Nonprofit leadership tends to lead with the heart and often overlooks the fact that nonprofits are businesses. They can be so focused on serving a community need in the short term that they miss important steps successful businesses must take to ensure they are protected in the long term.
It’s not an intentional oversight. Many organizations begin as volunteer-only with everyone consumed by getting the mission up and running and establishing day-to-day operations. Then, it’s all about growth and filling an important need. Down the road, when the organization has more staff, upscaled operations and is well-known in the community, a lack of rules, guidelines and structure can leave it open to a whole host of complications.
Preparing your nonprofit for sustainability is not just a financial exercise. Well-drafted nonprofit policies and procedures provide a blueprint for how your organization is run. In an industry with a lot of turnover, the right documentation also ensures everyone understands what is expected of them prior to coming on board. When problems arise, leadership doesn’t have to scramble for solutions, because those solutions will be written down.
Before I was in the nonprofit sector, I worked at a major financial corporation in a role that, at one point, focused almost entirely on paperwork, compliance and documentation. It was total overkill, but, 10 years later, I have found myself on a crusade to promote — of all things — the importance of paperwork, compliance and documentation.
I have seen many nonprofits face potential legal, reputational, structural and other serious risks that could have been avoided by having proper policies and procedures in place before a crisis hits.
Policies That Protect Your Revenue
If your mission depends on contributed revenue, then development is one of the business functions you can’t afford to run on unwritten rules. As an example, let’s take a look at how clear development policies can protect your fundraising and strengthen your bottom line.
Board Roles and Responsibilities Sheet
The board roles and responsibilities sheet is something all board prospects should receive prior to agreeing to join your board of directors. It should address both the board’s collective responsibilities and each member’s individual responsibilities. This document should give a brief overview of both board main functions of the board — governance and fundraising.
Board Fundraising Policy
A board fundraising policy, which details the board’s responsibility to ensure the organization has the resources it needs to fulfill its mission, should accompany the board roles and responsibilities sheet. This policy should contain examples of how board members can participate in development activities, as well as an annual requirement for board members to donate.
Annual Development Plan and Marketing Plan
Your annual development plan is a strategic plan to raise funds for the fiscal year. It should begin with a fundraising goal. Instead of your budget projection, aim for a cushion to protect against unforeseen expenses and to build operational reserves. This development plan also outlines the strategy you intend to implement to achieve that goal, and who in your organization (staff, board or volunteers) will complete each task. Since development and marketing go hand in hand, it can also contain a marketing plan for the year.
Donor Relations Policy
Your donor relations policy delineates donor rights and the steps the organization will take to both engage and inform donors, and to protect their privacy and financial information.
Gift Acceptance Policy
A gift acceptance policy becomes important as your organization grows since you may receive offers of hard assets like real estate, vehicles, artwork, etc. You must determine what your organization has the capacity to accept, and how you will deal with such items if they are received.
Other Critical Policy Areas
There are many more development-related examples, and development is just one part of your nonprofit that depends on clear policies and procedures. The same level of clarity is needed across the organization to protect your people, finances and mission.
Other topics of great importance include:
- financial and investment policies.
- human resources.
- legal and compliance issues.
- risk management and safety.
Documentation That Protects Your Mission
The other side of the paperwork coin is documentation. Just as publicly traded companies must report to their shareholders, nonprofits must report to their donors. Whether you are sharing deliverables with a grantor or sending an impact report to an individual donor, you must be able to demonstrate that your mission is producing the intended results.
Detailed documentation can also protect your organization from a number of threats. Written reporting and record-keeping policies will help avoid personnel, legal, reputational and other future complications.
These documents aren’t set in stone. They should be reviewed and updated periodically as your organization grows and changes.
You don’t have to create anything from scratch. This comprehensive list of policy documents (opens as a pdf) from Impact 8 can help you determine what your organization needs. A lot of sample language is available online.
Make paperwork a priority today so you can continue to carry out your mission and serve your community for years to come.
The preceding content was provided by a contributor unaffiliated with NonProfit PRO. The views expressed within may not directly reflect the thoughts or opinions of the staff of NonProfit PRO.
