Many people find themselves lost in the variety of legal documents involved in a church or non-profit. There are three major sets of documents every organization needs to have to operate.
1. Articles of Incorporation: This is the filing with the state in which the organization has its main office which creates the legal entity that can, like a regular person
- Buy, sell and own property
- Receive income and make expenditures
- Sue and be sued
Among other things.
The articles state the organization’s legal name and its legal purpose. All further documents must operate within that purpose.
2. Bylaws or Constitution: Some organizations have both bylaws and constitution where the constitution typically has greater authority and less mutability than the bylaws, which are often more policy-oriented and more easily changed.
Nevertheless, many organizations just have one or the other. The purpose of this document is to determine the means by which the legal entity (legal person) can speak. Without bylaws, state statute typically prevails. Important issues that appear in bylaws include:
Membership: who are the members of the corporation? What rights, privileges and responsibilities do they have? What criteria must be met for membership? How are they removed?
Board of Directors: How many? How are they selected? How are they removed? What criteria must they meet to become Directors? How often do they meet? What is the scope of their duties, if not the entire scope of the corporation?
Officers: who are the specific officers in the organization? How are they selected? What are their basic duties? Is there a CEO / Executive Director / Senior Pastor / Senior staff person?
Meetings: how are they conducted? How does voting take place? What constitutes the passage of a resolution?
Amendments: How are the bylaws amended?
Dissolution: How is the corporation to be dissolved? Where do its residual assets go? (If tax-exempt, they must go to other 501(c)3 compliant organizations.)
3. Policies: Policies are the way that the organization is governed. For guidance on writing good policies, see http://www.carvergovernance.com/model.htm
Design Group International has experienced consultants available to help review and design these essential documents, and guide your organization through the process of developing them. Click the link below to continue the conversation with us!