Tips on Updating CAA Bylaws
By Eleanor A. Evans, Esq., CAPLAW
Funding sources, charity regulators, the press and the nonprofit community continue to spotlight
governance practices of nonprofit organizations and federal grantees. As a result, many Community
Action Agencies (CAAs) are taking steps to implement governance best practices, including
reviewing and updating their bylaws. After training CAAs throughout the country on bylaws issues
and assisting many CAAs in revising their bylaws, CAPLAW has compiled the following suggestions
of issues for private, nonprofit CAAs to consider when updating their bylaws. CAAs will need to
consider other issues as well. For more information on some of the main issues private, nonprofit
CAA bylaws should address, as well sample bylaws language, see CAPLAW’s Bylaws Toolkit for
CAAs (for ordering information, visit the “Publications” page of CAPLAW’s website
www.caplaw.org). Keep in mind that differing state law requirements and individual circumstances
in how CAAs operate will ultimately determine how bylaws should be drafted. Therefore, a private,
nonprofit CAA should seek assistance from an attorney familiar with the nonprofit corporation law
in its state before amending or approving its bylaws. A public (governmental) CAA should consult
with the attorney for its city or county. CAPLAW is also available to answer questions relating to
the Community Services Block Grant (CSBG) requirements for CAA boards.
Board Composition and Selection
• CAAs need not specify in the bylaws particular public officials who will be on the board. Consider
leaving it flexible and letting your board choose public sector representatives depending on its needs at
the time. Note that the CAA must first look to elected officials; if not enough elected officials are reasonably available and willing to serve, the CAA may look to
appointed officials (i.e., government officials who were not elected).
CAAs are not restricted to choosing county commissioners, city mayors
or council members as their elected officials; they may choose other
elected officials as well (e.g., state legislators, city or county board of
education members, etc.). If a public official chooses a representative
to serve as a board member, that person, and not the public official, is
the board member and gets to vote at the board meetings.
NOTE: Some states’ Community Services Block Grant (CSBG)
laws or regulations specify that CAA public sector board members
must be selected by the “chief elected officials” of local governments
in the CAA’s service area. In some cases, state CSBG laws or
regulations define “chief elected officials” as those who possess the
authority to designate an eligible entity. However, these provisions
are inconsistent with current federal law, which now requires the
CAA to select the board members and also provides that only the
state, not the local government, has the authority to designate CAAs
(i.e. “eligible entities”).(1) Therefore, federal CSBG law, which
permits, even requires, the CAA to select public sector board
members, would most likely trump state law on this issue.
• Specify that low-income sector board members must be
democratically selected (as is required by the federal Community
Services Block Grant Act). The bylaws themselves may, but do not
need to, describe the selection procedure for low-income
representatives. However, if the procedure isn’t described in the
bylaws, it should be described in a separate document referred to
in the bylaws and adopted by the board.
It is not sufficient for the CAA board (or its nominating
committee) alone to choose low-income sector representatives.
There must be some low-income community involvement in the
selection process (e.g., selection “on the basis of some form of
democratic procedure, either directly through election, public
forum or, if not possible, through a similar democratic process,
such as election to a position of responsibility in another
significant service or community organization, such as a school
PTA, a faith-based organization leadership group, or an advisory
board/governing council to another low-income service provider,”
as is recommended by federal Office of Community Services
Information Memorandum 82(2)) Low-income sector board
members should not be staff of another organization providing services to low-income people unless they are somehow
democratically selected by members of the low-income
community, not by the executive director or board of the other
organization. (However, it may be acceptable for the board of the
other organization to select a staff person to serve on the CAA
board if a majority of the other organization’s board is made up
of low-income people from the CAA’s service area.)
• Specify that all low-income directors selected to represent a
particular geographic area must live there. (Note that, under
federal law, directors from the other two sectors are not subject to
this requirement; some states’ CSBG laws and/or regulations
require all directors selected to represent a particular geographic
area to live there.)
• Don’t specify in the bylaws other private sector organizations from
which CAA board members are chosen. Although you may want to
have the board, or a board committee, invite specific organizations to
designate board members, consider leaving the choice of all or some of
the individual private sector board members up to the CAA board,
rather than to other organizations (assuming state CSBG law or
regulations permit this). Doing this allows CAA boards to play a more
active role in determining who the private sector board members are.
In selecting private sector board members, while it is important to
choose people who are involved with community groups and interests
that will be good partners for the CAA and its programs, it is just as
important to choose people who themselves have the skills, experience
and resources (e.g., financial expertise, fundraising skills and contacts)
that the CAA needs. The CAA board (through a governance or
nominating committee, for example) should establish a process to
determine what skills, experience etc. the organization needs in board
members and seek out those types people to serve on the board. The
process does not need to be specified in the bylaws, but at any
particular time, the board should be able to articulate what types of
people it is looking for to serve on the board.
• Have an application and application process for potential board
members. As part of the application, require candidates to certify
that they:
• Are not presently debarred, suspended, proposed for
debarment, declared ineligible, or voluntarily excluded by any
federal department or agency;
• Have not been convicted of or had a civil judgment rendered
against them for commission of fraud or a criminal offense in
connection with obtaining, attempting to obtain, or performing
a public (federal, state or local) transaction or contract under a
public transaction, for violation of federal or state antitrust
statutes or for commission of embezzlement, theft, forgery,
bribery, falsification or destruction of records, making false
statements, or receiving stolen property;
• Are not presently indicted for or otherwise criminally or civilly
charged by a governmental entity (federal, state or local) with
commission of any of the offenses above; and
• Have not had any public transactions (federal, state or local)
terminated for cause or default during the three years prior to
their application.
If they can’t certify to these things, ask them to attach an
explanation to the application. The board can then consider the
explanation and decide whether they can be seated or not. Note
on the application that making a false certification is cause for
removal from the board.
• After the selection process, screen the candidates selected to be
sure they fit the criteria for serving on the board. For example:
• Run prospective board members’ names through the federal
governments’ “Excluded Parties List System” online database
to be sure that they are not suspended or disbarred from
participating in federal grant or contract programs. This
database is available online at www.epls.gov.
• If a low-income sector candidate has been selected to represent
a particular area, check that s/he lives in that area.
• After the screening process, have the board elect (i.e. vote to seat)
all directors.
Removal of Board Members and Officers
• Have strong removal provisions in the bylaws, consistent with
state nonprofit corporation law, which often specifies special
notice and other procedural requirements for removal. Allow the
board to remove any director or officer for cause, including but
not limited to, for example, false certification on the application,
unexcused absences from a certain number (e.g. three) of
consecutive board meetings, failure to comply with the CAA’s
conflict of interest policy, and taking actions that are against the
best interests of the organization. Some CAAs also include
incapacity as a ground for removal.
Board Members’ Terms and Term Limits
• Give all directors terms of office. Keep in mind that the different
sectors can have different term lengths (e.g., public official
directors have a shorter term length than the other sectors). Three
years is a common term length for nonprofit directors.
• Don’t permit public official directors (or their representatives) to
serve automatically on your organization’s board for as long as
they (or their appointing officials) are in public office. Give them
a specific term length. Do require that the public official directors
serve only while they (or their appointing officials) are in public
office (or only for a short period of time thereafter).
• Many states’ nonprofit corporation laws provide a default term
length if the directors’ terms are not stated in the nonprofit’s
articles of incorporation or bylaws. Therefore, make sure that
your bylaws state the length of directors’ terms.
• Consider having term limits (e.g. three three-year terms) but letting
a board member reapply to serve on the board after one year off.
Proxy Voting and Alternates
• Prohibit proxy voting by board members. Also, state nonprofit
corporation law does not generally permit having alternates who
come to board meetings and vote when a board member can’t make
it to a meeting. Only board members should be allowed to vote.
Conflicts of Interest
• Consistent with your state law, your CAA should have a policy
that establishes procedures for identifying potential conflicts of
interest and determining if a particular transaction that could
involve a conflict is in the organization’s best interest. It is best to
deal with the details of these issues in a separate conflict of interest
policy rather than in the bylaws. However, the bylaws should
require the board to develop and maintain a conflict of interest
policy. Sample conflict of interest policies are available on the
CAPLAW website www.caplaw.org under “Model Policies.”
• Require that board members be off the board for a reasonableperiod (e.g. one year, or possibly six months) before being eligible
to be hired by the CAA.
• Consider not letting former employees serve as board members. If
you let them, require them to have left employment with the CAA
for a reasonable period (e.g., one year) before joining the board. (You may also want to prohibit former employees who have been
involuntarily terminated from serving on the board.)
• Prohibit board members who are federal employees from serving
in any capacity that would require them to act as an agent of or
attorney for the CAA in its dealings with any federal government
departments or agencies.
Committees
• Be sure that your CAA’s committees – standing and ad hoc – meet
the organization’s current needs.
• Note in the bylaws any powers that the board cannot delegate to
committees under state nonprofit corporation law.
• Consult state nonprofit corporation law on who can create
committees and appoint committee members. Generally,
committees must be created in the bylaws or by board resolution.
Some states require the board (rather than the board chair or
president) to appoint committee members. Check state law as to
who can serve on committees. For example, are there
circumstances in which only directors may serve as committee
members? In cases where non-directors can serve, can they vote?
• If you have an executive committee, be clear in the bylaws about its
authority. If you intend to give that committee all the authority of
the full board between full board meetings (except those powers
prohibited to be given to committees under state law), then say so
and don’t use words like “subject to ratification by the board.”
Instead, require the committee to report to the full board at the next
meeting. Also, CAPLAW recommends that the executive committee
reflect the tripartite structure of the board if it is authorized to act
for the board.
• Instead of having a nominating committee that is only responsible
for board member and/or officer nominations, consider having a
governance committee that is responsible for care and feeding of
the board (i.e., board member recruitment, orientation, training
and evaluation). A governance committee could: run the lowincome
board member democratic selection process; make
recommendations for public and private sector representatives;
work to fill vacancies when they arise; develop written job
descriptions/expectations for board members; assign existing
board members to mentor new board members; coordinate
orientation for new board members and training for all board
members; coordinate the board’s periodic evaluation of itself and
of individual board members; and coordinate periodic review (e.g.,
at least every three years) of the CAA’s articles of incorporation
and bylaws. During the board evaluation process, get feedback
from individual board members on how the board is working,
what they like and don’t like about serving on the board, how the
board could improve its meetings and other operations, and what
individual board members’ interests are.
• Have an audit committee or another committee (such as the
finance committee) that is responsible for performing the functions
of an audit committee (e.g., reviewing and reporting to the full
board on the following matters, as well as powers delegated to it
by the board from time to time by resolution: selecting the auditor;
overseeing the audit process; approving any non-audit services
provided by the auditor; overseeing internal controls, conflict of
interest and whistleblower policies; and ensuring that the auditor’s
management letter concerns are addressed and resolved).
• Have the board adopt a whistleblower policy for the CAA and
make a board committee (e.g., the audit committee) responsible
for implementing it.
• Have a board committee that is responsible for overseeing the
executive director’s evaluation process. Either the whole board or
a committee of the board should set the executive director’s
compensation. If a committee does so, the whole board should
have input on and should understand the executive director’s
compensation package.
Bylaws Amendments
• Be sure language on bylaws amendments conforms to state
nonprofit law requirements. In many states, the vote of a majority
of directors at a meeting at which a quorum is present is
insufficient. Many states require bylaws amendments to be
adopted by a majority (or greater number, such as two-thirds) of
the directors in office. (Even where such a “super-majority” vote
is not required by state corporate law, your CAA may decide to
require it anyway.) Also many states have special requirements
about the notice that must be given to directors of proposed
bylaws changes.
1 See 42 U.S.C. § 9910, available online through the CAPLAW website
www.caplaw.org (go to “Resources” page, “CSBG” and click on “Federal
Community Services Block Grant Act.”
2 Information Memorandum 82 is available online at www.caplaw.org (go
to “Resources” page, “CSBG IMs” and click on “Information
Memorandum Transmittal No. 82.”
