As new board directors get indoctrinated into their positions, they quickly see how much a nonprofit board of directors handles. The wealth of policies and procedures alone provides many hours of reading material. The benefit of having clear and accessible policies and procedures is that they ensure that everything gets managed consistently. Nonprofit policies and procedures ensure that the organization responds fairly and equitably in all situations.
Policies and procedures serve as a reference for the staff, volunteers, and the board. Nonprofit boards that take a modern approach to governance will benefit most by storing their policies and procedures on a BoardEffect board management software system.
Nonprofit policies and procedures can affect various parts of a nonprofit’s work including governance, employee behavior, employee benefits, and anything else that needs to be clearly documented.
Governing Policies and Procedures
The government requires nonprofits to complete and register basic organizational documents to remain in compliance with laws and regulations. Organizational documents are not really policies and procedures per se, but it’s important to store them online so that board directors can have easy access to them when communicating the purpose of the organization and its programs. These documents include the organization’s mission statement, bylaws, Articles of Incorporation, and organizational chart. These are the important documents that clarify why the organization was formed.
Basic Board Policies
Depending on the type and size of the nonprofit, the types of policies that the nonprofit should devise will vary substantially. Some of the basic nonprofit policies and procedures have to do with conflict of interest, whistleblower, code of ethics, anti-harassment, and records retention and destruction.
Establishing a whistleblower policy is a regulatory issue as outlined in the Sarbanes-Oxley Act. The purpose of a whistleblower policy is to protect an employee from being fired in a situation where they chose to report misconduct within the organization. Whistleblower policies prevent fraudulent behavior in all types of organizations. The policy should consist of a written process whereby the organization will deal with employee or volunteer complaints while alleviating any concerns over retaliation to the reporting employee.
Conflict of Interest Policy
A conflict of interest is an activity or interest that would cause the lack of objectivity regarding a particular transaction being reviewed by the board of directors. The IRS requires nonprofit boards to have a conflict of interest policy to ensure that board directors are making decisions objectively. The Code of Federal Regulation addresses conflict of interest in the Code of Conduct section.
Records Retention and Destruction
The Sarbanes-Oxley Act also requires nonprofit organizations to have a formal records retention and destruction policy. The Act was passed in response to some major corporate and accounting scandals where accountability was in question. Records retention and destruction is a good policy to have even for organizations that aren’t subject to Sarbanes-Oxley. State and federal laws also list records retention as a requirement for receiving grants. Auditors in nonprofits should check to see that they are meeting state and federal levels of requirement for grant monies. Nonprofit should keep all documents for at least three years and longer in some cases.
Code of Ethics
A code of ethics outlines the ethical principles that govern a nonprofit’s behavior and decisions. In a nonprofit organization, the code of ethics applies to the board of directors, managers, employees, and volunteers. The code of ethics also becomes part of the fabric of the organizational culture.
Physical, verbal, emotional, and sexual harassment can occur in any setting, even in the boardroom. Nonprofit leaders should be proactive about preventing and addressing harassment in all forms. Nonprofit board directors can face legal liability for failing to protect employees and volunteers from harassment, illegal discrimination, or retaliation for complaining about any type of harassment.
Other Nonprofit Policies and Procedures to Consider
Many of the other types of policies and procedures apply to employees and volunteers. The most convenient way to provide employees and volunteers with copies of the policies and procedures is to combine them into an employee or volunteer manual. Recipients of the manual should acknowledge in writing that they received it.
A notable issue that nonprofits should consider for the current times is having a policy on internet usage, business equipment usage, and social media. Employees and volunteers may need to access the nonprofit’s internet service to perform many of their regular duties. Both parties need to be clear on how employees and volunteers may use the internet during work or volunteer hours. Nonprofits should also monitor internet usage and provide the proper passwords for sites they’re allowed to use.
Nonprofit boards should also consider developing policies and procedures for such issues as equal opportunity employment, anti-discrimination, disciplinary procedures, overtime policies, weekend pay, and flextime. In addition, they should consider such issues as drugs, alcohol, smoking, safety, and the dress code.
Another area that nonprofits should address is benefits. Employees and volunteers should be given written policies on vacation, sick leave, holidays and religious observances, medical leave, maternity leave, personal time, and bereavement.
Nonprofits that offer their employees health benefits should give them written information on medical insurance, dental insurance, COBRA, life and disability insurance, and workers compensation.
Accessibility of Nonprofit Policies and Procedures
Having written policies and procedures is only one part of the communication process for ensuring effective and efficient operations of programs and activities. As part of their oversight duties, boards should ensure that they communicate those policies and procedures clearly to the employees, volunteers, and the board so that everyone knows and understands their expectations.
Next steps include training staff and volunteers on policies and procedures and conducting regular assessments to ensure that everyone is following them. Board directors should also review the policies and procedures at least annually.
BoardEffect provides modern board management software for the types of modern problems that nonprofit boards encounter in their work. BoardEffect provides a confidential platform where board directors have an online space to develop their policies and procedures and store them safely in the cloud.