When you create a nonprofit theatre, one of your most important steps will be to draft the organization's bylaws, which establish the internal rules for operating the organization. The board of directors, tasked with setting policies and overseeing the nonprofit, will follow the rules and procedures outlined in the bylaws. Some states require nonprofits to have bylaws, but it's a good idea to have them even where not required. Bylaws can help those in charge to run your theatre, resolve conflicts among staff and volunteers, and demonstrate to the public and the IRS that your organization is responsibly managing donations to further the nonprofit's charitable mission.
We have provided sample bylaws in several different styles, depending on the size of the company, and how detailed you feel your bylaws should be. You may also find it useful to blend components from more than one set into your own.
Your bylaws will provide basic information about your theatre company and the rules that will govern your board of directors. Although the law does not require nonprofits to include any specific provisions, experts say that you should address the following to give your board adequate guidance to run the organization:
Review your state's nonprofit laws to make sure your bylaws are in compliance. For instance, many states require nonprofits to have a minimum of three directors, as well as a president, secretary, and treasurer. When your bylaws do not address an issue that is addressed by state law, your nonprofit must follow the laws of your state. For example, your state might provide that directors serve for terms of one year unless the bylaws provide otherwise. In such cases, if your bylaws do not specify term ength, by default your board members will serve one-year terms. However, you can use the bylaws to set a different term.
Many nonprofits pursue federal 501(c)(3) tax-exempt status, which allows organizations to avoid certain corporate, sales, and property taxes. Tax-exempt status is granted by the IRS, which does not directly require nonprofits to include specific provisions in their bylaws. However, when you apply for tax exemption, the IRS will look at your bylaws to determine if your nonprofit meets the legal requirements for exemption. By addressing the following provisions in your bylaws, you will increase your organization's likelihood of gaining 501(c)(3) status:
The IRS Has the Last Word: Always check with the IRS "Charities and Nonprofits" website for current law and information on applying for and maintaining federal 501(c)(3) tax-exempt status.
Your bylaws should address only basic information about your company and an overview of board procedures, and not the specifics of your day-to-day operations. Do not include rules that will be difficult for your board to follow (which they'll want to change) or procedures that will change frequently, because changing bylaws isn't simple—you must follow legal rules to amend your bylaws. For example, instead of stating the time and address of your board meetings, you can simply state that your board will meet once a month at an agreed-upon location. You might include general descriptions of officer positions that will stay the same throughout the life of the theatre company, but avoid listing employee positions, which are likely to change.
Public access is not a legal requirement, but you might make your bylaws public to increase transparency and the public's trust in your organization. Many nonprofits allow the public to access their bylaws, either by posting the document on their website or by request.
Make plans to review your bylaws regularly, both to make sure you are following them and to update provisions as necessary. To make amendments, follow the rules outlined in your bylaws, which should provide the number of board-member votes you need to make amendments (if your bylaws do not provide guidance, check with your state's laws). Record the results of the vote in your meeting minutes.
If your company has tax-exempt status and you make a "structural or operational" change to your organization, such as changing the name or purpose, you must inform the IRS. (For smaller changes, like changing board-member term limits, you do not need to inform the IRS, tax lawyers tell us.) You can report some changes on your annual tax return, while the IRS requires you to report other changes on different forms.
The link below takes you to a page with sample bylaws to download, read, edit, and use as you want. Note that different styles and wording may be needed in different states.
