Legal Compliance, Public Disclosure 1. A charitable organization should have a formally adopted, written code of ethics wi...
<ul><li>2. A charitable organization should adopt and implement policies and procedures to ensure that all conflicts of in...
<ul><li>3. A charitable organization should establish and implement policies and procedures that enable individuals to com...
<ul><li>4. A charitable organization should establish and implement policies and procedures to protect and preserve the or...
<ul><li>5. A charitable organization’s board should ensure that the organization has adequate plans to protect its assets—...
<ul><li>6. A charitable organization should make information about its operations, including its governance, finances, pro...
Effective Governance <ul><li>7. The board of a charitable organization should meet regularly enough to conduct its busines...
<ul><li>8. The board of a charitable organization should include members with the diverse background (including, but not l...
<ul><li>9. The board should hire, oversee, and annually evaluate the performance of the chief executive officer of the org...
<ul><li>10. The board of a charitable organization that has paid staff should ensure that the positions of chief staff off...
<ul><li>11. The board should establish an effective, systematic process for educating and communicating with board members...
<ul><li>12. Board members should evaluate their performance as a group and as individuals no less frequently than every th...
<ul><li>13. The board should establish clear policies and procedures setting the length of terms and the number of consecu...
<ul><li>14. The board should review organizational and governing instruments no less frequently than every five years. </l...
<ul><li>15. The board should establish and review regularly the organization’s mission and goals and should evaluate, no l...
Financial <ul><li>16. A charitable organization must keep complete, current, and accurate financial records. Its board sho...
<ul><li>17. The board of a charitable organization must institute policies and procedures to ensure that the organization ...
<ul><li>18. A charitable organization should not provide loans (or the equivalent, such as loan guarantees, purchasing or ...
<ul><li>19. A charitable organization should spend a significant percentage of its annual budget on programs that pursue i...
<ul><li>20. A charitable organization should establish clear, written policies for paying or reimbursing expenses incurred...
<ul><li>21. A charitable organization should neither pay for nor reimburse travel expenditures for spouses, dependents or ...
Fundraising <ul><li>  </li></ul><ul><li>22. Solicitation materials and other communications addressed to donors and the pu...
<ul><li>23. Contributions must be used for the purposes consistent with the donor’s intent, whether as described in the re...
<ul><li>24. A charitable organization must provide donors with specific acknowledgments of charitable contributions, in ac...
<ul><li>25. A charitable organization should adopt clear policies, based on its specific exempt purpose, to determine whet...
<ul><li>26. A charitable organization should not compensate internal or external fundraisers based on a commission or a pe...
<ul><li>27. A charitable organization should respect the privacy of individual donors and, except where disclosure is requ...
<ul><li>28. The board should take responsibility to ensure that the organization is pursuing adequate sources of revenue, ...
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Board Roles 4 16 2010

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An outline of non-profit board responsibilities applicable to small organizations. The principles were excerpted from Principles for Good Governance and Ethical Practice - A Guide for Charities and Foundations by Panel on the Nonprofit Sector convened by Independent Sector, October 2007

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  • Puts down on paper expectations for how volunteers, staff and board should act upon your values. Not required by law Not just doing things right, doing the right thing Have we articulated the values that drive our organization? Do you have a written code of ethics? Staff could research models and compare to values and figure out what is relevant – if it’s a priority for you
  • You have one - What is it? Do you know what it says? Can you find it when you need it? Conflicts can come up in supervising family – or when two different organizations (in which you are a member) request money from the same funder On 990 Form Include in all new board orientations Examples of when a conflict of interest has had a detrimental impact on another organization NOA – award of funds to Guy was a member of two boards – one organization gave out grants, one organization applied for grants – he didn’t declare a conflict of interest – before the conflict was discovered, he benefited personally as a participant in the recipient organization’s program – once discovered, he paid the recipient organization for the Declare conflict, don’t participate in discussion, don’t vote
  • Required by Sarbanes – Oxley 990 Asks if you Have one – you said no Why? Confidential process for complaints or reports of suspicious, illegal or unethical conduct Retaliation against whistleblowers can be a criminal offense Having a policy can help deter unacceptable acts – less likely to do something wrong if there’s a good way to rat you out Policy must take any complaint seriously and investigate it What does retaliation mean? – Fired, demoted, suspended, harrassed, not considered for promotion, any other kind of discrimination Even if claims are unfounded, organization may not reprimand the employee as long as employee has reasonable belief or suspicion that fraud occurred Staff could research examples of policies and draft policy for board approval
  • This applies to document retention and destruction Know where documents are, know how long you must keep records if they are specified – by a grantor, by law Policies should cover both electronic and physical records If you are under investigation or you have potential for being under investigation, make sure you destroy your records In 990 – ought to have a policy Do you have one? If you want to adopt policy it could be researched by staff
  • Do you have adequate insurance? Periodic review – where do you have insurance? – assess amount of coverage? – Children – keep them in a safe environment - do you have appropriate policies and procedures for staff/volunteers that interact with children Checks and balances to protect against fraud and embezzlement
  • Transparency equates with Trust Being able to differentiate between what must be public, what should be public, what must be kept confidential Posting 990 on website is a good way to share financial information Website can be used as depository for organizational info – cost effective, useful – budget, policies, program outcomes, annual report An annual report can be as short as one page
  • How do you decide when to meet? Do you have committees and are they performing? Could look at by-laws..
  • Diverse boards lead to better decision-making – having board members with expertise in budgeting and financial management is important. Relationship between board composition and ability to secure funding – if nobody has fundraising experience, then you have a board weakness What steps can you take to fill board positions with people that provide diversity Do you allow board members to participate in meetings electronically? When you recruit members, do you consider these factors
  • Legal and compliance issues – written annual performance protects organization if there are disagreements/disputes about employment Excessive compensation is a red flag Is full board involved and informed in performance evaluation?
  • The separation of roles is part of your by-laws Segregation of accounting duties?
  • How do you orient board members? Do they know personal liability for being on board and protection provided? Have adequate information to make decisions? Exercise individual responsibility for participating in meetings?
  • Before renewing term, board member should assess their performance How often do you think this should be done?
  • Pros and cons of term limit discussion What safeguards are in place to ensure a full board of engaged members Do you evaluate and remove members that aren’t fulfilling responsibilities? How do you keep board members that go off the board engaged in programs and services? Recruitment of board members through volunteer activities – Fishtrap example Community members move from non-voting role and can participate in decisions
  • What makes sense as timetable for review? Who’s responsible for reminding board to review? If you change by-laws or articles of incorporation, you must inform the IRS, and state if you change articles of incorporation – easiest to do as attachment to 990 If you want to make changes, you need to change governing documents.
  • Board needs to review strategic plan and determine if budget provides adequate financial and human resources to accomplish your goals When you review budget, you need to think about how that’s impacting mission and programs Are you getting adequate information about the effectiveness of your programs in meeting your mission Are beneficiaries engaged
  • Quarterly statement review – minimum standard CPA should report to board, not staff – board, finance committee or audit committee How do you know whether you need to have an audit or not? 500,000 of federal funds
  • Budget is financial strategic plan Fiduciary responsibility requires board to adopt budget and regularly review financial statements Decisions on levels of reserves or endowment and investment of funds should be done by the board Relevant comparisons – budget to actual, this year to last year Risk assessment – anticipated/significant changes to revenue Has the board established a cash reserve amount – board action if cash falls below X Laws regarding investment of funds
  • Considered to be a bad practice Have you ever made a loan to an officer? If bylaws don’t prohibit it, should you consider changing bylaws
  • Watch dog groups say you should spend 65% of revenue on programs What do you think you should shoot for All costs, including staff time and overhead, should be included when assessing program costs Budget needs to show fund-raising revenue and fund-raising expense – are you spending money on fund-raising that’s not carrying its weight
  • Do you have a reimbursement policy? Do you have an organization-owned vehicle? Compare travel policy to similar orgs? Clear, easy to follow guidelines are important
  • If role is conducting business for organization as member of committee/volunteer – then appropriate Otherwise expenses paid are considered compensation Policy on when they should be reimbursed Hit from IRS if you aren’t reporting reimbursement as compensation
  • Donor bill of rights Materials subject to review process – don’t have one person write and distribute pieces without review – Keep it truthful
  • If donor gives you something that says what it is for, it’s legally binding Donor intent should be clearly documented If you don’t agree with the donor conditions, don’t accept the donation How do you track donor intent? Example – if we can’t utilize money in manner for which they received them and we can’t do so, what is your responsibility to go back to donors? Renegotiate or refund – get back to donors quickly Museum example foundations questioned
  • Receipts for fund-raising dinner, can’t include value of dinner IRS example – Donor assesses value of gift in personal tax filing Charity must provide fair market value for anything it provides in return for the gift (written statement not required) Dinner – FMV is $25, ticket is $50, donor’s responsibility to only claim 25 as tax deduction If more than $75 – org provides written statement that gives estimate of value and excess amount that can be deducted Obligated to provide written acknowledgement for gifts of $250 or more
  • Do you have one? Especially important for non-cash gifts Does anyone know of a problem encountered by acceptance of gifts? If donor imposes too many restrictions, gift may not be deductable. IRS 990 asks whether orgs have gift acceptance policy that requrires review of nonstandard gifts such as property not readily marketable
  • Do you use external fundraisers – including grantwriters? Penalties for excessive compensation can apply to fundraisers Compensation should be based on performance and time and effort expended Example – grant writer hired to raise 80k – one org application takes 5 hours, one takes 20 hours – if paid 10%, 5 hour application overpaid. Can’t pay out of grant
  • Do you offer donors the option of being anonymous? Do you share lists with the public? Do you allow donors to opt out of future fund-raising requests? Must include certain donor information on 990, but that information is still considered to be confidential Do all board members understand that donor information should be kept confidential, unless donor seeks recognition?
  • Lots of ways for board to participate in fundraising Stuffing envelopes Identify names of potential donors Direct asks Volunteer at events
  • Board Roles 4 16 2010

    1. 1. Legal Compliance, Public Disclosure 1. A charitable organization should have a formally adopted, written code of ethics with which all of its directors or trustees, staff, and volunteers are familiar and to which they adhere.
    2. 2. <ul><li>2. A charitable organization should adopt and implement policies and procedures to ensure that all conflicts of interest, or the appearance thereof, within the organization and the board are appropriately managed through disclosure, recusal, or other means. </li></ul><ul><li>  </li></ul>
    3. 3. <ul><li>3. A charitable organization should establish and implement policies and procedures that enable individuals to come forward with information on illegal practices or violations of organizational policies. This “whistleblower” policy should specify that the organization will not retaliate against, and will protect the confidentiality of, individuals who make good-faith reports. </li></ul>
    4. 4. <ul><li>4. A charitable organization should establish and implement policies and procedures to protect and preserve the organization’s important documents and business records. </li></ul>
    5. 5. <ul><li>5. A charitable organization’s board should ensure that the organization has adequate plans to protect its assets—its property, financial and human resources, programmatic content and material, and its integrity and reputation—against damage or loss. The board should review regularly the organization’s need for general liability and directors’ and officers’ liability insurance, as well as take other actions necessary to mitigate risks. </li></ul>
    6. 6. <ul><li>6. A charitable organization should make information about its operations, including its governance, finances, programs, and activities, widely available to the public. Charitable organizations also should consider making information available on the methods they use to evaluate the outcomes of their work and sharing the results of those evaluations. </li></ul>
    7. 7. Effective Governance <ul><li>7. The board of a charitable organization should meet regularly enough to conduct its business and fulfill its duties. </li></ul><ul><li>  </li></ul>
    8. 8. <ul><li>8. The board of a charitable organization should include members with the diverse background (including, but not limited to, ethnic, racial, and gender perspectives), experience, and organizational and financial skills necessary to advance the organization’s mission. </li></ul>
    9. 9. <ul><li>9. The board should hire, oversee, and annually evaluate the performance of the chief executive officer of the organization, and should conduct such an evaluation prior to any change in that officer’s compensation, unless there is a multi-year contract in force or the change consists solely of routine adjustments for inflation or cost of living. </li></ul>
    10. 10. <ul><li>10. The board of a charitable organization that has paid staff should ensure that the positions of chief staff officer, board chair, and board treasurer are held by separate individuals. Organizations without paid staff should ensure that the positions of board chair and treasurer are held by separate individuals. </li></ul>
    11. 11. <ul><li>11. The board should establish an effective, systematic process for educating and communicating with board members to ensure that they are aware of their legal and ethical responsibilities, are knowledgeable about the programs and activities of the organization, and can carry out their oversight functions effectively. </li></ul>
    12. 12. <ul><li>12. Board members should evaluate their performance as a group and as individuals no less frequently than every three years, and should have clear procedures for removing board members who are unable to fulfill their responsibilities. </li></ul>
    13. 13. <ul><li>13. The board should establish clear policies and procedures setting the length of terms and the number of consecutive terms a board member may serve. </li></ul>
    14. 14. <ul><li>14. The board should review organizational and governing instruments no less frequently than every five years. </li></ul>
    15. 15. <ul><li>15. The board should establish and review regularly the organization’s mission and goals and should evaluate, no less frequently than every five years, the organization’s programs, goals, and activities to be sure they advance its mission and make prudent use of its resources. </li></ul>
    16. 16. Financial <ul><li>16. A charitable organization must keep complete, current, and accurate financial records. Its board should receive and review timely reports of the organization’s financial activities and should have a qualified, independent financial expert audit or review these statements annually in a manner appropriate to the organization’s size and scale of operations. </li></ul><ul><li>  </li></ul>
    17. 17. <ul><li>17. The board of a charitable organization must institute policies and procedures to ensure that the organization (and, if applicable, its subsidiaries) manages and invests its funds responsibly, in accordance with all legal requirements. The full board should review and approve the organization’s annual budget and should monitor actual performance against the budget. </li></ul>
    18. 18. <ul><li>18. A charitable organization should not provide loans (or the equivalent, such as loan guarantees, purchasing or transferring ownership of a residence or office, or relieving a debt or lease obligation) to directors, officers, or trustees. </li></ul><ul><li>  </li></ul>
    19. 19. <ul><li>19. A charitable organization should spend a significant percentage of its annual budget on programs that pursue its mission. The budget should also provide sufficient resources for effective administration of the organization, and, if it solicits contributions, for appropriate fundraising activities. </li></ul>
    20. 20. <ul><li>20. A charitable organization should establish clear, written policies for paying or reimbursing expenses incurred by anyone conducting business or traveling on behalf of the organization, including types of expenses that can be paid for or reimbursed and the documentation required. Such policies should require that travel on behalf of the organization is to be undertaken in a cost-effective manner. </li></ul>
    21. 21. <ul><li>21. A charitable organization should neither pay for nor reimburse travel expenditures for spouses, dependents or others who are accompanying someone conducting business for the organization unless they, too, are conducting such business. </li></ul>
    22. 22. Fundraising <ul><li>  </li></ul><ul><li>22. Solicitation materials and other communications addressed to donors and the public must clearly identify the organization and be accurate and truthful. </li></ul>
    23. 23. <ul><li>23. Contributions must be used for the purposes consistent with the donor’s intent, whether as described in the relevant solicitation materials or as specifically directed by the donor. </li></ul>
    24. 24. <ul><li>24. A charitable organization must provide donors with specific acknowledgments of charitable contributions, in accordance with IRS requirements, as well as information to facilitate the donors’ compliance with tax law requirements. </li></ul>
    25. 25. <ul><li>25. A charitable organization should adopt clear policies, based on its specific exempt purpose, to determine whether accepting a gift would compromise its ethics, financial circumstances, program focus, or other interests. </li></ul>
    26. 26. <ul><li>26. A charitable organization should not compensate internal or external fundraisers based on a commission or a percentage of the amount raised. </li></ul>
    27. 27. <ul><li>27. A charitable organization should respect the privacy of individual donors and, except where disclosure is required by law, should not sell or otherwise make available the names and contact information of its donors without providing them an opportunity at least once a year to opt out of the use of their names. </li></ul><ul><li>  </li></ul>
    28. 28. <ul><li>28. The board should take responsibility to ensure that the organization is pursuing adequate sources of revenue, including participation in fundraising activities. </li></ul><ul><li>  </li></ul>

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