In you missed it: In the
previous newsletter, we shared important things to consider when setting up an endowment. In this Part 2 of the series, we will talk discuss the critical role of bylaws to help manage endowments.
The role of bylaws is too critical to ignore in managing your Islamic center or nonprofit effectively.
It maybe that your bylaws currently don't protect the endowment related aspects. In this case, modifying them is crucial to help manage an endowment properly. This is because bylaws serve as the governing rules and procedures for the organization, and including specific provisions related to the endowments can provide clarity, guidance, and safeguards for its management.
Things to consider when modifying bylaws in relation to endowment:
1. Align endowment purpose with mission: To ensure that the endowment's purpose aligns with the overall mission of the center, clearly state the objectives of the endowment within the masjid's bylaws.
2. Define endowment fund structure within the bylaws such as specifying whether the fund will be held as a separate legal entity or as a designated fund within the organization's financial structure.
3. Address governance structure and the decision-making processes related to the endowment, such as defining the roles and responsibilities of the endowment committee or Board, investment oversight, spending policies, and procedures for accepting and managing donor restrictions.
4. Incorporate investment policies and guidelines within the bylaws to establish a framework for managing the endowment's investments, such as specifying acceptable investment types, risk tolerance, asset allocation, and guidelines for selecting investment managers.
5. Outline the spending policies for the endowment within the bylaws, such as specifying the percentage of the endowment income that can be spent annually to support the center's mission and operations. Also address how surplus income is reinvested or added back to the principal amount of the fund.
6. Address donor recognition and restrictions: If the endowment allows for donor restrictions, include provisions in the bylaws that address the recognition and management of such restrictions. This ensures that donor intentions are respected and adhered to.
7. Provisions for reporting and transparency: Include specific provisions that require regular reporting on the endowment's performance, financial status, and spending activities. This will help maintain transparency and accountability to the organization's stakeholders.
Important Tip: Though bylaw modification will require an agreement and approval of the center's governing body, it is essential to consult legal experts to avoid non compliance with applicable laws and government regulations.
Up next: Suggested modifications to bylaws with supporting policies and procedures
