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*** Please clarify terminology*** In process of writing Bylaws.

20 years 6 months ago #58544 by JHB
Critter makes a good point. You do want to read thru the IRS instructions to assure you have the proper pieces. The dissolution clause is key. We had the same problem. Our constitution said if we disbanded we would transfer assets to the school but it failed to say what would happen if the school (and thus us) ceased to exist. (You have to add that in that case you would transfer assets to another non-profit.)

Anyway, since we weren't incorporated, it didn't hold us up too long. Re-filing your incorporation would be a hassel.
20 years 6 months ago #58543 by Critter
As usual, JHB gives great insight...let me add just one more thing. In our state (Michigan), the state's incorporation form includes a "fill in the blank" Articles of Incorporation. It basically consists of our mission statement an address, and the name of our officers and "agent" (principal). Very easy to do.

BUT--and this is a big BUT -- the IRS requires very specific language in the Articles that the state did not ask for.

The IRS delayed our 501c3 application until we had ammended our state AOI and sent proof (hassle). The required language has to do with mission and what happens if you close up shop. I'm pretty sure the exact paragraphs are available to cut/paste from the Useful Resources section of this website.
20 years 6 months ago #58542 by JHB
Traditionally, an organization would have two official documents. The "organizing instrument" is usually a Constitution, Charter, Articles of Organization, or Articles of Incorporation. This defines what the organization is and why it exists. It usually has the very bare bones such as the name, purpose, basic organizational structure, fiscal year, policies, and how amendments can be adopted.

The bylaws are a companion document that state the rules by which the organization operates. They are much more detailed.

When I first started researching this several years ago, the set was what I understood was the "right" way to go about it. Since then, I've discovered many PTO's have a composite document, generally just called the bylaws. When we were getting our 501(c)(3), the IRS quite firmly seemed to expect us to have an organizing document besides the bylaws (for us, our constitution), so I'm not sure how others with a combined document have gotten around that. Perhaps the IRS has gotten more lenient.

You might think of the organizing instrument as a document positioned more for outsiders - to legally define who and what you are. An outsider, like state officials or the IRS wouldn't necessarily care about the day-to-day rules (bylaws). Those are intended more for internal use.

In choosing an "organizing instrument", the key question is whether you plan to incorporate (which is a good idea). If so, you want to find out what the Articles of Incorporation need to contain in your state. For groups like PTO's, it's usually pretty simple. In Texas they provide a 1 page template that can be used if you don't have your own.

Once this is filed, people tend to forget about it because it's the bylaws that always get referenced. But this would equate to the organization's birth certificate, so it's not exactly unimportant - just not something you need every day.

[ 05-12-2004, 11:56 PM: Message edited by: JHB ]
20 years 6 months ago #58541 by SueMac
Hi all:
I'm in the process of rewriting our school By-Laws because we're incorporating. I'm getting a bit confused by some of the lingo and the lawyer isn't readily available. Would someone be kind enough to enlighten me as to how the following terms relate to one another:
By-Laws
Articles of Organization
Constitution
Thanks so much! You guys are great!
P.S. Edited for spelling error!

[ 05-12-2004, 10:52 PM: Message edited by: SueMac ]
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