What We Learned About Your Bylaws

 

Our staff attorneys have spent more than a year reviewing hundreds of nonprofits' bylaws.Here is what they learned about the most common legal pitfalls!                                                                                                                         This is the first in a series of "The Five Most Common Bylaw Pitfalls for New York's Nonprofits" produced by NYCON's Legal Team. Stay tuned for Legal Pitfall #2 Next Week!   Welcome to the New Year! Can you believe it's 2016 already? Our legal team  spent much of 2015 reviewing and revising hundreds of our members bylaws for compliance with the new Nonprofit Revitalization law.   As you probably know by now, the law governing nonprofits recently changed pretty drastically. Some changes are for the better (yes, email voting can happen now!) but some make running a nonprofit a little more difficult.    For better or worse, most of the time they necessitate a change in the way we structure and govern our organizations, and that means revising our bylaws to bring ourselves into compliance.    Our attorneys have seen the same pitfalls time after time. So, NYCON is kicking off the new year with knowledge gleaned from the bylaw reviews our team has already done... And here is what they learned!     Legal Pitfall #1:  An Inadequate Conflict of Interest Policy   As many nonprofits are aware, the 2014 NYS Nonprofit Revitalization Act ("NPRA") requires far more formality than was previously required with respect to the disclosure, review, assessment and reporting of real and potential conflicts of interest.  Yet, it's still common to see nonprofit by-laws with a clause saying it will "maintain, regularly-updated conflict of interest procedures in order to fully comply with all applicable laws and regulations."   So, what's wrong with that? Well, for starters, such a limited conflicts of interest "policy" fails to comply with the law.  New NPRA obligations require all nonprofits to adopt and implement written conflicts of interest policies and procedures, which must address specific criteria.    Beyond statutory obligations, from a practical standpoint, a nonprofit with such a deficient policy simply doesn't have appropriate policies and procedures in place to properly address any real or potential conflicts of interest, let alone justify its response to any such situations, if ever questioned. A deficient policy needlessly undermines the mission, compromises operations and potentially exposes the nonprofit to liabilities. Need Additional Resources? Check out the Attorney General's Guidance entitled "Conflicts of Interest Policies Under the Nonprofit Revitalization Act of 2013." That resource will outline the minimum statutory requirements for New York nonprofits.   Members Only Webinar:   "The New Legal Bylaw Pitfalls Every New York Nonprofit Should Know"  RSVP Today.   Can We Help?  If you Still Have Questions and you are with a current NYCON member. you can submit your questions to our legal team here.   Need a Bylaw Review? If you'd like to find out more about our bylaw review services (including how to get a price) please click here.