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Must we amend bylaws to pursue new program?

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Must we amend bylaws to pursue new program?

Our 501(c)(3) organization wants to expand into other areas to help people, but our bylaws are written very narrowly in what we can do and also leave room for different interpretations. The board has already approved going ahead to help other people outside of our bylaws purpose. Do we need to make the necessary changes to our bylaws before pursuing our new endeavor?

This is exactly the reason I object to including specific purposes in the articles of incorporation or bylaws of a nonprofit.  Organizations’ purposes change over time.  Since bylaws function as a contract among those bound by them, a disgruntled member or director could sue to prevent moving in a new direction.  In Pennsylvania, the U.S. Attorney included in a criminal indictment of a prominent state senator a charge that a nonprofit organized to help the citizens of Philadelphia had operated outside its charter powers in making a grant to a dog memorial in a suburban county.  (See Ready Reference Page: “Indictment Spells Out Claims of Benefit, Obstruction of Justice by State Senator”)  Therefore it makes great sense to amend your bylaws as quickly as possible to expand the permissible activity.  In my view, a single dissident director or member should not be in a position to go to court to stop a new program advanced by the majority.  But specific bylaws that are not regularly amended create that opportunity.

You can get language of the type we recommend in our Ready Reference Pages on Articles of Incorporation and Bylaws.  We recommend language that should never have to be amended, no matter what activities the organization wants to undertake.

Thursday, August 8, 2013


A civic club established a seperate foundation in 1968 and obtained 501 c 3 status based on Articles Of Incorporation which indicated all funds raised would be given to other 501 c 3 organizations. Some 20 or 30 years ago this Public Charities started to give money to out of county projects (presumned very worthwhile), for other domestic USA (again worthwhile) projects, and college partial scholarships to or for High School seniors, etc.
After, I brought up Articles restrictions, scholarship awards are now sent (started last year) directly to colleges (finaniclial aid office) for credit to enrolled student account. Question:, besides amending articles with State of Incorporation, , what sort of IRS notification can (should) be made re: expanded (last 20-30+ years) charitable, educational, etc . purpose. Note: prior CPA (990 IRS form preparer) apparentely never read foundation's establishment documents. Original application form 1023 not locatable.
Any assistance, direction, would be most appricated.

If you have been listing your grants on your Form 990 tax information return over the last 20 years, you probably don't have to tell the IRS anything about the expansion of grant making.  You have to tell them about a new activity when initiated, but this doesn't sound like a new activity.  I assume that you are a public charity, because if you are a private foundation your scholarship grant procedure should have been approved in advance by the IRS.  As a public charity that is not required.   

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