Neighbors Building Neighborhoods. Invited Lecture:

Non-profit Organizational Structure and Bylaws, andHow do you talk about what it is you do?

First – what do we generally mean when we use the term, non-profit?

We generally mean, a 501(c)(3) organization, that being:1. A business formed under the appropriate state laws and

defined as a non-profit2. Which has applied to the Internal Revenue Service under

Section 501 of the Internal Revenue Code, for exemption from federal corporate income tax on their net earnings, and been granted that exemption in a Letter of Determination.

3. You might also be granted “tax-deductible” status by the IRS, which means you can accept donations that are tax-deductible for the individuals or organizations making those donations.

3. Which serves a charitable, religious, scientific, or educational purpose, and for which

4. No part of the income generated “inures to the benefit” of any particular person or group of persons.

What are the key roles in a non-profit?1. Clients

Ultimately, most non-profits are dedicated to serving a particularly defined population. In the case of the NBNs, the “clients” are the “residents” of each Sector.

2. Board of DirectorsThe Articles of Incorporation give power to the Board and make the Board directly accountable for the direction/governance and policies of the organization.

The Board creates the organization’s bylaws, which are essentially it’s operating manual – the bylaws, which we’ll talk more about later, describe how the organization does the work it does.

Members of a non-profit Board of Directors cannot receive monetary compensation for serving on the Board.

In theory, the Board should represent both the community of stakeholders for the organization, and also should represent the clients of the organization.

3. Board ChairThe individual who is going to coordinate:

The work of the BoardThe work of the Executive DirectorThe work of all standing committees of the Board

4. CommitteesStandard committees in many non-profit Boards include:a. Development/Fundraisingb. Budget/Financec. Nominating Committeed. Program Committee

5. Executive DirectorBoard selectsResponsible to the Board/carries out the work of the BoardAccountable for the work of all staff

6. StaffExecutive Director selectsReport to the Executive Director – NOT to the Board

7. VolunteersWork under the direction of the Executive DirectorAssist staffAre unpaid

8. MembersA vague term that must be clarified in your bylawsSometimes, members are just paid subscribers and have no voice or say in the organization.In other cases, members have the right to vote on organizational issues, like who goes on the Board of Directors.If you are a “membership” organization, the bylaw should clearly define how:1. one becomes a member, 2. how one’s membership is maintained or discontinued, and 3. what rights and obligations members have.

The Three Major Aspects of Non-profit Structure (i.e., how it works)

1. Governance

The Board of Directors is responsible for governance – which is the overall strategic direction the organization takes.

2. ProgramsThis is the meat of what the organization does. Programs are the real-life implementation of an organization’s mission. They are the services that are delivered – from start to finish. They encompass what’s required to deliver services, the services as delivered, AND the outcomes of those services.

3. Central AdministrationStaff and facilities that are common across all the organization’s programs, like Human Resources, Finance, etc. Non-profits strive to keep their Central Administration costs low in proportion to their program costs – and many funding organizations will only fund program costs.

More on BylawsFirst – bylaws are not set in stone – as an organization grows and changes, it should accommodate those changes in its bylaws – so its bylaws must contain clear instructions on how they are amended or changed.Second – once established, organizations should not violate their bylaws.

The general structure for non-profit, membership organizations looks something like this:

Article 1 – Name and Purpose: Establishes the name of the organization, its operating location, and its purpose or mission. A mission statement should not be too specific – it’s a mission --- which is something like a goal, or dream. It doesn’t say how you will accomplish what you want to accomplish – that is a vision statement. A mission focuses on the “big picture.” It’s your organization’s reason or rationale for existing, and it’s the core value for your organization’s governance.

Article II – MembershipWho is eligible?What is required?What rights do members have?How is membership terminated?Are there non-voting members?

Article III – Meetings of MembersMembership meetings must be held on a regular scheduleThere is generally an Annual MeetingThere can be special meetings under defined circumstancesHow are members notified about meetings?What is a Quorum? How many members must be there/what percentage of the full membership, in order for work to proceed?How is voting done?

Article IV – Board of DirectorsBoard roles, sizeLength of serviceRegular Board meetings and attendance policyNotification of meetingsHow Board members are electedWhat is a Quorum?Who are the Officers and what are their duties?

Chair, Vice Chair, Secretary, TreasurerHow are vacancies on the Board filled?How are resignations, terminations, and absences handled?How are special meetings convened?

Article V – CommitteesHow are committees formed? Are there a set of committees that must be in place?

Executive Committee (4 Board officers)Finance Committee

Article VI – Director and StaffDefines the relationship between the Board, the Executive Director, and the Staff.Article VII – AmendmentsHow are the bylaws changed? What’s the process?Once changed, how are members notified?

How do you describe your organization ?

What is your mission? Who do you exist for? Who are you clients/members?How do you accomplish your mission? What do you do?Why do you do this? What is your rationale for existing?Where is this work done?

Also:

How do you demonstrate your effectiveness?