Governance Documents: Understanding the Hierarchy

The frame is divided vertically into two equal sections, like a split screen. The left side displays Eliza Kragh, a woman with short brown hair wearing a dark top and a pendant necklace. Behind her is a light-colored, plain wall. On the right side, Mark Apodaca, a man with glasses and a gray beard is visible. He is wearing a dark sweatshirt over a red collared shirt. He is seated in a dark chair, and a portion of a wooden cabinet is visible behind him on the right. The wall behind him is also a light color, similar to the one on the left side.

Eliza: "Hello, this is Eliza Kragh here today with Mark Apodaca, who is an expert Professional Registered Parliamentarian. We have an exciting topic to discuss today and will cover governance documents."

Eliza: "Hi Mark, thank you for your time. Please share about governance documents today."

Mark: "I will be showing a triangle and will name each part of it, then take it down and discuss it in detail."

Eliza: "Beautiful!"

The scene shows a computer interface displaying a presentation slide. The slide shows a triangle diagram titled "Governance Documents" with different levels labeled from top to bottom. Mark is sharing his screen while both participants are visible in smaller video windows.

Mark: "These documents apply to corporations, non-profits, partnership businesses, and some government entities and universities. They all have governance documents. For today, I am focusing specifically on non-profit organizations."

Mark: "First, you can see the top of the pyramid. Laws or statutes - state level. Next is Articles of Incorporation, then Bylaws, Special Rules of Order, Rules of Order, Standing Rules, and Policies and Procedures, and last one on the bottom are Customs."

Mark: "Laws at the top are the most important and have the highest authority. I'm going to stop sharing now."

Eliza: "Okay."

The screen returns to the split view of Eliza and Mark.

Mark: "Every state has its own non-profit laws. They are not the same and they're all different. What is New Mexico state law for non-profits is not the same as MN or MT or KS. Each has their own with their own legislative passing laws. These are the most authoritative laws."

Mark: "The second one is the Articles of Incorporation. If you want to set up a 501(c)(3) non-profit organization, you must file Articles of Incorporation with the Secretary of State. Most states around the country require it to be filed with the Secretary of State, but some have exceptions."

Mark: "In the Articles of Incorporation, you identify the name of the organization, the mission and purpose, and who the directors of the organization are. Most of the time you will name three directors. Directors do not have to be president or vice president. Directors can be anyone."

Mark: "An important point when filing Articles of Incorporation: you must have a paragraph with specific IRS clauses. The reason is when you file a 501(c)(3) application, the IRS requires a copy of the AOI and bylaws. If it does not show two important clauses, then the IRS will not accept your application for 501(c)(3). So make sure to include these clauses."

Mark: "Often times, the state will give a template to fill out, but that is not good enough because many people use that template, submit it, and get denied because it doesn't include what the IRS requires. So when you file AOI, make sure those clauses are included."

Mark: "With the AOI, you send it to the Secretary of State who will check to see if the AOI and state law are in compliance with no contradictions between them. If the Secretary of State finds that a clause conflicts with state law, they will deny and send it back saying they do not accept it because the state law says otherwise. This means you need to change that and ensure nothing conflicts with state law to get approval. So AOI is the second highest authority under state law."

Mark: "The third one is Bylaws. The Bylaws cannot conflict with the AOI and cannot conflict with the state law either."

Mark: "The fourth one is Special Rules of Order. I will give you one good example. You go to a business meeting as a member and someone makes a motion, it's seconded, and debate is open. Each person can debate for 10 minutes. 10 minutes, two times. That means I can debate in support, then someone debates against, and each time is 10 minutes. If no one else new wants to speak in support, then the same person can speak again a second time for 10 minutes. Suppose you had 200 members in a meeting and each has 10 minutes..."

Eliza: "Meeting drags on."

Mark: "It drags on all night and all day. So Special Rules of Order must be passed by the members. If you want to limit debate to 3 minutes per person, one time each for support and against, alternating, and then call for a vote... That is called Special Rules because it will override Robert's Rules of Order. If you do not have that, then you follow RONR."

Mark: "Then the next authority we have is Rules of Order. That can be Robert's Rules of Order, Newly Revised."

Eliza: "12th edition."

Mark: "12th edition, which is this book. If your bylaws state that RONR is your parliamentary authority, then you need to follow the book. Some organizations, though not many, use a different book."

Mark: "Standard Code of Parliamentary Procedure."

Eliza: "Other organizations use different parliamentary authorities."

Mark: "Yes, this is from the American Institute of Parliamentarians. That is different from the National Association of Parliamentarians. Many parliamentarians know both books. I am a member of both organizations. Some parliamentarians are certified in both."

Mark: "Again, the parliamentarian gets a copy of the bylaws and reads it, and if it states RONR, they follow it. If it states AIP with the Standard Code of Parliamentary Procedure, then you follow that. Sometimes organizations will use the Standard Code for Rules of Order that will supersede RONR, which can happen."

Mark: "The next one is Standing Rules, Policies, and Procedures, investment policies, finance policy, etc. At that level, do not put them in the bylaws. The bylaws explain the structure of the organization. Policies and procedures need to be separate documents."

Mark: "The last one is Customs. It is something that has been used for many years. But again, if you go to a business meeting and find a custom that conflicts with RONR, RONR beats customs and you must follow RONR, except sometimes people will elevate customs into Special Rules of Order. It happens."

Mark: "I want to clarify. Your bylaws are a legal document - a legal document. I've been in court where a judge asks me to be an expert witness. I have to explain what the bylaws say and interpret them so the judge can see all perspectives because it is a legal document."

Mark: "Another good example related to the triangle: One organization established in their AOI that they would have members, then when they created their bylaws, they also included members, just like the AOI. Years later, the board decided they did not want members anymore. So they amended the bylaws and removed members, but the AOI was never amended."

Eliza: "So they were in conflict."

Mark: "That caused a conflict. Some members notified me that this couldn't be done because they never voted on removing members. I asked to see the minutes. That is why minutes are very important because they are a legal document too. They could not provide me with any minutes. There was no record of members voting and approving the removal of members."

Mark: "That means the AOI was more authoritative than the bylaws, which means the organization had to revert to having members because there was no record in the minutes that members voted and approved the change."

Eliza: "Again, if it is not in the meeting minutes, then it never happened."

Mark: "Right. That is the bottom line."

Mark: "It is important that members of any organization, whether a state agency or an affiliate, understand these important governance documents."

Mark: "Another interesting example is when COVID happened, which had a significant impact. I went to an annual meeting for an organization and was approached about whether their Zoom meeting was valid. Why? Because their bylaws were silent about having meetings through video conferencing. But their state law already allowed it. They had included this provision before COVID, so the meeting was legally permitted."

Mark: "Another state did not have it in their laws. Robert's Rules of Order states that if video conferencing is not in the bylaws, you cannot have one. It must be in the bylaws, so many legislators across the US started adding amendments to their state laws to include video conferencing. So they could proceed with their meetings. But that one state already had it in there before COVID."

Mark: "There are variations in how to approach this. When I'm asked to serve as parliamentarian, I have to find out which state the organization is incorporated in, and if they provide that information, I will look up the non-profit laws in that state to read them. I will ask for a copy of the AOI, though many organizations don't keep a copy. That is an important document."

Mark: "If I receive these documents, I will review them to see if there are any conflicts. I review the bylaws, review any other rules, standing rules, etc. I must see the whole picture before my assignment to work as a parliamentarian. All governance documents should be there, minutes too. I make sure everything is available and check if there's anything from previous business meetings that must be added to the bylaws."

Mark: "I've encountered one or two organizations that did not keep good meeting minutes. There were many amendments to the bylaws going back 10 or 12 years, but no record in the minutes. That means the current bylaws are void because there is no record of the amendments in the minutes. You have to go back to the bylaws from 12 years ago and follow those."

Mark: "I have seen many organizations that don't realize the importance of these valuable documents. So that is my message about these documents."

Eliza: "I would appreciate some clarification. Now that you've mentioned each state needs to review their state laws, one good example would be that each state determines how often a non-profit must host a business meeting. Some require meetings every year, some every two years. Is that why it's important to review the state laws?"

Mark: "Yes, if your state law says you must have an annual meeting, that means every year. If you do not follow that, you are breaking the law."

Eliza: "Okay."

Mark: "But if your state law says it's left up to the organization to decide depending on their bylaws, then the bylaws can state every two years and that's acceptable. But if state law clearly states that an annual meeting means every year, you need to call for a meeting annually."

Eliza: "Okay. So again, that's why it's important to review the laws. Now with AOI, you mentioned that it's really important to include the mission of the organization, IRS information..."

Mark: "Clauses."

Eliza: "Clauses must be in there."

Mark: "The specific code."

Eliza: "And must have a board of directors. All that information needs to be included in the AOI. Is that correct?"

Mark: "In the past, they would name the positions of board members. Now that's not the case anymore; it's in the bylaws. So if your state law says you must have the president, vice president, secretary, and treasurer, then it's required. If your bylaws have president, vice president, and secretary/treasurer combined, the AOI and bylaws are in conflict."

Eliza: "Conflict."

Mark: "because there are two separate positions in AOI and it's one position in the bylaws. Today's AOI would not typically include the positions. In the past they did, but not anymore, at least in the states I've worked with. But it is important to include the IRS clauses."

Mark: "I used a template the first time, sent it to the Secretary of State, and it was approved with no problems. I got copies of the bylaws and AOI, sent them to the IRS for their review and approval for 501(c)(3). They did not accept it and said I must insert specific clauses, so I added them to the AOI. I sent it back and it was approved."

Eliza: "Okay."

Mark: "Just put in the IRS code."

Eliza: "When an organization wants to approve AOI, what kind of vote is required for that to happen?"

Mark: "AOI?"

Eliza: "(Nods in affirmation)"

Mark: "I have experienced two different approaches. One way is a group gets together and they want to establish a non-profit organization. They vote as a group, of course, by majority. Normally all agree that they want the organization. Then once they all agree, vote, and pass, they fill out the AOI application to submit it."

Mark: "The other approach that I have seen is when an organization finds three people that want to establish a non-profit. Those three, since state law requires three. So they apply for AOI with their three names, get approved, and announce to the community that they've established a new non-profit and will have a general meeting. The purpose is to develop the mission, vision, values, and bylaws together. People that want to join become members, pay dues, and start forward progress. Then that group develops everything with the bylaws. Then you have everything you need to send to the IRS to submit for 501(c)(3). So I have seen both approaches."

Eliza: "Either way. What if the organization wants to amend their AOI? What kind of vote is required for that process?"

Mark: "Two-thirds (2/3)."

Eliza: "With previous notice?"

Mark: "Previous notice with 2/3 or majority of the whole membership. Either one of those. If you amend the AOI, you have to amend the bylaws if necessary."

Eliza: "Because they cannot conflict."

Mark: "Both."

Eliza: "Okay, so now the next document are the bylaws. The bylaws will explain the structure of the organization, and expand on the responsibilities and duties of each board position. For the bylaws, what is the voting process to accept them?"

Mark: "For the first time or to amend?"

Eliza: "For the first time and then to amend."

Mark: "For the first time, it will be majority of the votes. Then to amend is two-thirds unless your bylaws say otherwise. One organization required eighty (80) percent approval to amend. Another organization required one hundred (100) percent, which means if one person voted against it, the whole proposal fails. Normally two-thirds (2/3) according to Robert's Rules of Order is required to amend. At the beginning, the members review it which requires majority, and then later change it to two-thirds (2/3)."

Mark: "You're right that the bylaws explain the structure, the responsibilities of the board and officers. Some bylaws, for example, will list the specific duties for the role of Secretary and that's it. Some organizations have a list in bylaws but need to go to the policies for a detailed list of responsibilities. So the policy is separate from the bylaws."

Mark: "The function and responsibilities of the Secretary in the bylaws might state to pass out the minutes, keep a record of the names of all the members, and to make sure that the minutes be posted on the web or distributed to all members. If your bylaws say the minutes need to be sent by mail to all members, then if you post on the web and not send it out, you violate the bylaws."

Mark: "So the clause in the bylaws must be specific, like 'the minutes will be posted on the web within 10 days after the board meeting.' It must be specific and not broad. I have seen many bylaws that are very vague and they cause a lot of problems and mistakes in interpretation."

Mark: "I have seen some bylaws with 30 to 40 pages with many of them mixing policy and procedures together. You want to separate them, as shown in the triangle with the bylaws, and move policies down to their proper level."

Eliza: "Another important thing to include in the bylaws would be the membership dues - how much it costs? And also, if the members want to amend the membership dues, that requires a two-thirds (2/3) vote?"

Mark: "Bylaws, again, define the structure, with different categories: regular members, senior citizens, hearing members, and so on - all those categories. The fees and dues are in the standing rules."

Eliza: "In the standing rules and not in the bylaws?"

Mark: "No, the standing rules will list them. I look at the National Association of Parliamentarians and their bylaws are silent on dues. The standing rules will have it since the board themselves can adjust the dues. So if during a business meeting, a motion to increase the dues by $5 is passed, it will go into the standing rules and modify it. The bylaws stay the same."

Eliza: "That is a very common thing that I've noticed in various state associations - their bylaws include their member dues. So that was good to clarify."

Mark: "It says they will pay their member dues, but how much is in the standing rules."

Eliza: "Thank you for the clarification. You also mentioned that if you want to vote electronically, you must include that in the bylaws itself. If it is not in the bylaws, then you cannot."

Mark: "Paper voting by ballot ensures privacy so people will not know who voted for what. If the bylaws state you must use ballots, you must do so even with only one candidate."

Eliza: "You cannot use unanimous consent."

Mark: "The bylaws are clear. You must vote by ballot. You still have to vote and that is RONR rules. But if you put it in the special rules, the bylaws override special rules and RONR. If you do not want ballots, then amend the bylaws or put it in the special rules. Then if the special rules say if there is no challenge from any person, then you can have acclamation. Right with acclamation?"

Eliza: "Unanimous consent or acclamation."

Mark: "Yes, acclamation. Again, it is important to think about what you put in the bylaws. Some people just throw things in, but that will cause problems and conflicts that will pop up later. The bylaws must be thought through very carefully. Sometimes when a bylaws committee of an organization forms, they will have a parliamentarian there working with them."

Mark: "I have been involved with many bylaws committees to make sure that they think about various scenarios or questionable items. If you want to change the name of the organization, what do you think will happen when the members resist? First, you need to think about this."

Mark: "Sometimes an organization will develop new bylaws and submit them to a lawyer. The lawyer will review them to make sure they don't conflict with state law. But the organization will work with a parliamentarian to start the process with everything and then give it to the lawyer. Sometimes bylaws are very simple and easy to follow, then you do not need a lawyer. That is a decision the organization needs to make."

Eliza: "Okay, now the next document, Special Rules of Order. One example you used is that RONR itself states that in debate, each person can debate up to 2 times, 10 minutes each time."

Mark: "10, 10, 10."

Eliza: "Now if they have over 200 members, that would take a long time, so the Special Rules can limit debate time. What other topics are good to address in the Special Rules of Order?"

Mark: "I would recommend, for example, that members who make a motion and receive a second, the member who made the motion is the first person to discuss why they support it. That's one example. Your rules of order can have 3 in support and 3 against. Then after explaining why they support, it goes to explaining why against, and then back to support. If there's no one else to speak against, which means it's 2 to 1, then you stop there. It means stop debate."

Mark: "But you need to put this in the Special Rules to say that if there are 2 in support and 1 against, debate stops and you proceed to vote. When it happens, go ahead and follow that."

Eliza: "What is the voting process to accept Special Rules of Order?"

Mark: "To accept it at the beginning, it is majority and to amend it, it requires two-thirds (2/3)."

Eliza: "Do Special Rules of Order continue after the business meeting is finished?"

Mark: "They're dropped on the floor."

Eliza: "And then the next business meeting, you will have new Special Rules of Order again?"

Mark: "Members need to vote on them again."

Eliza: "So it's new every time."

Mark: "There is always something new that comes up based on what happened previously, so every year it changes. I have seen Special Rules for conferences from 1966 and compared them with recent ones, and they were very different. Things and times change."

Eliza: "True. Next is parliamentary authority. Most organizations currently follow Robert's Rules of Order, Newly Revised, which seems to be the most common one. How does an organization accept that parliamentary authority?"

Mark: "It is in the bylaws when they were approved the first time. If you want to change it to another authority, you must amend the bylaws."

Eliza: "That will require a two-thirds (2/3) vote?"

Mark: "Normally two-thirds (2/3), and the bylaws will state that if you want to amend, it must have two-thirds (2/3) or three-fourths (3/4) vote."

Eliza: "Next is Standing Rules. You mentioned that Standing Rules relate to financial issues or the administration of the organization. Can you please provide another example of what Standing Rules look like?"

Mark: "Sure, and I am going to show what Standing Rules of NAP look like."

The screen shows Mark sharing a document displaying the National Association of Parliamentarians' Standing Rules.

Mark: "This is an example of NAP's Standing Rules. It specifies titles and the Greek alphabetical names, and look at the registered mark symbol. When I make business cards as a member of NAP, I include that symbol. Next is the financial list with membership dues and the prices."

Eliza: "It separates the cost for each category."

Mark: "Yes, different groups. Now number 4 is about how I pay my dues to NAP. NAP will send $10 per member back to the state association. So if 50 members from New Mexico send dues to NAP, NAP will calculate 50 times $10 and send back $500 for the state membership. Members don't pay New Mexico state directly; instead, NAP distributes the funds. That is in their Standing Rules."

Mark: "Number 5 is referral procedure. Number six is public relations. It states that April is parliamentary law month which must be promoted and posted with all these rules every April. With number seven, when I ran for treasurer of NAP back in 2021, they put my picture from the bylaws in their newsletter."

Mark: "The next one is chartering. The next one covers conventions where non-voting attendees can come without voting rights. Next we have publications. Now we have professional responsibilities and members discipline committee. And the last one is reclassification. So those Standing Rules are not in the bylaws; instead, they are in the policies and procedures."

Eliza: "Because of the governance document structure, that means that bylaws themselves are above the Standing Rules?"

Mark: "Yes."

Eliza: "When an organization wants to accept Standing Rules, what vote is required for that?"

Mark: "Standing Rules at the beginning require a majority vote, but to change them requires two-thirds (2/3). It always requires two-thirds (2/3) when amending something, and that's normal."

Eliza: "When do Standing Rules expire?"

Mark: "There is no expiration."

Eliza: "None at all."

Mark: "If you want to change them, change them at a conference business meeting. During the conference, the members can review financial issues and make a motion to increase the dues by $10. Once passed, it goes into the Standing Rules for modification."

Eliza: "Okay, so now..."

Mark: "Things happen."

Eliza: "Then after Standing Rules we have Customs. One very common custom is that many people will make a motion to accept meeting minutes, and we've discussed that before. It is not necessary, but it is customary. Can you think of another common custom that does not need to happen?"

Mark: "Really, customs are dwindling because the other levels of authorities override customs frequently. I shared one example with you, but I cannot give you another one because they are fading away. That is good because it means the bylaws state that RONR is the authoritative parliamentary source, and that overrides customs. So bury it, drop it, and move on."

Eliza: "Yes, so that removes personal feelings and emotions and we must follow the law. That is a legal document."

Mark: "Right."

Eliza: "One last question now: Many state associations also have affiliates and local clubs with their own bylaws. Where (showing the governance document triangle) do the bylaws of the local club fit within that structure?"

Mark: "If the affiliate has their own 501(c)(3), then they just pay the membership dues as an affiliate and that's it. If the bylaws say that they can have affiliates, then they will list the requirements that must be met in order to pay the dues and that's it. The organization does not manage the affiliate organization; they are on their own."

Mark: "Now, if they are not an affiliate, do not have their own 501(c)(3), and federal ID, then they are a chapter. There must be a clause in the bylaws about having a chapter. With chapters, the members pay their membership dues to the chapter and can also fundraise. But their financial information must be part of the parent organization's finances when they do their taxes and financial reports."

Mark: "An affiliated 501(c)(3) has their own financial information that is not part of the parent organization. They are separate and different organizations with their own IDs and names. I am aware of a few organizations that feel chapters are not effective, so members are informed that they will no longer be a chapter at the end of the year. You can set up your own 501(c)(3) with your own name that is different from the parent organization, with your own Articles of Incorporation. Some will do that, and others will simply dissolve. But that is an option."

Eliza: "What is the benefit for a chapter to become its own 501(c)(3) and become an affiliate?"

Mark: "Suppose an organization is national with chapters in Texas, Iowa, and California that use their parent organization's name? They can stay as a chapter, or they can decide to go on their own to become a national organization themselves. They could do that, or if they want their state association to serve their state as a 501(c)(3). They have their own board and charge dues to earn money which is their own and don't have to share with a parent organization."

Mark: "If they are a chapter, the parent organization will have rules in their bylaws about what the chapter can and cannot do. They have control. If they're set up on their own, they control themselves."

Eliza: "There's very limited flexibility within a chapter's potential ability to manage themselves."

Mark: "Yes, but I am not seeing many organizations with chapters."

Eliza: "They are fading away."

Mark: "Yes, some have regionals and some have chapters. And with effectiveness - some are and some are not."

Eliza: "It's important to make sure that all the governance documents align with state law, that everything is legal, and that all those documents are actually legal documents. Is that correct?"

Mark: "AOI and bylaws are legal documents. Special Rules of Order and Rules of Order are more procedural. They are not legal documents; they are procedures on how to conduct a smooth meeting. But the other two are legal."

Eliza: "When a person becomes a member of a non-profit organization, what is considered best practice for providing members with documents?"

Mark: "Provide the bylaws and policy procedures as well. More and more organizations that I am seeing are posting bylaws and policy procedures on their website."

Eliza: "Transparency."

Mark: "Yes, and when they go to the business meeting, they have it right there. They know what they can do and what they cannot do, what they would like to amend, to make a motion, and so on. They don't go into a meeting only to be told something and then 'see you next year.' No, these are people who read the bylaws, notice something is wrong during the meeting, and raise their hands for a Point of Order. 'You decided these things but the policy says this.'"

Mark: "Where is the protection of the people? Members are protected with policy procedures and bylaws. If you withhold them and the board decides they can do whatever they want, that is not a member organization. To make it clear, members are above the board. You should be transparent and distribute documents to the people so they know what's happening. Maybe they will see something that needs work or is limited, so let members decide what to vote on. That is democratic procedure."

Eliza: "The more information each member has about their own organization, the more ability they have to influence and make decisions with proper procedure knowledge. Without that, they're overwhelmed and lost."

Mark: "Right."

Eliza: "The point of parliamentary procedure is to protect the majority and the minority members, not only the board."

Mark: "Right, and again, your bylaws make it very clear. Suppose the bylaws clearly say if a board member does not perform their duties, then only the board can remove that member. Members cannot remove a board member because that is the board's responsibility. If you have a board member who has a conflict of interest and the board turns a blind eye or does not care, you may want to add some teeth in the bylaws to give the members some power to remove a board member. It needs to be put in the bylaws. If it is not in there, then what can you do? You are stuck, so that is why it is important to be transparent with the bylaws."

Eliza: "That really clarifies each section of the governance documents. Again, that's why it's really important to consult with either a lawyer or an expert parliamentarian like yourself."

Mark: "Yes, because both lawyers and parliamentarians spend a lot of time going to workshops, going to training, building a library, writing opinions, researching, and numerous other things. We don't just tell you that it is how it is; we show what, where, and who stated it - the whole picture."

Eliza: "Facts."

Mark: "Facts and always provide facts, not our opinion. I have written opinions that could be 5 pages long to explain why you cannot do certain things based on state law, AOI, and bylaws. 'Why are you going off on a tangent?' I have written several."

Mark: "Also, I will tell you that parliamentarians are constantly pursuing education. You go to conferences, go to workshops, and build a library. I just ordered new books and should get them today for my parliamentary library. With expert witness cases, I read different cases on how to handle things to become more knowledgeable with different viewpoints when I provide expert testimony. Again, that requires a lot of time and is part of our responsibilities."

Eliza: "Parliamentary procedure itself is not simple and is a big responsibility. It is very important to continue with education on all the current laws, policies, and everything else. Thank you for sharing your knowledge and explaining more about each part, including the vote required for accepting and amending. I feel that clarifies our non-profit governance documents. Thank you, Mark!"

Mark: "You're welcome."
