revision involves drafting a new, comprehensive document that replaces the old bylaws in full. This process typically requires the same or a higher voting threshold than a single amendment.

Common Challenges When Amending Bylaws

Amending bylaws for a nonprofit can encounter several hurdles:

• Lack of Engagement: Low attendance or board participation can prevent quorum, delaying necessary changes.
• Disagreement Among Board Members: Conflicting opinions on proposed amendments may stall progress. Engaging a neutral facilitator or consultant can help.
• Outdated Bylaws: In some cases, the existing bylaws are so outdated that following amendment procedures becomes impractical. In such cases, a full bylaw revision might be required.
• Failure to Notify Members Properly: Inadequate notice can invalidate an amendment vote, so always follow the bylaws' notice requirements exactly.

Frequently Asked Questions

1. What is the process for how to change bylaws for a nonprofit?
   The process includes reviewing current bylaws, drafting changes, giving notice, holding a formal vote, documenting the changes, and notifying the IRS if necessary.
2. Can nonprofit bylaws be changed without a lawyer?
   While technically possible, involving an attorney is highly recommended to ensure compliance with legal requirements and avoid unintended consequences.
3. How often should a nonprofit review its bylaws?
   Nonprofits should review their bylaws every 2–3 years or when significant organizational or legal changes occur.
4. What happens if a nonprofit doesn’t follow its bylaws?
   Failure to follow bylaws can lead to legal disputes, loss of tax-exempt status, or board member liability. It can also damage organizational credibility.
5. Do bylaw changes need to be reported to the IRS?
   Yes, if the changes affect the nonprofit’s structure or operations. These should be reported via Form 990 or in a letter to the IRS Exempt Organizations Office.

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