Between implementing new accounting standards, keeping up with regulatory changes, and meeting fundraising and program delivery goals, many not-for profits (NFPs) are stretched to their limits. So when it comes to creating or updating policies, it’s easy to push those tasks to the bottom of the list. However, having strong policies in place can protect your NFP from liability, help your organization adopt consistent and clear actions, and help with more efficient usage of limited resources. Sound policies can also help the governing board provide more effective oversight.
The following steps can help your NFP get the ball rolling when it comes to creating or updating policies:
Perform an inventory of the policies that are currently in place: This may require some digging if you don’t have a central repository for your organization’s policies. It may also include reviewing past board meeting minutes. As you identify the policies, create an index that lists all of them in one place. Include the date the board originally approved the policy and any subsequent dates they were reviewed and/or updated. The index can help with identification of the policies that have not been reviewed recently and finalize those that were never approved by the board.
Consider what policies should be in place and what they should include: Once the policies the organization has in place have been identified, management should consider what might be missing. Policies that a NFP organization may wish to consider having in place include:
- Designation of Funds Policy
- Delegation of Authority Policy
- Conflict of Interest Policy
- Telecommuting Policy
- Document Retention Policy
- Gift Acceptance Policy
- Information Security Policy
- Investment Policy
- Social Media Policy
- Whistleblower Policy
- Ethics Policy
- Travel Policy
Create a process for updating policies: Once your NFP has a comprehensive list of policies, it’s important to plan for periodic reviews. The frequency and time frame for review may be different for each policy. For instance, some organizations review their investment policy annually, and review other policies every three years. Establishing a policy review schedule will help to ensure that policies reflect the organization’s core values, mission and vision and are being adhered to by staff. In addition, consider establishing a consistent practice of having the board and/or board committees review and approve policies.
Establish a means of effectively communicating policies: For board members to comply with organizational policies, they need to be provided with the policies. Board members should not be placed in a position where they need to ask for them. They also need to understand them. It’s not enough to distribute the policies to the board members and ask them to sign a statement saying that they have reviewed and understand them. Formal training on the policies is necessary for board members to fully understand the need for the policies and the ramifications of not following them. The organization should consider offering comprehensive training on policies as part of the board orientation, augmented by an abbreviated policy training at each board meeting.
Ensure that policies are consistently enforced: The quickest way for policies to lose their effectiveness is to enforce them inconsistently or not at all. It is therefore important to make sure that management and the board take consistent action. Like the board, organizational staff need to understand the policies in order to comply with them. Formal policy training for staff is recommended during new hire orientation, augmented by abbreviated policy training during staff meetings.