According to the Internal Revenue Service, a 501(c )organization is any of 27 different kinds of nonprofit organizations described under Section 501(c) of the Internal Revenue Code. The most common of these nonprofits is the 501(c)(3), which the IRS describes as a nonprofit, generally tax-exempt organization devoted to activities that include, but are not limited to, religion, education, literacy and charity.
A 501(c)(3)'s tax exempt status is best preserved by the incorporation of appropriate bylaws in its charter or declaration of trust. The IRS provides downloadable examples of a 501(c)(3) compliant charter and charitable trust. The bylaws appearing in either of these can provide a basis for the bylaws in your nonprofit's organizing document.
501c3 Bylaw Guidelines
You can setup your nonprofit organization as a corporation, unincorporated association, community chest, fund or foundation. Charitable trusts also quality. You cannot set up a nonprofit as an individual, however.
In your organization's charter or declaration of trust -- include one or more bylaws specifically limiting the organization's activities to the exempt purposes described in Section 501(c)(3), except for "an insubstantial part of its activities." For example, you could have a nonprofit organization with the primary purpose of preserving arctic wildlife, for example, but could also have an online bookstore that sold books related to the arctic and to wildlife preservation with profits that partially paid some foundation expenses, so long as it would be clear to an IRS examiner that this was only an ancillary activity.
Your bylaws should specify that the organization's assets "must be permanently dedicated" to exempt purposes. For example, the bylaws can specify that upon dissolution of your nonprofit organization, the assets will be distributed to another nonprofit such as the National Wildlife Federation.
Other Essential Nonprofit Bylaws
Neither of the two IRS examples, however, includes other necessary provisions for nonprofit rules of organization. These should also include bylaws that establish who controls the nonprofit, its board of directors or its members.
You should also include bylaws describing the duties of directors, their terms of office and provisions for their removal. Bylaws should also describe how directors and officers are elected and/or appointed.
Inclusion of specific committees in your bylaws isn't essential so long as they describe how committees are created and abolished. Your bylaws should also describe who has the right to amend the bylaws -- the directors, members, a third-party organization or some combination of the three.
Nonprofits need to have particularly explicit bylaws about how the nonprofit responds when a conflict of interest is identified. Bylaws describing specific procedures for rectifying the conflict quickly and appropriately help avoid IRS penalties and charges of breaches of fiduciary duty that could lead to the IRS revocation of the nonprofit charter.
I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.