Welcome to the first in a two-part series where we will examine best practices for nonprofit excellence. In our first article, we’ll look at governance and accountability. Then, in Part 2, we’ll examine Financial Management and Fundraising.
Governance and Accountability Best Practices
Nonprofit boards of directors are stewards and guides of the organization’s direction and finances. They set policy and should actively support the organization’s mission by approving adequate funding, providing direct oversight to leadership, and evaluating the effectiveness of the organization’s programs and how well these programs achieve its mission.
Choose Board Members Carefully
However, the effectiveness of a board depends upon its members. There are several best practices for developing strong, effective, committed nonprofit boards. These practices include recruiting board members who reflect the constituency you serve. While the entire board may not be a perfect reflection of your constituency, it should at least reflect the majority of the people you serve.
You should also strive to find board members who are as deeply committed to your mission as you are. Board members should have a passion for your organization’s work.
Board Responsibilities
Board members should have a comprehensive understanding of their roles and responsibilities to the organization and the public. This can be achieved by providing a clear set of expectations and responsibilities, access to bylaws, articles, and other key organizational documents, an introduction to the organization’s work, and continuous opportunities to engage in discussions and review their duties.
Members must also fully comprehend their legal and fiduciary responsibilities, ensuring the effective execution of their duties in key areas. These include strategic planning, policy approval and periodic review, annual evaluation of the executive director’s performance and compensation, succession planning, determination of compensation structures, preparation of annual budgets and revenue plans, oversight of financial procedures, management of risks, and compliance with nonprofit financial filings and regulations.
Governance Frameworks
Boards should convene at least six meetings annually and expect regular attendance from members. A consistent meeting schedule helps board members remain actively engaged and accountable for their responsibilities. Term limits on board participation encourage a healthy influx of new ideas and perspectives.
Boards should adopt practices that maximize participation, including providing accommodations for remote or electronic participation during meetings, deliberations, or decision-making.
Committees are an important part of governance. A committee structure enables a board to function effectively by creating smaller working groups with specific goals.
Choose your board chair carefully. This person presides over meetings, oversees committees, and ensures all board members have access to the documents and materials they need to be effective. Like a good CEO or president, board chairs must be good leaders and communicators, able to run effective meetings, gain consensus among members, and listen to differences of opinion.
Accountability
Lastly, as part of governance and accountability, ensure that your organization follows best practices related to compliance with laws and regulations. For example, filing IRS Form 990 and the organization’s annual report is an essential part of nonprofit compliance.
Your organization is accountable to more than just the IRS. It’s accountable to its donors, members, or constituents. Ensuring that annual reports, audited financial statements, and other reports of how your organization manages its finances and achieves its mission are also part of nonprofit best practices. Prioritizing donor communication is a best practice worth following.
Next: Financial and Fundraising Best Practice Ideas
We hope you enjoyed Part 1 of this series. Next up, we’ll share financial management and fundraising best practice ideas.
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Welter Consulting
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.
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