Top 4 Policies You Need

September 28, 2010

Posted in Management.

Hooray! You’re about to read about policies, which is a term that means “document that resulted from learning a painful lesson.” That’s right – policies exist because someone, somewhere, and in some situation, did something that made someone else go “we need to make sure this never happens again.”

1. Conflict of Interest Policy

Non-profits, especially those reliant on volunteers, are often willing to accept help without much thought to motives. Unfortunately, some non-profit workers and volunteers seek to benefit from their work. Take care to regularly survey your board and staff about conflicts. In fact, the IRS Form 990 asks about a written whistleblower policy. If a donor or funding agency looks at your 990, what would your response say about you?

Example Conflict of Interest

In Roseland, Indiana, two out of the three members of the township board were married to each other. For the remainder of their terms, they wreaked havoc on the township by fining citizens who disagreed with their views, having people arrested, and refusing permits to businesses that conflicted with the council members’ own interests. It was a media gold mine resulting in arrests, jail time, and a documentary.

Sample Conflict of Interest Policies

2. Whistleblower Policy

If one of your employees or volunteers discovers illegal activity in the organization, it is imperative that the board of directors knows about it. But fear of retaliation, punishment, or even getting fired might keep good people from speaking up. The organization’s leaders should make it clear that employees will be protected from retaliation for speaking up. This is another question on your Form 990.

Example of a Whistleblower

Michael Paul, a former senior technical analyst in the California court system, publicly disclosed in 2009 that tens of millions of dollars worth of overpriced construction work was being steered to unlicensed contractors in a bid rigging scheme that involved his employer and public funds. The California Administrative Office of the Courts demoted Mr. Paul and extended the terms of the underlying contracts, contracts that are deemed void under the California Business & Professions Code. In response, Mr. Paul filed a taxpayer lawsuit. He was promptly fired.

Sample Whistleblower Policies

3. Board Member Job Descriptions

When you hire an employee, you detail his or her job expectations and duties. But does your board clearly understand what their job is? It’s important to set expectations before a board member joins. Creating job descriptions is a good way to do this, even for your current board members. Review these with your board each year to ensure that the descriptions stay accurate and as a reminder for your board members of what they should be doing.

Sample Board Member Job Descriptions

4. Record Retention and Destruction Policy

How long do you keep your tax returns? How about receipts? Annual reports, personnel files, board meeting and committee minutes? Not only is this asked on the Form 990, but it’s critical for your organization’s leadership to manage its own documents. As you bring in new executives and board members, access to such information is highly useful for decision-making. And destroying documents when they’re no longer useful (i.e., cleaning house) is helpful, too.

Example of Record Retention and Destruction Policy

Family Connections, an agency that provided early childhood education support to 32,000 Austin-area children and adults, couldn’t hide their losses. Former executive director Louanne Aponte has been charged with the theft of more than $330,000 from the agency; authorities are currently trying to extradite her from Venezuela. She volunteered her services as treasurer at other organizations, and allegedly stole from those as well. Stringent financial controls and review processes would have helped prevent the issue, but responding and filing charges may require a forensic audit – and solid record retention practices would ensure that the trail wasn’t wiped clean.

Sample Record Retention Policies

Why Having Policies Isn’t Enough

Sure, you could check a box on your 990 and that might be enough for you. But the real value is putting the policies into practice. Board member job descriptions are great, but only if you use them to encourage your board to get involved and truly contribute. Like a strategic plan, a policy does little good if it’s collecting dust on a shelf. Be sure to revisit your policies regularly, review them with your board and staff, and take steps to avoid ever having to point to a policy in court. After all, an ounce of prevention is worth a pound of policy.

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