Nonprofit Quick Tip: Delegation of Authority Policy

Do you know who in your nonprofit has authority to make certain types of decisions? The guidelines should be spelled out in a delegation of authority policy.

The delegation of authority policy should first delineate which decisions must be addressed by the board of directors. This likely includes strategic items such as the organization’s mission and some higher level items such as approvals of the budget, financial statements, and IRS Form 990. Second, it should indicate which things management is specifically responsible for and that any matters not specifically identified to the board that relate to day-to-day management are delegated to management.

Also, a delegation of authority policy may identify certain matters that specific roles in the organization have authority over, establish approval limits, and establish parameters on the temporary delegation of authority.

Having these matters documented in a policy makes it very clear to everyone in the organization who has the authority to make different decisions. This can help make operations more efficient and helps ensure that employees are properly following the internal controls which are in place.