Sometimes nonprofits come to us with a mixture of documents – some duplicative and not all of which are called for under state law. Nonprofit charters and constitutions are often combined with articles of incorporation and bylaws. In this post, we attempt to disentangle the purpose of some of these documents and when they are appropriate to use.
A corporation’s governing documents are fundamental to how the organization operates. In most states, a nonprofit corporation’s foundational documents generally include articles of incorporation and bylaws. Though, states differ in verbiage.
Articles of Incorporation vs. Charter
For example, some jurisdictions refer to articles of incorporation as the Certificate of Incorporation or Charter. For instance, Tennessee nonprofit law requires a nonprofit to file a charter instead of articles of incorporation. However, the substance is equivalent to articles of incorporation.
When forming a nonprofit corporation, state law and practice should govern the substance and style of the corporation’s foundational documents. For this reason, it is a bad idea to copy the governing documents of other organizations, which may or may not comply with state law and may or may not reflect the founders’ desires.
Constitution vs. Bylaws
While some terms are used interchangeably, nonprofits often confuse constitutions with bylaws. This confusion is understandable because there is often overlap in what is included in a constitution and bylaws. However, the two documents are distinct in both their content and purpose.
Most state nonprofit statutes do not call for a constitution of any kind. Nonetheless, some nonprofits have adopted constitutions. Constitutions can make sense as a policy statement of a nonprofit’s purpose and overarching principles. However, in our experience, most nonprofit constitutions are largely duplicative of the Bylaws.
In contrast, most state nonprofit codes mandate that nonprofit corporations adopt bylaws that, in conjunction with state law, set forth the internal rules and procedures that govern the nonprofit. Standard provisions in Bylaws include who is eligible to sit on the Board of Directors, how members of the Board are selected, how Board meetings are called and conducted, members’ rights, officers’ duties, and other administrative provisions.
Related read: The Consequences of Violating Articles and Bylaws
Conclusion
The articles/charter and bylaws are legally mandated documents. Whether the term articles of incorporation or charter is appropriate depends on state law. These formation documents are the foundation of a nonprofit’s corporate existence. A constitution, however, is not legally mandated and often overlaps with legally required documents. Accordingly, nonprofits should ensure they are using the proper terminology for their state and consider whether adopting a constitution adds anything meaningful to the mix other than confusion.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Kyler Mejia is an attorney with Caritas Law Group, P.C.‘s Arizona office. To schedule a consultation, call 602-456-0071 or email us through our contact form.