Page 12 - C&A's Nonprofit Board Guide
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NONPROFIT BOARD ► The Board must have written conflict ► The Board should have in place or
of interest policies that will govern
implement a written whistleblower
POLICIES & PROCEDURES the independence of directors, officers, policy to encourage employees to
make anonymous, good faith reports
and employees, as well as transactions
of
suspected
fraud,
corruption,
in which directors, officers, and
employees have a financial interest. misappropriation, etc., without being
This policy must cover definitions; fearful of retribution. Organizations
disclosure procedures; that the person with 20 or more employees and annual
with the conflict not be present for the revenue in excess of $1 million are
deliberation or vote; that he/she not required to adopt a whistleblower
improperly influence the deliberation or policy and they must distribute a copy
voting; and the existence of the conflict of the policy to all directors, officers,
employees, and volunteers who provide
and process must be documented in
A successful nonprofit organization the minutes of any meeting where substantial services to the organization.
relies on a Board of Directors that
adheres to best practice policies and discussed or acted on. There should be The distribution requirement may
procedures. Such policies help to ensure annually-signed disclosure statements be satisfied by posting the policy on
that the Board remains aware of the status of that the Secretary or Secretary’s the organization’s publicly available
the organization, creates accountability, and designee provides to the Chair of the website or at its offices in a conspicuous
helps the Board make unbiased decisions Audit Committee or if there is not location accessible by employees
in the best interests of the organization. one, to the Chair of the Board. The and volunteers. The policy must have
Outlined below are some practices and Board will need to actively assess procedures for reporting suspected
key policies that every organization’s and approve transactions between the violations, preserving confidentiality,
Board should consider implementing. It nonprofit and its directors, officers, and protecting whistleblowers from
is important to note that effective January and key employees, including their retaliation. The policy should designate
1, 2017 an employee of an organization relatives and other organizational an employee, officer, or director to
cannot also function as the “chair” of affiliations. An interested person will administer and report to the Audit
its Board. Employees can still be on the have to disclose the material facts of or other committee of independent
Board, but this is no longer considered best his or her relationship in a related party directors, or if no committee, to the
practice. The actual functions of the Board transaction to the Board and be absent Board.
position, not the title itself (chair, president, from Board discussions and votes. ► The Board should have in place
etc.), is most relevant. The Board will need to approve and or implement a written document
► A formal IRS Form 990 review process document that the transaction is fair, retention and destruction policy. There
reasonable, and in the best interests of
should be implemented whereby a the nonprofit, and consider alternative are certain types of documents that
completed copy of IRS Form 990 is options. The Attorney General will may need to be retained for a period of
distributed or made available to all have power to bring action to enjoin time. Staff members should be aware
members of its governing body before or rescind any related party transaction of these documents, so they can shred
filing the form. The Board should create which it determines do not meet the unnecessary papers, and retain key
and implement a set process to be standards. documents.
followed by the organization to review
the 990. This helps to ensure that the
Board is aware of what is being reported
to the IRS and the outside world, as
an organization’s 990 is posted on
GuideStar and other websites, and is
accessible to anyone that would like to
review it.
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