Is it Real if it Isn't Written Down?

bylaws.jpg

Recently, I had the opportunity to support a newly-formed board of directors for an emerging nonprofit organization in Arizona. Although none of them have previous board experience, I was glad to see them doing some foundational work that will help them be stronger down the road.

One of the areas they are addressing head on involves corporate documents and important organizational policies. Not the sexy side of nonprofit work, but critical to an organization’s success. So, I thought I would share a quick(ish) “101” on essential corporate documents and policies.

Corporate Documents

Now, obviously, this is most applicable to those organizations that incorporate with the state. In the case of the group I mentioned above, that would be the State of Arizona. Note-this step is completely different and separate from filing for a 501c status with the IRS! In fact, if you intend to file for the 501c3 charitable entity status, in particular, then you will be required to take that step of filing with your state.

Corporate documents are actually minimal. In general, you will want to have and safely store copies of:

-Articles of Incorporation (which will typically include your bylaws)
-IRS Designation Letter
-Organizational Meeting Minutes This is specific to the first meeting of the board of directors (or original incorporators, i.e. the people who signed the Articles of Incorporation) held after incorporation.*

This meeting usually addresses things like:

  • setting an accounting period and tax year

  • membership nonprofits will want to approve the establishment of memberships and set membership dues

  • authorize and establish the board. Yes, this needs to actually formally happen!

  • appoint corporate officers

  • approve the bylaws

  • authorize the nonprofit to apply for tax-exempt status or, if already done, documenting that

  • approve other important actions necessary for the functioning of the corporation. Things like the opening of a corporate bank account.

    *In reality, records of meeting minutes must be kept of all board meetings

Policies

Policies are super important and unnecessarily intimidating for a lot of people. They are the practical side of how you will operate and the expectations that your organization will have for itself in carrying out the business of fulfilling its mission. This part of the work is also some of the easiest to procrastinate on, or push to the side. Don’t do it. Taking the time early on in your organization’s formation and lifecycle, will save SO much hassle and heartache later on!

Generally speaking, there are a few core policies that a board of directors will want to adopt (meaning formally approve) early on. BoardSource has some great resources for getting started on many of these. Also check out the National Council of Nonprofits.

Recommended policies include:

  • Conflict of Interest

  • Gift Acceptance Policy

  • Code of Ethics/Whistleblower Policy

  • Document Retention and Destruction Policy

  • Travel and Expense Reimbursement Policy While board members cannot personally benefit from their position on the board, they may be reimbursed for service-related expenses. This policy sets the parameters for that.

  • Signature Authority Policy-In addition to “who are the signers on the bank account” this policy addresses who has the authority to do things like enter into contracts for the organization.

  • Social Media Policy-This can seem less serious in some ways but, in today’s world, social media can make or break your organization’s reputation (which is EVERYTHING). A policy will define how your organization wants to be perceived on social media.

Again, I know some of this can seem intimidating and even overwhelming. But most of the policies that organizations need and should have, are one to three pages, at most. There are templates and examples out there in abundance, to get you started. As always, you can also drop me a note!

Debra Porta