Leadership Letter
May 2021
ASK COUNSELOR TARA
ASCE’s General Counsel Tara Hoke responds to legal questions posed by Sections and Branches here each month. Send Tara an email with your question.
Why is it important for a nonprofit such as ours to have bylaws?
At a corporate level, the answer to this question is simple: the adoption of bylaws is a necessary step in many important corporate filings, including state corporate registration and the application for exemption from federal income taxes. But even for groups without a formal legal status, such as ASCE's student and Institute chapters, younger member groups, and other subsidiary organizations, bylaws serve a variety of important functions. Among these functions are:
1. Bylaws provide consistency in the group's operations. Bylaws serve as a written record of important details such as membership qualifications, size and structure of the board and its committees or subsidiaries, and the process for selection of the group's leadership. A good set of bylaws provides a roadmap for new members and leaders to follow, and ensures that critical information about the group's governance is not lost when its founding leaders cease to be active.
2. Bylaws set limits on the powers of the governing leadership. While a group's board (or if no board, its chair or executive leader) is responsible for managing the group's affairs, it must do so subject to the requirements of the group's bylaws. A board cannot take any action that is prescribed by its bylaws--and since bylaws usually set a high threshold for amendments, the group's board cannot easily change its governing documents so as to authorize an action that conflicts with existing language. Such restrictions could involve the structure of the board itself--e.g., term limits for holding office--or they may involve prohibited activities--e.g., for charitable organizations, the governing documents should prohibit the group from political action.
3. Bylaws serve to protect the rights of the group's members and leaders alike. For nonprofits that are membership organizations, most of the membership's most important rights are spelled out in the bylaws--such as the right to vote, the right to have regular meetings, and the right to be consulted in certain important decisions (e.g., the decision to disband the organization, or to merge with another). Similarly, notice requirements and other procedural mandates ensure that individual leaders are not cheated out of their vote in board matters, or removed from office without appropriate cause and a fair hearing.
4. Bylaws help to prevent conflicts, or to resolve them when they occur. Many of a group's activities carry high stakes for members, volunteers, and others--e.g., election of the group's leaders, allocation of funding, naming of award winners or honorees. A well-crafted and clear description of procedures and requirements for making those decisions helps to avoid questions about the fairness of the group's processes, or offers a framework to address issues as they arise.
While this list is by no means exhaustive, it nevertheless demonstrates the value served by an organization's bylaws. It can also be seen how outdated or inaccurate bylaws might harm an organization, by creating the perception that the organization is not transparent about its governance processes, or even that its leadership is operating outside the bounds of its authority. If you believe your governing documents are not sufficient to serve the needs of your Section, chapter, or other group, contact ASCE for assistance..