(This blog was updated in September 2023.)

Most of the time, board members of nonprofit corporations pay little attention to the code of regulations and bylaws that govern their organizations. 

But when there’s a legal challenge to the organization, when there’s deep conflict on the board, or when an aggressive or unscrupulous board member tries to take over, everyone’s attention is drawn to the organization’s governing documents. And too often, board members learn that the documents were drawn up years ago and haven’t been looked at since. 

Here is a recap of the most important provisions that should be included within an organization’s governing documents: 

Indemnification. Nonprofit organizations need a statement that limits the personal liability of board members. Also, nonprofit organizations should procure directors’ and officers’ liability insurance in sufficient amounts to protect their board members and officers’ personal liability and to cover the cost of legal defense. 

How many leaders? Bylaws should specify the minimum and maximum number of directors or trustees. 

Terms and term limits.  Imposing term limits could serve to recruit new board members with fresh ideas. For example, a term could be two years, with a limit of three consecutive terms (for a total of six years); after a year off, a board member may be permitted to return. Similarly, terms can be staggered so that, for instance, one-third of the board is up for reelection each year. 

The number required for a quorum. A quorum is the minimum number of board members who must be present for official decisions to be made.  In Ohio that number constitutes a majority of the members, directors or trustees unless otherwise provided in the bylaws. 

Officer appointments. Bylaws should cover the titles of officers, how they are appointed and their terms of office. Example: Appointed by majority vote at a regular meeting of the board for a term of one year with a maximum of two consecutive terms. 

Procedure for removing a board member or officer. Example: By majority vote at a regular or special meeting of the board where the matter was included on the written agenda and circulated at least two weeks prior to the meeting. 

Conflict of interest policy. Bylaws generally state that there exists a conflict of interest policy governing officers, directors and employees of the nonprofit organization and incorporate its provisions by reference rather than reciting the entire policy. 

Conference calls and electronic meetings. Bylaws should be clear as to how meetings should be conducted and how votes may be cast. Generally meetings are held in person but meetings may be held  by conference call if all members can simultaneously interact with one another. As internet usage has grown, some boards are adding provisions to the bylaws that describe how to hold a board meeting on the internet, or whether and how decisions can be made by e-mail and then ratified at the next regular meeting. 

 Other key provisions covered in the bylaws include the following: 

• Number of board meetings per year. 
• How special or emergency board meeting may be called. 
• How a committee of the board may be created or dissolved. 
• What standing or special committees of the board exist, how members are appointed, and their powers, if any. 

Each board member should be given a copy of the articles of incorporation, code of regulations, bylaws, the IRS tax exempt determination letters and the annual IRS Form 990 (a copy of which must be filed with the Ohio Attorney General). Some organizations also post their governing documents on password-protected sections of their websites. 

Review Bylaws Periodically 

Every few years, it’s also important to review a nonprofit corporation’s organizing documents to confirm that the organization remains in “good standing” with the State of Ohio, the Ohio Attorney General, the IRS and other regulatory agencies that may govern its activities – and to make sure there are provisions needed to address problems.  

Revisions to the code of regulations or bylaws should be recorded in the board minutes and, in some cases, reviewed by a lawyer experienced in nonprofit law. 

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Shawna L. L’Italien, a lawyer in the Salem office of Harrington, Hoppe & Mitchell, focuses on business organization, commercial and real estate transactions, succession planning, elder law and estate planning. She can be reached at slitalien@hhmlaw.com or at (330) 337-6586.