As a law firm, we spend quite a bit of time dealing with by-laws, and a by-law can be important for a non-profit or registered charity. However, for registered charities, the by-law is by no means the most important document that they deal with.
Unfortunately, some people involved with charities might not understand this, and I see some charities spending a lot of time on by-laws and frequently changing them. Unless there is a dramatic change in your organization, by-laws should not be frequently changed. If they are frequently changed, it usually indicates that the by-laws were not well-crafted and probably contain too much detail that changes constantly and should probably be included in policies and not the by-laws.
Back to the central point. If the only issue for your charity is your by-law, then spend as much time as you need, but other documents such as gift agreements, funding agreements and compliance with charity law are typically far more important.
We recently submitted documents to CRA involving governance changes for an ONCA group. CRA accepted the documents, and this is part of their response, with my emphasis.
…we have added the organization’s amended bylaws to its file without review. No further action is required from you at this time, but please keep a copy of this letter as part of the organization’s books and records. [These are so important that CRA does not even review them! It is not to say that you could not have something problematic in your by-laws but the likelihood is that CRA is not even going to review them when filed or often even during an audit.]
A registered charity’s bylaws provide information on the organization’s structure and internal procedures, such as the duties of its officers. Please note that in situations where similar clauses are contained both in a registered charity’s bylaws and in its governing document, the clause in the governing document takes precedence. [We often see groups inappropriately including certain clauses in by-laws such as “purposes” which should never be in by-laws as they belong in articles of the corporation – and CRA is reminding you that the articles take precedence.]
Depending on how the organization is constituted, its governing document can consist of an incorporating document (such as letters patent or articles of incorporation), a trust document, or a constitution. In order for a charity to maintain its registration, its governing document must meet certain requirements. For more information, go to canada.ca/charities-registration, then select “Set up your organization before applying for registration” followed by “What is a governing document?”. [For CRA the articles are very important – they have purposes, dissolution clause and certain non-profit clauses. If your articles are not appropriate you cannot be a registered charity.]
If the organization has also adopted, or intends to adopt, new purposes and/or activities, we recommend that you advise the Charities Directorate of these changes, if you haven’t already. For more information, go to canada.ca/cra-operating-a-registered-charity, then select “Make a change to your organization” followed by “Change purposes and activities.” [This is just a reminder that if you will change your purposes you should get CRA pre-approval. In addition if your purposes are not being changed and your activities have not expanded beyond your purposes but the purposes are older than say 2013 when CRA introduced their guidance on drafting purposes, you probably should check with CRA whether the old purposes are still acceptable.]