Nonprofit Policy Book and How to Inventory and Update Policies

Every nonprofit strives to advance its mission. The board of directors is responsible for guiding the organization in its pursuit of that mission. It is the board’s responsibility to ensure that all assets and activities are used to further the mission, that conflicts of interest are recognized and disclosed, and that the organization obeys laws, regulations, and its bylaws. The board must ensure that decisions are in the best interest of the organization and accomplishment of its exempt purpose.

In adherence to these responsibilities, the board provides a foundation for the organization by adopting formal policies. Policies not only provide guidance, but they protect the organization from legal challenges, provide compliance with regulations and funding agencies, and set the tone for ethical and transparent conduct by employees. Policies also allow organizations to operate consistently when similar or recurring situations arise or when turnover in management and governance occurs.

If your nonprofit organization has been operating for some time, you likely have policies in place already. If you don’t have an inventory of your policies, now is a good time to create one. Start with identifying which policies you currently have in place. Every policy should be reviewed and approved by the board, so begin with reading previous board minutes. Also, the management team or department heads likely know of policies that affect them directly. Once you have identified what you have in place already, group them together in one location, electronically or on paper, and create an index, assigning numbers to each policy. Once you have the inventory of current policies, determine which additional policies are needed.

Policies to consider:

• Code of Ethics (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-code-of-ethics) 
• Conflict of Interest Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-conflict-of-interest-policy) 
• Credit Card Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-credit-card-policy) 
• Delegation of Authority Policy
• Designation of Funds Policy
• Document Retention Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-document-retention-policy) 
• Gift Acceptance Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-gift-acceptance-policy) 
• Information Security Policy 
• Investment Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-investment-policy) 
• Liquidity Policy (https://www.yeoandyeo.com/blog/start-creating-a-liquidity-policy-now) 
• Operating Reserve Policy 
• Restricted Net Assets Policy 
• Social Media Policy
• Travel and Expense Reimbursement Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-travel-and-expense-reimbursement-policy) 
• Whistleblower Policy (https://www.yeoandyeo.com/blog/nonprofit-quick-tip-whistleblower-policy)

In determining which policies your organization needs to implement, don’t assume that your organization needs a written policy for everything; customize this list to adhere to your organization’s specific needs. Also consider the enforceability of the policy, as well as the consequences of not adopting a policy. Be sure to use a template or sample policy, making appropriate changes for your organization.

As you identify the policies your organization needs to implement, consider the process for implementation. It may seem overwhelming, but use a system for addressing these policies. Determine who introduces a policy and who must review new policies before they go to the board. If your board meets once a month, you may consider reviewing and adopting a policy every month or every other month until you have each of them in place. One or two people should be assigned to manage the policy process.

A significant part of the policy process is communication. Policies will be effective only if the board and staff are knowledgeable about the policies and their significance. This is done through board orientation and new hire training, as well as ongoing meetings and trainings. Not only do your board and staff need to know what the policy is, but they also need to know who is responsible for enforcing it, who is monitoring compliance, and what the consequences are for noncompliance.

Forms should be developed where necessary. For example, your conflict of interest policy may stipulate that board members will disclose, at least annually, any conflicts of interest. To facilitate this disclosure, you may create a form that captures the appropriate information for board members to complete and return at your annual meeting.

By using a systematic approach, the board can provide the guidance and oversight needed to steer the organization in the pursuit of its mission. Formal policies provide a solid foundation for ensuring decisions are in the best interest of the organization, allowing board members to uphold their responsibilities and obligations to the organization. Effective board policies produce effective nonprofit boards.