POLICIES AND BEST PRACTICES FOR NOT-FOR-PROFIT GOVERNANCE
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By Ben Dennison, CPA – Staff Accountant
The following are 20 general policies that not-for-profit entities should keep in mind, in regard to sound not-for-profit governance.
- A written code of business conduct and ethics for board members that states the organization's values. This code should become part of the not-for-profit's culture.
- A conflict-of-interest policy for board members that requires periodic disclosures and consistent monitoring.
- A whistleblower policy. This should allow everyone associated with the organization to come forward without fear of retaliation.
- A document retention and destruction policy.
- Expense reimbursement should follow IRS guidelines, requiring documentation and receipts for all purchases over a specific dollar amount. There should be no payment of personal expenses.
- A gift acceptance policy. This be reviewed by legal counsel, and potential gifts should be screened to determine whether ethics, financial circumstances, or other interests are compromised by the acceptance of the gift.
- Board members' review or Form 990, Return of Organization Exempt From Income Tax, before it is filed.
- A board compensation policy.
- Oversight of independent review of financial statements. Recruiting board members with financial expertise is critical to assist this process.
- Procedures for selecting and monitoring grant recipients.
- An endowment spending policy. This can help make sure investment is done responsibly.
- A written fundraising policy that is monitored for compliance and reviewed at least annually.
- Disclosure of governing documents.
- Review the size, structure, and independence of a board. There should be at least five members, preferably with diverse backgrounds. Additionally, two-thirds of members should be independent of the organization.
- A meeting minutes policy. Minutes should contain enough detail to determine the quality and extent of discussion, and are reviewed and approved at a subsequent board meeting.
- Ensuring compliance with all applicable laws, regulations, policies, and ethical standards.
- Determine board focus and information needs. The board should prioritize items based on importance and structure meetings to make the best use of time.
- Effective and focused leadership.
- Board guidelines, which include but are not limited to expectations of directors in regard to board functions and processes and also fundraising efforts.
- Specific short-term and long-term operational goals should be monitored and measured against benchmarks the board has determined to be relevant, to ensure management is meeting the organization's mission.
Sources: Tysiac, Ken. 15 Policies for Sound Not-for-profit Governance. Journal of Accountancy, 21 June 2013. <http://www.journalofaccountancy.com/news/20138217.htm>.
"The Guide to Not-for-Profit Governance 2012." Weil, Gotshal & Manges LLP. Not-for-Profit Practice Group / Weil, Gotshal & Manges LLP, n.d. Web. (available at http://www.weil.com/files/upload/NFPGuide_2012.pdf)
If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at blue@blueandco.com or call us at 800-717-BLUE
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