Delaware Nonprofit Bylaws Requirements: A Comprehensive Guide

How do you draft a Delaware nonprofit’s bylaws?

A nonprofit’s bylaws show how an organization operates, including its leadership structure and decision-making processes. While Delaware doesn’t require you to file bylaws with the Secretary of State, proper bylaws establish processes that help a nonprofit comply with state and federal laws.

When drafting bylaws, mistakes can be costly. Here’s everything you need to know about creating bylaws for nonprofits in Delaware.

Key Takeaways

• Bylaws are essential for the internal governance of a nonprofit and are typically required by state law (Title 8 of the Delaware Code) and best practices. Bylaws also support a nonprofit’s tax-exempt application with the IRS.
• Bylaws provide an organization with a structure, outlining the processes related to its leadership, financial reporting, meetings, membership, and decision-making.
• Proper bylaws can protect directors and officers from personal liability if they do their jobs in good faith and their actions are within the law.

Why Delaware Nonprofits Need Bylaws: Legal Requirements Explained

Bylaws serve as the organization's internal operating manual, establishing rules for key activities and roles. The board adopts the bylaws at its first organizational meeting.

Bylaws are also crucial for nonprofits seeking federal tax-exempt status. When an organization applies for 501(c)(3) recognition, the IRS could ask to see its bylaws to prove that the appropriate rules and safeguards are in place.

Essential Components of Delaware Nonprofit Bylaws

Bylaws need to show how you’ll run your organization. Delaware isn’t strict regarding how nonprofits set up their bylaws. However, the essential components that should be included to meet legal expectations and gain public trust include:

Article I – Name and Principal Office

List your nonprofit organization’s official name and main office address. Make sure the information matches the name and address in your Certificate of Incorporation filed with the Delaware Division of Corporations. This avoids confusion with legal filings and tax records.

Your main office address doesn’t have to be in Delaware. However, you need to list a registered agent with a physical address (not a P.O. box) in Delaware. Your registered agent receives legal and government documents on your behalf. 

Please note that bylaw requirements may vary for other states, such as Texas and Michigan.

Article II – Purpose

An organization’s bylaws should state its mission and objectives to explain why it was established. If seeking federal tax-exempt status, write a nonprofit’s purpose in such a way that it aligns with IRS 501(c)(3) requirements. 

Article III – Membership

Nonprofits can operate without any members in Delaware. The bylaws should state that the board of directors is responsible for all decision-making and governance.

If a nonprofit will have members, its bylaws must include details like the admission process (including qualifications). Also, enumerate members’ rights and responsibilities and include the grounds and procedures for removing a member.

Article IV – Board of Directors

Bylaws should specify the individuals responsible for overseeing an organization’s programs and finances. Specify in the bylaws the number of directors it has. In Delaware, you need at least one. Other details to include in this section are:

• Qualifications: List all the skills or credentials one must have to qualify for the board of directors.
• Terms of Service: Specify how long a director can serve before re-election or replacement.
• Election Process: Explain who votes for a director (the board or members).
• Termination: Lay out all the conditions that could remove directors from their position.

Article V – Officers

Officers are responsible for a nonprofit’s day-to-day operations. Bylaws should include every officer’s title and duties. The list of officers typically consists of a president, secretary, and treasurer.

Indicate who elects the officers and their terms of service. Additionally, specify the process for removing an officer from their position.

Article VI – Meetings

Bylaws should specify the frequency of the board of directors' meetings. Most nonprofits are required to hold annual meetings. In addition, bylaws must include details like:

• Notice Requirements: Indicate the amount of advance notice for a meeting and the method of notification (e.g., via mail, email, or other means).
• Quorum: In Delaware, having a majority of directors present constitutes a quorum (unless your bylaws say otherwise). However, the quorum can never be set lower than one-third of the total number of directors.
• Voting Procedures: Define the voting procedures, e.g., will a simple majority or a larger percentage of votes be required?
• Special Meetings: Determine who is authorized to call for one and under what conditions.

Article VII – Fiscal Policies

This section identifies the organization’s fiscal year and outlines expectations for financial reporting. It informs directors and members of the deadlines for preparing annual budgets and when to expect the financial statements.

Ensure that you specify who can approve expenses and how the funds will be distributed. Establish procedures for audits or financial reviews, especially if it’s required by law (e.g., those who receive federal grant awards).

Article VIII – Conflict of Interest Policy

Rules should be in place for individuals who stand to gain personally or financially from organizational decisions. In the event of a conflict, directors and officers must not participate in relevant discussions or votes.

Article IX – Indemnification

Indemnification protects directors and officers from personal liability for actions taken while serving the nonprofit, provided they were done in good faith. It’s strongly recommended to include an indemnification clause. The nonprofit will typically cover legal costs, judgments, or settlements resulting from a director or officer’s duties, provided that person acted responsibly and within the law.

Article X – Amendment of Bylaws

Specify who has the authority to make changes to the bylaws and the process to do it. In Delaware, the board of directors has the authority to adopt and amend the bylaws. If the bylaws are drafted before a board is elected, the incorporators are responsible.

The bylaws should also specify the voting requirements, such as whether a simple majority is sufficient or if a two-thirds majority is required for amendment. 

How Spellbook Can Help Nonprofits Draft Bylaws

Spellbook streamlines the way you write bylaws, especially if you have to comply with state and federal requirements. It’s an AI co-pilot that works in Microsoft Word, giving you and your legal advisors the ability to draft, review, and refine bylaws with confidence.

You can use Spellbook to generate tailored clauses and templates for bylaws that reflect standard legal practices. Spellbook can review drafts for compliance with Delaware nonprofit law and IRS requirements, and automatically pinpoint errors, missing provisions, and unclear language. It suggests new language and improvements to drop in with a single click.

Frequently Asked Questions

Are Nonprofit Bylaws Required to be Filed with the State of Delaware?

Delaware nonprofits are not required to file bylaws with the Division of Corporations. State law requires nonprofits to adopt and follow bylaws to govern operations. Bylaws are also necessary for organizations seeking federal tax-exempt status. Filing is unnecessary, but adoption and compliance are mandatory.

Can Bylaws be Amended After Adoption?

Bylaws can be amended after adoption. The board of directors typically makes amendments, but members may also propose amendments if permitted by the Certificate of Incorporation. Nonprofits require a vote, and amendments pass when the vote meets the required threshold, such as a simple or two-thirds majority.

Do Bylaws Need to be Signed?

Delaware nonprofit bylaws do not require signatures. Board members or incorporators often sign bylaws after adoption to create a record of approval. This signing is common practice but not a legal requirement.

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