Why Nonprofits Are Strengthened by Updating Policies

Is it necessary for nonprofit organizations to examine their policies every year? Changes that impact the organization, both internal and external, recommend an annual policy review.  Here are three types of changes that nonprofit boards should monitor.

  1. Changes in the IRS Form 990.  Whenever new standardsare introduced, it is prudent to review the potential effect on your current policies, such as those related to endowment spending. Pay attention to the specific policies that the 990 asks about.For example, conflict of interest, whistleblower, document retention, and gift acceptance policies should align with the 990.
  2. Changes in the economy.  Shifts in funding– current investment performance and long term plans – require reviews of financial status and goals and may warrant updates to your investment allocation policies.
  3. Adherence to existing policies.Many internal changes occur in a nonprofit organization that lead to confusion or forgetfulness about the specific procedures in place. Changes in leadership, including board members, as well as new staff and funders can affect memory for and adherence to approved policies.  A review of all documented and board approved policies should be an annual routine for board members and staff.  New members should become familiar with the policies as part of the orientation.

Here is a list of policies to consider.

  • Conflict of Interest Policy
  • Document Retention & Management Policy
  • Endowment Spending Policy
  • Expense Reimbursement Policy
  • Fraud Policy
  • Fundraising Policy
  • Gift Acceptance Policy
  • Investment Policy
  • Whistleblower Policy

Remember, current and relevant policies can lay the groundwork for stronger nonprofit organizations.

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