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May 8, 2018

Not-for-Profit Board Governance Best Practices to Implement

No matter the size of the organization, if you’re serving on the board you want to feel confident that the organization has the right governance policies and practices in place. Those pesky Form 990 questions actually offer a fantastic checklist for making sure your organization has the right policies.

Checklist of Must-Have Governance Policies and Practices

1) Maintain minutes of all board meetings and committee meetings for committees that are authorized to act on behalf of the board, such as an executive committee

This may seem obvious, but we still see organizations that fail to keep minutes. Minutes are crucial to maintaining transparency within the organization. Written agendas can also help keep board meetings on-track.

2) Provide a copy of the Form 990 to the board before it is filed

Require the board to acknowledge receiving and reviewing it. Tax forms can be difficult to understand, but it’s important the board recognizes their responsibility for this important document.

3) Adopt a written conflict of interest policy, and

4) Adopt a process for board members to disclose conflicts of interests annually and document in minutes of board meetings when the policy is invoked so that the nonprofit can demonstrate that compliance with the policy is regularly and consistently monitored and enforced

Unrecognized and unreported COIs can disrupt and even destroy a not-for-profit organization.

5) Adopt a written whistleblower protection policy

Employees and volunteers need to have a channel of communication to the board without fear of retribution

6) Adopt a written document retention/destruction policy

Most not-for-profit organizations, and even for-profit businesses, have a tough time keeping up with this. Technology is changing by the second and yesterday’s document retention policy is likely out-of-date or completely irrelevant. Coordinate with your IT consultant and attorney on the latest trends in cloud document storage and related issues.

7) Adopt a policy for the board’s review of the executive director/CEO’s compensation and benefits

Be sure to keep up-to-date with market trends and salary benchmarks for your organization’s size and structure. Guidestar publishes salary information to help with this process.

8) Adopt a written gift acceptance policy to govern the receipt of “non-cash” gifts, such as gifts-in-kind, and unusual gifts including land, vehicles, artwork, etc.

We’ve seen gifts of old/abandoned houses, land in remote parts of other states, even livestock!

9) If the organization has participated in a joint venture, adopt a policy to regularly review participation in partnerships and joint ventures to avoid any prohibited private benefit

More and more organizations are collaborating with other not-for-profits, and joint ventures can be a great way to share resources. Be sure to consult with your attorney and accountant/business advisor if you are entering into a joint venture.

These policies provide a good framework to ensure the organization’s board runs smoothly and ethically. If you have questions about implementing board governance policies in your not-for-profit organization, contact an Anders advisor, or learn more about Anders Not-for-Profit Services.

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