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If there is a procedure for amending the bylaws in both the articles and the bylaws,
the procedure in the articles must be followed. Generally, amendments to the
bylaws are effective with board approval alone. However, it is common for
nonprofit corporations with voting members to require approval of bylaw
amendments by the members. Even if a membership vote is not required, it is not
unusual for the procedure for amending bylaws to call for a supermajority vote of
the board or for special notice or meeting requirements. In addition to amending
the bylaws, the board may also repeal one or more of the bylaws or adopt new
bylaws. Once adopted, the bylaws continue to govern the affairs of the corporation
until the bylaws are either amended or repealed.

CHAPTER 19. Sarbanes-Oxley – Document Retention and Protections for
Whistleblowers

With the passage of the Public Company Accounting Reform and Investor
Protection Act of 2002 (often referred to by the names of its principal sponsors as

“Sarbanes-Oxley,” or “SOX” for short), corporate America was prompted to give
more attention to governance and financial accountability. This law focuses
primarily on the financial affairs of publicly traded corporations. Two of the
provisions of Sarbanes-Oxley have very broad application, though, and directly
pertain to the operations of most nonprofit organizations.

Preservation of Records

Title VIII of the Sarbanes-Oxley Act (SOX) extends criminal penalties to
anyone who “knowingly alters…any record…with the intent to…obstruct…the
investigation or proper administration of any matter within the jurisdiction of any
department or agency of the United States.” (section 802). Destroying or altering
documents related to an IRS investigation of a nonprofit organization’s Form 990
(see Chapter 35) is an example of the kind of behavior this section is designed to
punish. Nonprofit organizations may frequently be required to file other reports
with federal agencies that fall within the scope of this section. Adopting policies
that guard against violating SOX is good business practice for any organization that
files reports with the federal government.

Every nonprofit organization should preserve the documentation used to
prepare any reports and, in particular, make clear to all volunteers and employees
that documents cannot be destroyed or altered in any way if an investigation of the
organization’s affairs are on the horizon or underway.

WASHINGTON NONPROFIT HANDBOOK -54- 2018