Handling Governing Documents: A Handy Primer


Governing documents are a vital part of any nonprofit's governance system – they are the official documents that a) establish the nonprofit legally and b) provide the rules and structures necessary to shape and manage the organization's affairs. Executive leaders, governance administrators and board leaders should be intimately familiar with the governing documents as they will inform most (if not all) of what their boards and committees do. Even so, those who are even peripherally involved in the board's affairs stand to benefit from understanding how governing document impact the entire organization. For those who are wondering, here is a brief primer.
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WHAT ARE THEY?

There is a hierarchy to governing documents that helps to make sense of what they are and which rules take precedence over others. When a provision in one document conflicts with another, it's necessary to determine which document will prevail. Generally speaking, governing documents go in the following order:
  • Articles of Incorporation – Articles establish the organization in the state or jurisdiction where it's founded (usually). Not all nonprofits are incorporated, and those that aren't are likely to have a similar founding document, such as a "charter" or "constitution". Articles aren't supposed to be detailed and their contents will vary depending on the state/jurisdiction in which they are filed. Amending Articles shouldn't be easy but sometimes it's necessary if, for example, an organization wishes to change its name.
  • Bylaws – These are the basic rules for how an organization is governed and managed. At a minimum this document should include: the nonprofit's name, mission and purpose, qualifications of members (if applicable), composition and responsibilities of the governing body, the duties of officers, a provision for committees, rules for meetings and voting, a parliamentary authority and a process for amending the bylaws and Articles. Nonprofits often include other provisions in their bylaws - such as indemnification clauses and non-discrimination policies - that contribute to the fundamental governance rules of the organization.
  • Board Resolutions – Sometimes governing bodies adopt resolutions that expand upon the bylaws. Parliamentarians might call these "standing rules," but regardless of what you call them, they are a useful and flexible way for a board to institute specific governance and/or management structures without having to write them into the bylaws, which cannot be suspended and are usually more difficult to amend.
  • Policies – When governing bodies adopt an official position or state a formal expectation of how business will be carried out in the organization, they are making policy. Sometimes policies are formally written and other times they exist in the form of a board action or resolution. Regardless of their form, they should be kept track of carefully and adhered to consistently.
  • Operating Procedures – By most definitions these are not technically a "governing document", but I'm listing them here to make a necessary distinction. Procedures are generally considered staff-driven documents intended to “operationalize” the board’s policies. Procedures can be super formal (i.e. Standard Operating Procedures or SOPs) or they might be informal and easily changed. It is highly unusual for a governing board to dictate procedures unless it is a working board, typical in volunteer-run nonprofits. Nonetheless, having documented procedures are important to ensuring efficient operations, but are normally the domain of staff. 

Above this hierarchy are state corporate statutes and any other law or regulation that a nonprofit may be subject to. It is neither possible, nor completely necessary to know all of those laws, but it can be very helpful to develop a working knowledge of the nonprofit corporate statutes in the state where your nonprofit is incorporated. This is because state corporate statutes tend to establish basic standards for governance, such as a minimum number of directors and committee members as well as parameters around taking action without a meeting. When your bylaws are silent on a particular matter, such as the definition of a quorum or whether it is permissible meet by conference call, the legal standard will likely be found in the corporate statute.

WHAT DO I DO WITH THEM?

By now you might be thinking that definitions are all well and good, but what are we supposed to do with our governing documents? The short answer is that they need to be followed and maintained with care and continuity.

Every nonprofit should be intentional about how their governing documents are kept, revised and archived so that they can be easily referenced throughout the life of the organization. How to go about doing this can be a challenging question for organizations of any size - whether they are large federated nonprofits with decentralized files or small volunteer-run nonprofits with no technical infrastructure. Regardless of the organization's unique challenges, conversations about how to manage the governing documents should include the following considerations:
  • How long does the organization's Document Retention Policy require governing documents to be kept? (Most will say "in perpetuity.")
  • Who should be accessing and referencing the documents on a regular basis? Should it only be staff and volunteer leaders, or also the public? 
  • How should we account for versioning and keeping old policies from being confused with their revisions? 
  • How do we capture document revisions in our meeting minutes? Should we consider cataloging board actions? 
Once you have answers to these questions, workable solutions for maintaining these documents should seem pretty obvious. Also, there are a number of practices out there that can be replicated. For example, many nonprofits have taken to posting most (if not all) of their governing documents on their websites. This serves the dual purpose of making current versions of the documents accessible to a diverse group of stakeholders as well as establishing a sense of transparency and public accountability. Not all nonprofits will prefer to do that, in which case, investing in an intranet site or some other form of online document repository can help to maintain continuity of records.

WHY SHOULD I CARE?

Keeping accurate records of governing documents and subsequent board actions is essential to quality governance. This is because Articles, bylaws, policies and board actions are all binding until they are legally repealed or revised. Understanding these governing documents is essential to ensuring compliance, and ensuring compliance protects an organization from legal exposure and helps to preserve the public trust.

From a parliamentary perspective, if a governing board takes an action that is in conflict with the law, Articles, bylaws or a motion/resolution that has not be previously repealed, it is considered a "continuing breech." This means that any member, at any meeting, can object to the motion long after it was adopted. An objection like that can wreak havoc on a nonprofit's operations and may even cause conflict among leaders.

So ultimately, keeping, understanding and following governing documents - such as articles, bylaws, resolutions, and policies - are foundational to maintaining a healthy nonprofit... even if they are sometimes boring and difficult to read. Consultants can help with that part.

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Rachel Miller-Bleich, MA, CAE is a nonprofit governance consultant and Principal & Owner of MillerBleich Consulting, LLC. Learn more at www.millerbleichconsulting.com.

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