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June 2020

Neighbors, 

The Trustees just finished our fifth reading on proposed changes to the IBIC Bylaws and you will soon have multiple opportunities to provide comment and feedback. Please keep an eye out for communications, including in this issue of the Breeze. I’ve presented basic information on topics such as IBIC finance in the Breeze and thought it would be good to include particulars on the difference between Bylaws and Articles of Incorporation.

Rules of the Road

Do you have guiding principals you won’t compromise that help you be the person you envision being? You’ve likely been exposed to some guiding principles throughout life, such as: live with integrity, treat others as you wish to be treated, don’t tolerate intolerance, be inclusive and pursue your passions. Just like we have “rules of the road” that help us in a variety of contexts, nonprofits with adopted bylaws have rules of the road to help them navigate various situations.

A non-profit corporation is a legal entity, which essentially means it’s a collection of individuals who desire to pursue the same common goal. With most nonprofits, since the common goal is often a charitable one, it’s helpful for those individuals to have a set of common principles. Accordingly, bylaws reflect the set of principles that are associated with the governance of the nonprofit. Taken together, these rules and procedures form the operating manual for the nonprofit’s governance activities. When the nonprofit’s annual meeting will be held, who the officers of the nonprofit will be and when and how the directors will be elected are typically addressed in the bylaws. These rules of the road guide the leaders as they fulfill the nonprofit’s mission.

It’s important for nonprofit leadership to have a firm understanding of how bylaws differ from a nonprofit’s articles of incorporation. Some individuals use these two terms interchangeably when in fact they are distinctly different concepts and documents.

A nonprofit is governed by its articles of incorporation and bylaws. A nonprofit’s articles of incorporation allows it to exist as a legal entity under the State of Washington, whereas bylaws govern the internal affairs of a nonprofit.

Our articles of incorporation under Article 3 state our purpose and is important to review to make sure we are consistently focused on those purposes.

Article 3 of the IBIC Bylaws

The purposes for which said corporation is formed are the establishment and maintenance of a library, reading room, and a place of social and community meetings, and to conduct all community activities as are usually connected with or grow therefrom.

Said corporation is organized exclusively for charitable purposes, including, for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 501(c)(3) of the internal Revenue Code of 1954 (or corresponding provisions of any future United States Internal Revenue Law).

It’s even more important to understand what the powers of the IBIC are to again make sure we are focused on those powers only.

Article 6 of the IBIC Bylaws

The powers of the corporation shall be:

(a) To hold real property estate by ownership, lease, rental, purchase, gift, or otherwise;

(b) To hire, purchase, or erect suitable buildings for it accommodation, to be devoted to the purpose set forth in this agreement;

(c) To receive and hold trust or otherwise funds received by gifts, dues, bequest, assessments, or otherwise, and to be devoted by it to said purposes;

(d) For said purposes, to issue its promissory notes, bonds or other obligations, and secure the same by mortgage on its real estate and other property in such manner as may be provided by its bylaws.

I hope the information above helps explain these differences and why it is important to have good bylaws and an understanding of our articles of incorporation as they form the governance of the Indianola Beach Club. We look forward to your comments on the proposed changes.

Don Lantz, IBIC President 2019-2020

 

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