Contents of this multi-part series on writing bylaws for a non profit organization.

1. The Mission Statement

2. Article 1 (NAME)

3. Article 2 (OBJECTIVES AND PURPOSES)

4. Article 3 (FAIRNESS)

5. Article 4 (MEMBERSHIP, VOTING ELIGIBILITY, RUNNING FOR OFFICE)

6. Article 5 (BOARD OF DIRECTORS)

7. Article 6 (FUNCTIONS AND DUTIES OF MEMBERS OF THE BOARD)

8. Article 7 (EXECUTIVE DIRECTOR AND STAFF) THIS PAGE

9. Article 8 (FINACES)  THIS PAGE

10. Article 9 (COMMITTEES)

11. Article 10 (AMENDMENTS)

In the previous section, we discussed Articles 5 and 6 which dealt with the formation, role and responsibilities of the Board of Directors.  In this section we will cover Articles 7 and 8 which deal with the Role of the Executive Director and how the organizations Finances will be handled.

If you are forming a nonprofit organization with the idea of creating a paying job for yourself or others, then Article 7 of the bylaws is where you will want to focus that wording. Article 7 in this example covers the position of the Executive Director (ED) and gives the ED the authority to collect an income which is comparable to other incomes of like organizations. In the beginning of a nonprofit, one of the founding members will usually be granted this position, or if you are the sole founding member you grant yourself this position.

The following is how I drafted Article 7 in the bylaws for The League of Fools.

ARTICLE 7: (EXECUTIVE DIRECTOR AND STAFF)

Section 1: (Executive Director)

This position will be assumed by the Founder and maintained until:

A) He is ready to step down.

B) If after 4 years in the position, and every 4 years thereafter, The Board of Directors reviews the Executive Directors position and finds by two-thirds vote that the Executive Director is no longer a proper match for The League of Fools, the Board of Directors may offer a probationary period or other methods of remediation including termination.

The role of the Executive Director is to design, develop and implement strategic plans for The League of Fools in a cost-effective and time-efficient manner. The Executive Director is also responsible for the day-to-day operation of The League of Fools, including managing committees and staff and developing business plans in collaboration with the board for the future of the organization. In essence, the board grants the Executive Director the authority to run the organization. The executive director is accountable to the president of the board and reports to the board quarterly. The board may offer suggestions and ideas about how to improve the organization, but the Executive Director decides whether or not, and how, to implement these ideas.

The Executive Director is a leadership role for the organization and often fulfills a motivational role in addition to office-based work. The Executive Director motivates and mentors members, volunteers, and staff, and may chair meetings. The executive director leads the organization and develops its organizational culture.

As the title suggests, the Executive Director needs to be informed of everything that goes on in the organization. This includes staff, membership, budget, company assets, and all other company resources, to help make the best use of them and raise the organization's profitability and profile

The Office to the Executive Director will be funded with 25% of The League of Fools annual budget. This budget will cover the day to day operations and administration costs of the organization to include Executive Director and other staff remuneration.

The Board can designate other duties as necessary.

Article 8 is where we discuss the nonprofits Finances. This is where it is especially good to have an accountant on the board to help determine the best financial practices to follow. Everything about the organizations finances should be clearly written in the bylaws and at the very least should include how the organization is going to earn money, what it will do with the money earned, who can handle the money and who cannot.

The following is how I drafted Article 8 in the bylaws for The League of Fools.

ARTICLE 8: (FINANCES)

Section 1: (Policy)

The League of Fools state that their basic financial policy shall be to acquire funds and property and erect buildings suitable for the following purposes in keeping with the objectives of the organization:

A) Presentation of amateur theatrical productions, and provision for workshop, clubhouse activities, and meeting facilities.

B) The conduct and support of worthy activities, such as instruction in the theatrical arts and provision of scholarships for deserving students.

Section 2: (Funds)

The organization shall divide its properties and assets into the following funds.

A) Working Funds. These funds represent the allocation of assets in a amount necessary for the performance of the routine administrative and operational tasks of the organization including, but not necessarily limited to, the budgeting of theatrical productions, the administrative expenses of the Board of Directors and the Executive Director, advertising, and correspondence. The Working Funds are under the custody of the Treasurer and are disbursed in accordance with direction of the Executive Director.

B) Permanent Funds. These funds represent the balance of the organization's assets after the allocation of Working Funds and are available for growth investments and the acquisition of real property designed to enable the organization to accomplish its objectives as defined in Article 2 hereof. The Executive Director shall administer the Permanent Funds on behalf of the organization.

Section 3: (Gifts, Gratuities, and Bequests)

These funds shall be handled in the following manner:

A) The solicitation mechanism for acquiring these funds shall be designated by the Executive Board.

B) Donations for gifts, gratuities, and bequests shall be separated into two categories.

1) Those for operating expenses shall be administered by the Executive Board;

2) Those to the building fund shall be administered by the Board of Trustees. Unless otherwise designated by the donor, the funds will be put into the building fund.

Section 4: (Banking Practices)

All monetary assets of the (LOFCP) shall be maintained in a banking institution designated by the Executive Committee. Withdrawals may be made only to meet the financial obligations of the (LOFCP). All checks, drafts, or orders for payment of money, notes, or other evidences of indebtedness issued in the name of The League of Fools shall be signed by the Executive Directors AND the Treasurer.

Section 5: (Interest in Assets)

No member of the organization shall have any right, title, or interest in any property of the (LOFCP). No person whose membership in the (LOFCP) is terminated, whether by death, resignation, or any other means, shall have any right, title, or interest in any asset or property of the (LOFCP).