Recordkeeping Part III - Policies



 Once you’ve become a nonprofit organization it is highly recommended that your Board of Directors adopt policies, in order to successfully manage the nonprofit activities. The Board of Directors’ decision on which policies to adopt should be based on the organization’s structure, size and type. Furthermore, nonprofit organizations that fail on adopting such policies have a greater chance of being audited by the IRS. 



Some of the policies that your nonprofit organization may adopt include:


1. Conflict of Interest Policy

The conflict of interest policy is a strategy that organizations should adopt as a means to establish procedures that will offer protection against charges of impropriety involving officers, directors or trustees. This is one of the policies that the organizations should provide and keep for their records when applying for their 501c3 exempt status with the IRS. Furthermore, part VI/Section B - Policies of form 990 (nonprofit informational tax return) is specifically asking for this policy.



2. Whistleblower Policy

The whistleblower policy is a written policy in which the procedures for reporting financial and other questionable practices can be reported. This policy gives the chance to employees to report to the compliance manager (responsible Board member) about any improprieties in a confidential manner. The whistleblower policy is mainly adopted by big and well-established nonprofit organizations. Small nonprofits are not required to adopt it.



3. Document Retention Policy

The purpose of the document-retention policy is to provide guidance for your nonprofit organization on how long and what type of documents to be kept. At the same time the policy provides guidance on when it is appropriate for some documents to be destroyed. In its nature the document-retention policy is a good one, as it helps nonprofits demonstrate legal compliance.



4. Chapter/branch Policy

If your nonprofit organization has local chapters, it should adopt a chapter/branch policy. This policy usually includes information on how the activities between the chapters are maintained and monitored; any specific procedures for reporting, financial management, etc.



5. Board Decision-Making Policy

The Board Decision-making policy is another option for the Board of Directors to establish good principles in serving the nonprofit organization. This policy is more applicable to large nonprofit organizations, as the small ones usually include information about their decision-making process in their Bylaws.



6. Gift/Grants Acceptance Policy

This is another type of policy that the nonprofit organizations may accept in order to standardize the process of accepting gifts and grants. This policy is especially applicable to nonprofits that receive non-standard gifts.

There are some other types of policy that your Board of Directors may consider adopting, such as: Joint Venture Policy, Board Attendance Policy, Board Media Relations Policy, etc. All the above policies are optional except for the Conflict of Interest Policy, which each nonprofit should adopt.

Whatever policies your nonprofit organization decides to adopt, the Board of Directors should be aware of the fact that these are governing policies that need to be reviewed and revised on a regular basis. The governing policies and best practices for operation will bring a positive feedback to your organization’s supporters and donors that all the operations are in compliance.

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