Non-profits come in all sizes. Many of the largest employers in any given area are legally non-profits…consider area hospitals and colleges. There are also thousands of smaller non-profits ranging from those with a very specific and active purpose, a social service provider, a community mental health agency, a library foundation, a service club or its foundation, to simply a vehicle for making donations; i.e., a private foundation, frequently funded primarily by one family.
Not all non-profits are also tax exempt but, as the term is usually used, non-pro t usually means tax exempt as well. For our purposes, we will assume we are talking about a non-pro t that is also tax-exempt under the IRS code.
As non-profits come in so many shapes and sizes, it is difficult to state comprehensively the best practice rules that apply for all of them, especially if the non-pro t runs active programs. Practical and space constraints of this newsletter make it impossible to run through a primer of all relevant best practices for a well-run non-pro t, but below is a checklist of 50 items appropriate for consideration in almost all cases.
If in reviewing the checklist, with a particular non-pro t in mind (perhaps you serve on the Board), you come up short on any significant number of these issues, it may be appropriate to ask for a complete best practice review.
- Is there a clear sense of mission or purpose and a statement of same?
- Is the organization legally incorporated in some state?
- Are there governing documents including a Certification and By-Laws in place?
- Has the entity received an IRS qualification?
- Is it ling annual 990’s?
- Is it avoiding any political involvement or lobbying activities as required by law?
Board of Directors
- Is there an active Board of Directors?
- Does the Board have regular terms and an appropriate size?
- Does the Board meet as frequently as needed?
- Are there regular meeting minutes and a system of ongoing communication both internally and externally?
- Is there periodic review of organizational and governing documents?
- Does the Board set reasonable and appropriate compensation and duties and supervise the chief executive officer or other designated leader of the organization and regularly review the performance of same?
- Is there a written job description for Board members?
- Is the Board made up of individuals with the appropriate skills and experience to manage the organization?
- When Board members join the Board, are they properly orientated and is training provided later on?
- Do the Board members understand their “Duty of Care”, “Duty of Loyalty”, and “Duty of Obedience”?
- Do Board members attend meetings regularly?
- Do Board members have diverse perspectives and experience necessary to run the organization properly?
- Does the Board and/or staff bring in subject matter experts when appropriate and necessary?
- Does the Board cause the organization to conduct regular and periodic evaluation?
- Does the Board evaluate itself on a regular and periodic basis?
- Does the organization have a logo?
- Does the organization have a brand overview (set colors, language, fonts to be used in external communication)?
- Does the organization have a website & social media presence?
- Does the organization have an elevator pitch?
Evaluation & Planning
- Is the mission of the organization reviewed from time to time?
- Are the programs of the organization regularly reviewed to make sure they t the mission?
- Is there a system for regularly evaluating and measuring the impact of programs and giving?
- Is feedback solicited from all appropriate constituencies?
- Is strategic planning, both long and short range, done?
- Is there a written code of ethics?
- Is there a written conflict of interest policy?
- Are Board members asked to acknowledge these policies on a regular (annual) basis?
- Is confidentiality appropriately protected?
- Is there a whistle blower protection policy?
- Are there appropriate procedures in place to avoid harassment at any level within the organization?
- Is professional help, both legal and accounting, sought and utilized as necessary?
- Are there job descriptions for all key volunteers and staff?
- Is there an organizational chart?
- Does the organization regularly evaluate the performance (at least annually) of staff?
- Is there a training program?
- Is a budget created and regularly reviewed and approved?
- Is cash ow regularly reviewed?
- Are written financial management policies adequate for the organization size and complexity in place?
- Are there appropriate internal controls and auditing policies?
- If there is an endowment is it appropriately protected, managed, and invested?
- Are the expenses of the organization appropriate, legal and reasonable?
- Is there a risk management plan, and if necessary, insurance?
- Is there appropriate transparency for all aspects of the organization provided to all constituencies?
- When commitments are made to donors, are they honored fully with respect to monies donated?
If you read through this list and did not come up with any substantial number of concerns, congratulate yourself and your organization, because you are probably in good shape. If you are a member of the Board of Directors of a non-pro t and there is no good answer or even if you just don’t know the answer to many of these questions, then further attention is appropriate.
Author: Thomas M. Wells