Page 12 - C&A's Nonprofit Board Guide

NONPROFIT BOARD is fair, reasonable, and in the best interests of a policy that makes IRS forms 1023 and 990,

POLICIES & PROCEDURES the nonprofit, and consider alternative options. as well as its governing documents, conflict
The Attorney General will have power to bring
of interest policy, and financial statements
action to enjoin or rescind any related party
available to the public. This can be achieved
transaction which it determines do not meet the by making these documents available on the
standards. organization’s website, or outlining how and
► The Board should have in place or implement where they can be obtained on request. This
a written whistleblower policy to encourage creates transparency in your organization.
employees to make anonymous, good faith ► The Board should have in place or implement a
reports of suspected fraud, corruption, policy whereby minutes of all Board meetings
misappropriation, etc., without being fearful (and committee meetings for each committee
of retribution. Organizations with 20 or more with authority to act on behalf of the governing
employees and annual revenue in excess of $1 body) are maintained. This creates a historical
million are required to adopt a whistleblower log of topics discussed and decisions made,
policy and they must distribute a copy of the and supports the diligence of the governance
policy to all directors, officers, employees, and process in running the organization.
volunteers who provide substantial services to ► The Board has a fiduciary responsibility
the organization. The distribution requirement to protect the assets of the nonprofit and to
may be satisfied by posting the policy on the use those assets to further the nonprofit’s
organization’s publicly available website or at philanthropic mission. One way to achieve
its offices in a conspicuous location accessible
B ehind every successful nonprofit and other websites, and is accessible to anyone by employees and volunteers. The policy this may be to invest the nonprofit’s cash in
organization is a Board of Directors that
that would like to review it.
investment vehicles, such as stocks and bonds,
implements and follows best practice ► The Board must have written conflict of interest must have procedures for reporting suspected and other financial investments that can grow the
policies and procedures. Such policies help to policies that will govern the independence of violations, preserving confidentiality, and nonprofit’s assets. The Board should develop an
ensure that the Board remains aware of the status directors, officers, and employees, as well protecting whistleblowers from retaliation. The investment policy before investing significant
of the organization, creates accountability, and as transactions in which directors, officers, policy should designate an employee, officer, assets. The policy should focus on a prudent
helps the Board make unbiased decisions in and employees have a financial interest. This or director to administer and report to the Audit approach to investing assets by: defining the
the best interests of the organization. Outlined policy must cover definitions; disclosure or other committee of independent directors, or nonprofit’s objectives for investing, identifying
below are some practices and key policies that procedures; that the person with the conflict not if no committee, to the Board. the nonprofit’s risk tolerance, and adopting an
every organization’s Board should consider be present for the deliberation or vote; that he/ ► The Board should have in place or implement investment policy. There are three competing
implementing. It is important to note that effective she not improperly influence the deliberation a written document retention and destruction interests for any funds that a nonprofit invests:
January 1, 2017 an employee of an organization or voting; and the existence of the conflict and policy. There are certain types of documents (1) protecting (and growing) the investment,
cannot also function as the “chair” of its Board. process must be documented in the minutes of that may need to be retained for a period of (2) earning a reasonable interest rate, and (3)
Employees can still be on the Board, but this is any meeting where discussed or acted on. There time. Staff members should be aware of these maintaining access to the invested cash when
no longer considered best practice. The actual must should be annually-signed disclosure documents, so they can shred unnecessary needed. An investment policy can address all
functions of the Board position, not the title itself statements that the Secretary or Secretary’s papers, and retain key documents. three, as well as define who is accountable for
(chair, president, etc.), is most relevant. designee provides to the Chair of the Audit ► The process for determining compensation for investment-related activities. The full Board may
Committee or if there is not one, to the Chair the organization’s top management official (CEO, delegate the authority to oversee the nonprofit’s
► A formal IRS Form 990 review process should of the Board. The Board will need to actively investment portfolio to an Investment Committee
be implemented whereby a completed copy of assess and approve transactions between the Executive Director, etc.), as well as other officers and/or the nonprofit may hire a professional
IRS Form 990 is distributed or made available nonprofit and its directors, officers, and key and key employees should include a review and investment manager. Evaluating the performance
to all members of its governing body before employees, including their relatives and other approval by independent persons, comparability of the invested portfolio and the investment
filing the form. The Board should create and organizational affiliations. An interested person data, and contemporaneous substantiation of the manager’s performance are the responsibilities
implement a set process to be followed by the will have to disclose the material facts of his deliberation and decision. This ensures that there is of the Board (or the Investment Committee of the
organization to review the 990. This helps to or her relationship in a related party transaction adequate support of the thought process for setting Board).
ensure that the Board is aware of what is being to the Board, and be absent from Board salaries and bonuses, instead of just paying someone
reported to the IRS and the outside world, as discussions and votes. The Board will need unsubstantiated additional compensation. ► Having a gift acceptance policy in place is
an organization’s 990 is posted on GuideStar to approve and document that the transaction ► The Board should have in place or implement considered a best practice by the IRS. A well-
considered gift acceptance policy should be

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