Creating policies

Don’t reinvent the wheel

Since the revised IRS Form 990 debuted a few years ago, many nonprofits have been reviewing the policies on their books, improving them, and adding new policies to their collections. Form 990 doesn’t state that these policies are required, but asking about them implies that they should be in place. Form 990 aside, the public — concerned by stories of nonprofit mismanagement — has put more emphasis on nonprofit governance, including policy adoption and enforcement.

There’s good news about this policy-making uptick: Because so many organizations already have policies on the books, you can learn from their successes.

Types of policies

What types of policies do nonprofits need? Form 990 asks nonprofits if they have policies on:

• Conflicts of interest,
• Whistleblower protection,
• Document retention and destruction,
• Chief executive compensation, and
• Activities of chapters, affiliates and branches.

Policies on gift acceptance, investment practices and joint ventures also have become more popular in recent years.

Learning from peers

Here is a selected listing of organizations and websites that can help you in developing or improving your nonprofit’s policies:

BoardSource. At http://www.boardsource.org, you can purchase policy samplers on a variety of topics. An extensive policy sampler contains 241 policies on 48 topics under the categories of ethics and accountability, board and board members, chief executive, finance and investments, fundraising, personnel, communications and committees.

Independent Sector. This nonpartisan coalition of approximately 600 national organizations, foundations and corporate philanthropy programs posts model policies at http://independentsector.org under “The Principles for Good Governance and Ethical Practice Resource Center.” You can download them for free.

National Council of Nonprofits. At http://www.councilofnonprofits.org, members have access to a variety of policy-related information, including a Form 990-related “governance practices” checklist and sample policies on conflict of interest, document retention and destruction, board review of compensation policy, joint venture and partnership, and other topics.

Customize, customize, customize

Although you should customize your own policies — rather than go with a boilerplate — there’s something to be said about not reinventing the wheel. Just be sure to carefully adjust policies from other sources to fit your operation. Make sure, for example, that the processes are practical for your size and structure, and that the titles and positions listed for policy oversight are correct.

Your CPA can help you customize a policy or review the one you devise. Your lawyer also should review any policy before it’s adopted.