Why are bylaws important? How often do they need to be revised? What should be in them and why?

1. BETTER
BYLAWS
Bill Taylor
UW Extension Area Community Development Educator

2. REFERENCES
• Better Bylaws by D. Benson
Tesdahl, published by BoardSource, 2010
• The Handbook of Nonprofit Governance
by BoardSource, 2010
• Free Management Library at
http://managementhelp.org/

3. REFERENCES (cont.)
• Wyoming state statutes at
http://legisweb.state.wy.us/LSOWEB/wyStatutes.a
spx
– Title 6, Chapter 5, Article 1 – Offenses by Public
Officials
– Title 9, Chapter 13, Article 1 – Public
Officials, Members and Employees Ethics
– Title 16, Chapter 3 – Administrative Procedure
– Title 16, Chapter 4, Article 4 – Wyoming Public
Meetings Act
– Title 17, Chapter 19 – Wyoming Nonprofit Corporation
Act
– Title 18, Chapter 7, Article 1 - Libraries

4. DISCLAIMER
• No training guides or lesson plans for
public boards
• All training materials written for nonprofit
boards and organizations
– Must be converted to apply to public boards
• Wyoming statutes do not require bylaws of
a public board, just rules of operation
– Bylaws are easiest & most concise place for
those general rules

5. DISCLAIMER (cont.)
• Remember:
– Bylaws are for internal operating rules for the
board
• No public hearing required
– Rule-making for public policy requires the
public hearing process

6. • Proper governance, best practices, call for
bylaws
• Bylaws are guide for how you are
organized and operate
– Without them, there is no standard by which
to hold the board, members, or officers
accountable

7. WYOMING LAW
• W.S. 16-3-101(b)(ix) – “ „Rule‟ means each
agency statement of general applicability that
implements, interprets and prescribes
law, policy or ordinances of cities and
towns, or describes the
organization, procedures, or practice
requirements of any agency.”

8. WYOMING LAW (cont.)
• W.S. 16-4-404(a) – “In the absence of a
statutory requirement, the governing body of an
agency shall provide by
ordinance, resolution, bylaws or rule for holding
regular meetings…”
• WY Nonprofit Corporation Act good guide for
those things applicable to public boards
• Each establishing statute may be slightly
different.
– County Library Board example – W.S. 18-7103(b); 18-7-105(a)

9. CONSEQUENTLY
• This presentation will be mix of nonprofit
and public board practices
– Some are interchangeable
– I will attempt to delineate where there are
differences

10. PURPOSE
• Reflect how to fulfill mission & carry out
business in orderly, legal manner
• Define duties, authority limits, principle
operating procedures

11. PRECIDENCE OF AUTHORITY
• Nonprofit
– Wyoming Nonprofit Corporation Act
– Articles of Incorporation
• Public
– Wyoming statute, county resolution or city
ordinance which established board
– Wyoming statutes, county resolutions or city
ordinances, or policies which dictate
authority, governance, relation w/ other
entities, etc.

12. PRECIDENCE OF AUTHORITY(cont.)
• Nonprofits & public
– Bylaws – always subordinate to
statutes, county resolutions or city
ordinance, articles of incorporation
– Organizational Resolutions (properly passed
motions) – subordinate to bylaws
– Organizational recommendations, guidelines
– often nonbinding
– Organizational procedures – processes to
implement policies

13. CREATION
• At the organizational start-up
• Need to be in place so the organization
knows how to conduct business
• Nonprofit file copy with IRS Form 990
• There is no state agency which reviews
content or accuracy
– Inconsistencies or improprieties usually
addressed when someone (member, public)
complains or files adverse action

14. • Content varies, depending on organization
• Revising requires specific, often timeconsuming process, so detailed & specific
policies often left to policy documents

15. CONTENTS (cont.)
Suggested for nonprofit
organization (P = Public in
parentheses):
• General
– Official name (P)
– Location of principal office
(P)
– Limitations required for tax
exemption
– Procedure for amending
bylaws (P)
– Procedure for dissolving
organization
– Disposition of assets on
dissolution
• Members (if a member
organization)
– Qualifications for
membership
– Admission procedures
– Dues obligations
– Classes of
membership, their rights &
privileges
– Notice required for
membership meetings (P)
– Quorum requirements
– Frequency of meetings and
meeting procedures
– Voting procedures (P)

16. CONTENTS (cont.)
• Board of Directors
– Size of board (P)
– Qualifications for
membership
– Terms of office & term
limits (P)
– Selection process (P)
– Process for filling
vacancies (P)
– Frequency of meetings
(P)
– Quorum and voting
requirements (P)
– Meeting procedures (P)
– Powers of the executive
committee
– Other standing
committees or statement
that allows their
formation (P)
– Compensation of board
members
– Circumstances under
which board members
may be removed (P)
– Conflict-of-interest
procedures (P)

17. CONTENTS (cont.)
• Officers
– Qualifications for holding
office (P)
– Duties of officers or
reference to job description
(P)
– Process for selecting or
appointing officers (P)
– Terms & term limits (P)
– Provision for chief
executive on the board (P)
– Circumstance under which
officers may be removed
(P)
• Fiscal Matters
– Audit committee & audits
(P)
– Fiscal year of the
corporation
– Indemnification and
insurance for officers &
directors

18. MISSION
• Broad statement of purpose in Articles of
Incorporation for nonprofit organization
(NP)
• Further refined and clarified mission in
bylaws

19. MEMBERSHIP
• NP w/o membership controlled and
administered by board of directors
– Makes bylaws and procedures simpler, more
efficient
– Places control in hands of a few
• The more types and levels of
membership, the more complicated bylaws
and procedures become
– Members accorded rights by state law

20. BOARD OF DIRECTORS
• NP board of directors/public board –
similar in many ways
• Size - best to provide range rather than
specific number
– Providing range does not require bylaw
amendment to adjust
• i.e. – County library board statute – 3 to 5

21. BOARD OF DIRECTORS (cont.)
• NP
– Can easily become too big to be efficient
• Establish advisory body, honorary council for those
prominent individuals who will not be able to be a
working member of board
– State whether or not compensated
• Compensation (excluding reimbursement of
expenses) is rare and legally risky
• Excessive compensation may trigger IRS
sanctions

22. BOARD OF DIRECTORS (cont.)
• Selection
– Nonprofit
• Normally elected by members, if member
organization
• WY law allows other methods of designation or
appointment if specified in bylaws
• May be elected by board in non-member
organization, or as specified in bylaws
– Public
• Selection process dictated by
statute, resolution, ordinance

23. BOARD OF DIRECTORS (cont.)
• Terms
– Term limits
• Advantages
–
–
–
–
Ensure variety of perspectives
Expand base of contacts
Prevent concentration of power
Easy way to eliminate undesirable members
• Disadvantages
– Loss of expertise & institutional memory
– Cost of more orientation & training

24. BOARD OF DIRECTORS (cont.)
• Terms (cont.)
– Term limits (cont.)
• Advantages & disadvantages balanced by allowing
return after break in service of 1-2 years or terms
– Length
• Commonly 1-5 years
– NP average – 3-year terms w/ 2 term limit
– Usually staggered, especially w/ larger board

25. QUORUM
• Minimum number present to conduct
business
• WY law – according to bylaws
– Cannot be lower than greater of 1/3 of board
members or 2 directors
– 10% of membership, unless stated differently
in bylaws of membership organization
• Should you allow board to act w/o majority
of board present?

26. QUORUM (cont.)
• May require higher number for certain
actions – i.e. amending bylaws, dismissing
a director, etc.
• Typically majority of board members – 1
over 50%

27. MAKING DECISIONS
• Determine methods of acceptable decision
making
– Typical to state all business must be
conducted by Robert’s Rules of Order
• Too restrictive – what about consensus, other
parliamentary law systems, etc.?
• Suggest – “…or other methods as agreed upon by the
(members)(directors)(board).”
– As long as recorded in minutes as decision of group, a
vote is not required unless stated for certain decisions in
the bylaws, statute, resolution, or ordinance

28. MAKING DECISIONS (cont.)
• Voting
– Majority – one over 50% of those voting
• Most common requirement
– Super-majority – higher level for certain
decisions
• Amending bylaws often requires 2/3 or ¾
– Unanimous – may be required for most critical
decisions

29. MAKING DECISIONS (cont.)
• Voting (cont.)
– Proxy – appointing someone else to vote for
you
• Allowed via signing proxy form in general
membership voting (WY Nonprofit Corporation Act)
• Not listed as proper form of director voting in
nonprofit act
• No provision for proxy voting on public boards

30. MEETINGS
• Membership organizations required to hold
annual meeting of membership
– Board may meet as outlined in bylaws
• Public boards – see establishing
statute, resolution, ordinance
– Some monthly, some quarterly, some as
needed
– Should publish time & place for regular
meeting schedule (see WY Open Meetings
Act)

31. MEETINGS (cont.)
• Public boards (cont.)
– 3 possible types of meetings (Open Meetings
Act)
• Regular, Special, Emergency
• Outline process for
calling, advertising, holding, recording of each in
bylaws
• Executive sessions
– Outline process for calling, holding, recording
– Public – only in accordance w/ Open
Meetings Act

32. MEETINGS (cont.)
• Virtual meetings
– Public Meetings Act
• “ „Meeting‟ means an assembly of at least a quorum…”
• “ „Assembly‟ means communicating in person, by
means of telephone or electronic communication, or in
any other manner such that all participating members
are able to communicate with each other
contemporaneously.”
– Must provide method for public to hear
– DOES NOT include email decisions or discussion

33. MEETINGS (cont.)
• Virtual meetings (cont.)
– Establish acceptable methods in bylaws
– Nonprofit Act does not mention any electronic
means for meetings

34. OFFICERS
• NP – President, Secretary, Treasurer
required unless otherwise stated in bylaws
– One person may serve multiple offices
• P – see establishing
statute, resolution, ordinance
– i.e. – County library board – chair is required

35. OFFICERS (cont.)
• Provide general outline of duties –
minimum expectations
– Can refer to detailed job description as
additional document
– Broad & flexible enough so bylaws do not
require amending with every adjustment of
duties

36. OFFICERS (cont.)
• NP – carefully consider whether officers:
– Chosen from among directors
– Directors by virtue of being officers
– Chosen from general public or
membership, but not part of board of directors
• Non-directors have no voting power on board
– Most common – elect officers from among
directors

37. COMMITTEES
• Appointed to focus on specific issues,
programs, activities, etc.
– Specify who may appoint (commonly board or
chair or both)
– Usually a subset of board, could include
others as needed for expertise
• WY NP law – committee of board can only consist
of board members
– Duties and authority should be defined

38. COMMITTEES (cont.)
• Keep bylaws broad enough so
amendment not needed for every
committee appointment or change
– May list names of standing committees, w/
authority to appoint ad hoc committees
– May provide general statement of authority to
appoint committees & refer to policy
documents for composition, duty
description, make-up, length of existence, etc.

39. COMMITTEES (cont.)
• Suggested clause: “The board shall have the right to
appoint and determine the composition and authority of
such standing committees and other committees and
task forces as it deems necessary from time to time.
Such committees and task forces may be described in
separate administrative regulations or in resolutions of
the board.” – Better Bylaws by D. Benson Tesdahl

40. COMMITTEES (cont.)
• Task force, work group – temporary, less
formal group assembled to deal w/ specific
task
• Some organizations write a “charter” for
each committee or task force, outlining
composition, organization, duties, authority
, duration, etc.

41. COMMITTEES (cont.)
• Common NP standing committees
– Executive
– Finance
– Audit
– Governance

42. • “A situation in which a director or officer has
divided loyalty.” – Better Bylaws by D. Benson
Tesdahl
• Duty to act in best interests of board or
organization
– Becomes of special concern when you, your
family, your business, or another organization
you represent will benefit from a board
decision
• Not illegal, sometimes unavoidable

43. (cont.)
• IRS: “…purpose of a conflict-of-interest
policy is to protect the nonprofit organization‟s
interest when it is contemplating entering into
a transaction or arrangement that might benefit
the private interest of one or more of its
officers or directors.” - Better Bylaws by D. Benson
Tesdahl

44. (cont.)
• Policy set forth in bylaws defining conflict
of interest and outlining process when it
occurs
– Or reference conflict of interest policy
document
• For easier & more efficient changes and
adjustments

45. (cont.)
• Minimum policy should:
– Define in general terms what a conflict is
– Require disclosure to full board of actual or
potential conflict
– Have board decide (w/ counsel, if needed) if
conflict exists
– Preclude director from participating in
discussion or voting on any conflicting
transaction

46. (cont.)
• Wyoming Law
– Director not to engage in any discussion
concerning the matter, influence any of the
parties, or vote on the matter (W.S. 6-5106(b))
– Best not to even be present during that
agenda item – leave the room

47. CODE OF ETHICS
• Expectations for ethical conduct of officers
& directors
• Bylaws may include a statement or
reference a separate document
– May include disciplinary code of action
– May include nondiscrimination statement
• Federal & state laws prohibit certain
unethical or discriminatory actions whether
included in bylaws or not

48. INDEMNIFICATION
• NP – required to indemnify (pay) officers
and directors for expenses incurred in
defending any proper action of board
• P – indemnification covered by
governmental entity
• Even though required, many organizations
place indemnification statement in bylaws
for clarity

49. INSURANCE
• NP – should strongly consider directors
and officers (D&O) insurance
– Covers liability unless convicted of criminal
action
• Review carefully – usually contains several
exemptions
– Also covered by WY NP volunteer immunity
statute (W.S. 1-1-125)
– Policy statement in bylaws

50. INSURANCE (cont.)
• P – covered by governmental liability
umbrella
– As long as performing assigned duties in
good faith

51. OTHER PROVISIONS
• NP – IRS Form 990
– Asks if following governance policies in
place?
•
•
•
•
•
Conflict-of-interest
Whistleblower
Document retention & destruction
Executive compensation
Joint venture

52. OTHER PROVISIONS (cont.)
• Vacancies on board
– NP – outline procedure for filling vacancies
occurring before end of term
– P – outlined in
statutes, resolutions, ordinances, procedures
• Removal of board members & officers
– NP – outline conditions necessary for removal &
procedure
– P – outlined in
statutes, resolutions, ordinances, procedures

53. OTHER PROVISIONS (cont.)
• W.S.9-2-410. – “All public records are the
property of the state. They shall be delivered by
outgoing officials and employees to their
successors and shall be
preserved, stored, transferred, destroyed or
disposed of, and otherwise managed, only in
accordance with W.S. 9-2-405 through 9-2-413.”
– Reference WY Dept of State Parks & Cultural
Resources, or County or City Clerk for details
• Provide bylaw statement of how records are
to be handled

54. AMENDMENTS
• Bylaws must change as operations
change
– Operations in violation of bylaws are illegal
– Cannot ignore bylaws because they are
inconvenient, incomplete, outdated
– Actions of boards & organizations have been
voided by courts because they did not follow
their own bylaws

55. AMENDMENTS (cont.)
• Review regularly
– Recommended every other year
– Whenever governance problems or changes
arise
– Committee, legal counsel, committee-of-thewhole

56. AMENDMENTS (cont.)
• Include clause in bylaws detailing exactly
how they may be changed
– Whether amendments can be made by board or
members (NP)
– How changes are developed & reviewed
– Is advance notice required before vote for
approval? How long?
– Whether changes can be approved at meeting or
with mail ballot (NP)
• All business must be at public meeting if public board
– Vote required for approval
• Majority? Supermajority?

57. AMENDMENTS (cont.)
• Each revision dated upon approval of
organization
– Date of amendment recorded in minutes
• NP – file amended copy w/ IRS Form 990