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Should we include our conflicts and whistleblower policies in our bylaws?

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Should we include our conflicts and whistleblower policies in our bylaws?

Should we include our conflicts and whistleblower policies in our bylaws?

You could but we don’t recommend it.  Our form of bylaws provides that the Board will adopt policies on conflict of interest, whistleblower protection and document destruction and retention.  (See Ready Reference Page:  “Sole Member Bylaws Can Protect Founder of Nonprofit”) 

We include the requirement to adopt not only because we believe that these (along with many other) policies are important, but because they are the ones that the IRS specifically asks whether you have on the Form 990 tax information return. We don't include the policies themselves because they tend to be relatively long and not directly related to governance, and also because they are more likely to change over time.  Since the board can adopt the policies by resolution, it can modify them at any time by resolution, without having to follow the more elaborate procedures for amendment of the bylaws.  We think it is more efficient to do them separately.  If the board wants to extend the coverage of the whistleblower policy to clients, families, volunteers, and even vendors, for example, we don't think that kind of change should require an amendment to the bylaws.

We also recognize that articles of incorporation and bylaws are often printed in a basic governance handbook for members, directors or other constituents.  You don't want to have to reprint that booklet because you add the vice president of the board as another person with whom a whistleblower can file a complaint.

Tuesday, December 10, 2013

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