Page 15 - C&A's Nonprofit Board Guide

NONPROFIT BOARD POLICIES & PROCEDURES NONPROFIT BOARD POLICIES & PROCEDURES

► Having a gift acceptance policy in place ► If the organization utilizes artificial
is considered a best practice by the intelligence (AI) technologies in its
IRS. A well-considered gift acceptance operations, the Board should consider
policy should be implemented by implementing an AI policy. This policy
the Board to assist with managing should outline guidelines for ethical
the expectations of donors, and also AI use, data privacy considerations,
serve as guidance for Board and staff transparency in AI algorithms, and
members who are on either the asking, accountability for AI-related decisions.
or receiving end, of contributions. It should also address how AI impacts
Adopting a gift acceptance policy will the organization’s mission and
► The process for determining ► The Board has a fiduciary responsibility help guide the organization with regard operations, ensuring alignment with its
compensation for the organization’s top to protect the assets of the nonprofit to accepting or declining some types values and goals.
management official (CEO, Executive and to use those assets to further the of gifts that may run counter to the
Director, etc.), as well as other officers nonprofit’s philanthropic mission. One nonprofit’s values and a nonprofit may All policies should be reviewed by legal
and key employees should include a way to achieve this may be to invest simply not be equipped to either dispose counsel before implementing them.
review and approval by independent the nonprofit’s cash in investment of or manage the ongoing requirements Otherwise, you may be opening your
persons, comparability data, and vehicles, such as stocks and bonds, of maintaining the value of certain gifts, organization and Board of Directors to
contemporaneous substantiation of the and other financial investments that such as real estate. potential, unintended liabilities.
deliberation and decision. This ensures can grow the nonprofit’s assets. The
that there is adequate support of the Board should develop an investment Other policies and procedures to consider, Please don’t hesitate to contact us should
thought process for setting salaries policy before investing significant which apply to specific organizations, are you require any assistance or have any
and bonuses, instead of just paying assets. The policy should focus on outlined below. questions related to the various policies and
someone unsubstantiated additional a prudent approach to investing ► If the organization has local chapters, procedures outlined above. While many
compensation. assets by: defining the nonprofit’s branches, or affiliates, then the Board policies can be somewhat generic and cover
► The Board should have in place or objectives for investing, identifying the should have policies and procedures all types of nonprofit operations, you may
nonprofit’s risk tolerance, and adopting
need additional policies to address issues
implement a policy that makes IRS that govern the activities of such
forms 1023 and 990, as well as its an investment policy. There are three chapters, affiliates, and branches to that are unique to your organization.
governing documents, conflict of competing interests for any funds that ensure their operations are consistent
interest policy, and financial statements a nonprofit invests: (1) protecting (and with the organization’s exempt purpose.
available to the public. This can be growing) the investment, (2) earning ► If the organization invested in,
achieved by making these documents a reasonable rate of return, and (3) contributed assets to, or participated in
available on the organization’s website, maintaining access to the invested cash a joint venture or similar arrangement
or outlining how and where they can when needed. An investment policy can with a taxable entity during the year,
be obtained on request. This creates address all three, as well as define who then the Board should have in place or
transparency in your organization. is accountable for investment-related
activities. The full Board may delegate implement a written policy or procedure
► The Board should have in place or the authority to oversee the nonprofit’s requiring the organization to evaluate
implement a policy whereby minutes investment portfolio to an Investment its participation in joint venture
of all Board meetings (and committee Committee and/or the nonprofit may arrangements under applicable federal
meetings for each committee with hire a professional investment manager. tax law, and take steps to safeguard
authority to act on behalf of the Evaluating the performance of the the organization’s exempt status with
governing body) are maintained. invested portfolio and the investment respect to such arrangements.
This creates a historical log of topics manager’s performance are the
discussed and decisions made, and responsibilities of the Board (or the
supports the diligence of the governance Investment Committee of the Board).
process in running the organization.

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