Putting Board Governance & Policies In Perspective – Rea CPA

Putting Board Governance & Policies In Perspective

A job can’t be carried out correctly if you don’t understand your duties.

Board Governance For Nonprofit Organizations And The Importance Of Written Policies

This may come as a surprise to you, but a major challenge most boards and board members have in nonprofit organizations is that they don’t fully understand their responsibilities and roles. This confusion then leads to dysfunction that plagues your entire nonprofit from the top down. However, communication and having the proper policies in place can help you guide your organization to success.

Read Also: Start Engaging With Your Nonprofit’s Leadership

A job can’t be carried out correctly if you don’t understand your duties. That’s why it’s critical for all nonprofit boards to take the necessary time to ensure their members understand what’s needed and expected of them before it’s too late. Furthermore, it’s up to the other board members to hold each other accountable if another member gets off track.

Policies & Responsibilities

Your board members must know what is expected of them and many of your organization’s policies need to be written accordingly. This starts with outlining the fundamental duties of your board and the important policies your organization has in place.

  • Important aspects of board governance and the significant roles board members must complete, include:
    • Creating policies and procedures
    • Setting goals for the nonprofit organization
    • Authorizing major transactions
    • Overseeing decision-making
    • Reviewing/settling budgets and effectively managing organizational resources
    • Helping to accomplish the nonprofit’s mission
  • Important policies for nonprofit organizations to have in writing, include:
    • Determination of compensation for officers and key employees
    • Conflict of interest guidelines
    • A “Whistle Blower” provision
    • Document retention and destruction policy

It’s important that your nonprofit’s roles and policies are closely monitored closely throughout the year. Additionally, significant policies such as conflict of interest and determination of documentation should be reviewed annually to ensure they’re consistent. Your organization’s other policies and specific roles should be updated every three to five years to ensure accuracy as your nonprofit evolves over time.

Lay Out Your Roles And Policies

Don’t let dysfunction cripple your nonprofit. If you don’t have your board members’ roles outlined and policies written out, start an implementation plan today. If you need help or have any further questions, email Rea & Associates. Our team of nonprofit specialists are happy to talk to you about ways to improve your organization.

By Lane McCartney, CPA (Cambridge office)

Check out these articles for additional insight to help manage your nonprofit:

Does Your Nonprofit’s Operating Reserve Balance Stack Up?

Nonprofits Consider For-Profit Advantages

Nonprofit Leaders: Protect Yourself From Personal Liability