Description
The Principles and Practices for Nonprofit Excellence are based on the fundamental values of quality, responsibility and accountability. The 11 accountability principles distinguish the nonprofit sector from government and the business sector.
1
Principles & Practices
for Nonproft Excellence
A guide for nonproft staff and board members
A guide for nonproft staff and board members
The Minnesota Council of Nonprofts (MCN) is a statewide
association of more than 2,000 Minnesota nonproft
organizations. Through its website, publications, workshops
and events, cost-saving programs and advocacy, MCN works
to inform, promote, connect and strengthen individual
nonprofts and the nonproft sector.
Copyright © 2014 by the Minnesota Council of Nonprofts. All rights reserved. No part of this publi-
cation may be reproduced or transmitted in any form or by means electronic or mechanical without
the written consent of the Minnesota Council of Nonprofts.
Principles & Practices
for Nonproft Excellence
2
Introduction
IN 1994 THE MINNESOTA COUNCIL OF NONPROFITS (MCN) became
the frst state association of nonprofts to develop a set of accountability
principles and management practices. This revised edition completely up-
dates those original standards while remaining true to MCN’s longstanding
goal of open access to our comprehensive policies for strong public account-
ability.
The Principles and Practices for Nonproft Excellence are based on the fun-
damental values of quality, responsibility and accountability. The 11
accountability principles distinguish the nonproft sector from government
and the business sector. The 192 management practices provide specifc
guidelines for individual organizations to evaluate and improve their opera-
tions, governance, human resources, advocacy, fnancial management and
fundraising.
This document has three intended purposes. The frst is to provide indi-
vidual organizations striving for excellence with a tool for strategic planning
and operational evaluation relative to the rest of the nonproft sector. The
second is to support the growth and quality of the sector. The third is to
increase public understanding of the role and contributions of the nonproft
sector.
The Principles and Practices for Nonproft Excellence are not meant for use
by funders or government to evaluate nonproft organizations, nor are they
intended as a substitute for the wisdom of directors or trustees of individual
organizations. Given some blurring of the lines between the three sectors of
the economy, this document is designed to support the effective functioning
of our sector by recommending specifc best practices.
This revised edition of the Principles and Practices for Nonproft Excellence
was developed by a 37-member committee representing the diversity of
Minnesota’s nonproft community. A complete list of members can be found
on page 5.
Every nonproft organization needs a strong foundation of compliance and a
broad organizational awareness of laws and regulations related to fundrais-
ing, licensing, fnancial accountability, human resources, lobbying, politi-
cal advocacy and taxation. The Principles and Practices presume that each
organization is in compliance with applicable laws, including Minnesota
Chapter 317A (the Minnesota Nonproft Corporation Act); relevant sections
of the Internal Revenue Code; and other federal and state laws dealing with
employment, occupational health and safety, and more.
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Principles and Practices for Nonprofit Excellence
Minnesotans join together throughout the state to form associations and
organizations of every type. The Principles and Practices for Nonproft
Excellence are of particular interest to 501(c)(3) organizations. However,
the information and concepts apply broadly to all types of nonproft orga-
nizations. Because of the sector’s diversity by size, region and activity area,
each organization must determine whether or not an individual practice is
appropriate for its current situation.
Nonproft organizations have proven essential to the vitality of communi-
ties. They enrich quality of life, epitomize the highest societal values and
strengthen democracy. Volunteers, board members and employees become
involved with a nonproft because of the organization’s public beneft mis-
sion. Therefore the continued success of Minnesota’s nonproft organiza-
tions requires broad public support and confdence. This document publicly
testifes the nonproft sector’s commitment to excellence—always for the
beneft of society.
The critical role of nonprofts in democratic societies underscores the im-
portance of knowing how to form, govern and manage these organizations.
The growth and progress of the nonproft sector depends on developing
and improving this body of knowledge. Since its founding by Minnesota’s
nonprofts, MCN has provided research, education and technical assistance
to strengthen nonproft management and governance. The Principles and
Practices form an ongoing framework for MCN’s trainings, publications
and other educational materials. MCN’s website also provides access to
templates, samples and techniques to help organizations easily and cost-
effectively implement the Principles and Practices.
Note to Readers: Please be aware that certain words have particular
meanings in this document:
• “Must” is used to describe practices required by state or federal law,
and is noted with this symbol ; the online version of the
Principles and Practices (located at www.minnesotanonprofts.
org) will soon include direct web links to relevant federal and state
statutes and reporting forms.
• “Should” is used to describe highly recommended practices.
• “Constituents” describes people with a stake in the success of the
organization and may include members, neighbors, clients,
volunteers and contributors.
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An Updated History of the Principles and Practices
THE MINNESOTA COUNCIL OF NONPROFITS BEGAN THIS DOCU-
MENT on nonproft accountability at its 1993 Annual Conference. We
continued to develop it through community meetings, workshops and dis-
cussions throughout the state. Under the leadership of Dr. James P. Shannon
and James V. Toscano, MCN joined with two organizations—the Charities
Review Council of Minnesota and MAP for Nonprofts—to convene discus-
sions on nonproft standards and to develop principles of sound nonproft
management and accountability. The frst draft of the Principles and Prac-
tices for Nonproft Excellence was circulated to nonproft and philanthropic
leaders throughout Minnesota and the United States in 1994 and was ap-
proved by MCN’s board of directors in 1998.
In 2005, MCN conducted a major revision of the Principles and Practices,
led by James V. Toscano. In 2013, MCN gathered a new group of nonproft
leaders through the Principles and Practices Advisory Committee to review
necessary changes. James V. Toscano returned as a co-chair of the commit-
tee joined by Rinal Ray and Armando Camacho, with Laura Johansson as
facilitator. The new draft incorporated input from these nonproft leaders
from across the state, who are listed on the following page.
Over the past ten years, a growing number of associations of nonproft
organizations throughout the United States have used MCN’s Principles
and Practices for Nonproft Excellence as the basis for similar documents in
their states. MCN has been pleased to give permission to adapt the Prin-
ciples and Practices for Nonproft Excellence to statewide organizations,
including:
• Arkansas Coalition for Excellence
• Colorado Nonproft Association
• Connecticut Association of Nonprofts
• Kentucky Nonproft Leadership
• Maine Association of Nonprofts
• Michigan Nonproft Association
• Mississippi Center for Nonprofts
• Nonproft Association of the Midlands (Nebraska)
• North Carolina Center for Nonprofts
• South Carolina Association of Nonproft Organizations
• Texas Association of Nonproft Organizations
• Center for Community Based and Nonproft Organizations (Texas)
MCN will cooperate with these associations and others to develop and share
educational tools and resources to strengthen the accountability and
effectiveness of nonprofts everywhere.
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• Armando Camacho, Opportunity Partners (co-chair), Minnetonka
• Rinal Ray, formerly with Minnesota Justice Foundation (co-chair), Minneapolis
• James V. Toscano, Toscano Advisors, LLC (co-chair), Saint Paul
• Judy Alnes, MAP for Nonprofts, Saint Paul
• Shannon Benolken, formerly with Itasca County Habitat for Humanity,
Grand Rapids
• Kerrie Blevins, The Patrick and Aimee Butler Family Foundation, Saint Paul
• Susie Brown, Minnesota Council of Nonprofts, Saint Paul
• David Brown, CBIZ, Saint Paul
• Shelly Chamberlain, Minnesota Council of Nonprofts, Saint Paul
• Bobbi Cordano, Amherst H. Wilder Foundation, Saint Paul
• Christine Durand, Minnesota Environmental Partnership, Saint Paul
• Amel Gorani, Consultant, Northfeld
• Phil Hansen, American Red Cross Twin Cities Area Chapter, Minneapolis
• Mary Jones, YWCA of Minneapolis, Minneapolis
• Jason Kujanen, formerly with MACC CommonWealth, Minneapolis
• Jeff Larson, Mille Lacs Band of Ojibwe Health and Human Services, Onamia
• Anne Long, Plymouth Christian Youth Center, Minneapolis
• Paul Masiarchin, Minnesota Council of Nonprofts, Saint Paul
• Sonja Merrild, Blandin Foundation, Grand Rapids
• Heidi Neff Christianson, Nilan Johnson Lewis, Minneapolis
• Katie Nelsen, Animal Humane Society, Golden Valley
• Janet Ogden-Brackett, Nonprofts Assistance Fund, Minneapolis
• Jon Pratt, Minnesota Council of Nonprofts, Saint Paul
• Sondra Reis, Minnesota Council of Nonprofts, Saint Paul
• Robert Routhieaux, Hamline University School of Business, Saint Paul
• Patrick Rowan, Metro Meals on Wheels, Inc., Minneapolis
• Jenna Salinas, Charities Review Council, Saint Paul
• Lori Saroya, Council on American - Islamic Relations, Minnesota, Minneapolis
• Tim Schmutzer, Pine Habilitation and Supported Employment, Sandstone
• Rich Smith, Family Pathways, Cambridge
• Sheila Smith, Minnesota Citizens for the Arts, Saint Paul
• Linda Tacke, Carl and Eloise Pohlad Family Foundation, Minneapolis
• Paul Vliem, Minnesota Council of Nonprofts, Saint Paul
• Melinda Wedzina, Feeding Our Communities Partners, Mankato
• John Wurm, Minnesota Council of Nonprofts, Saint Paul
• Reid Zimmerman, RA Zimmerman Consulting, Pine City
MCN’s board of directors approved this revision of Principles and
Practices for Nonproft Excellence on May 20, 2014.
Principles and Practices Advisory Committee
THE PRINCIPLES AND PRACTICES FOR NONPROFIT EXCELLENCE
are meant to educate nonproft leaders, board members, managers, volun-
teers and staff about the fundamental roles and responsibilities of nonproft
organizations. As their adoption spreads, MCN believes they will strengthen
both individual nonprofts and the sector as a whole.
The Minnesota Council of Nonprofts is sensitive to the large amount of
sometimes contradictory advice directed at nonprofts. MCN expects that
the Principles and Practices will be useful to virtually every nonproft
organization as they form a set of reference tools that can be adapted to
meet particular needs and circumstances.
Clearly a large list of recommended practices presents challenges for small
organizations with limited resources. Small and mid-sized organizations
may have limited or no staff, or lack specialized positions to develop recom-
mended policies and systems. To make this task more practical and achiev-
able, MCN provides additional tools and resources on its website to help
organizations prioritize practices for different sizes and stages of organiza-
tions. These tools address questions about why practices are recommended
and the steps organizations can take to achieve them.
The creativity and diversity of the nonproft sector and the signifcant
variations in local conditions means that some practices may not ft every
situation and will necessarily vary in application. In adapting and adopting
the Principles and Practices, each organization will face dozens of specifc
choices about how to accomplish its mission and structure its work, requir-
ing deliberation and modifcations by board members and managers.
They are not intended for use by funders or by government to evaluate orga-
nizations nor are they intended as a substitute for the wisdom of directors
or trustees of individual organizations. Nevertheless, the nature of nonproft
activity requires that organizations fully commit to public accountability
and devote the time and attention necessary to be transparent and respon-
sive to the community.
MCN welcomes your feedback. Please let us know how you applied the
Principles and Practices for Nonproft Excellence in your organization.
Additional information, links to tools and templates, and a feedback form
are available on MCN’s website at www.minnesotanonprofts.org.
Advice for Users
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Principles & Practices
for Nonproft Excellence
6
The Principles of Nonproft Excellence
Governance
A nonproft’s board of directors is responsible for developing, defning and
reviewing the organization’s mission and for providing overall leadership
and strategic direction to the organization. Boards are not owners of the
organization but are stewards of the organization’s mission and resources.
Each nonproft board should actively set policy and ensure that the orga-
nization has adequate resources to carry out its mission, provide direct
oversight and direction for the executive director and the organization as a
whole, and evaluate its own effectiveness as a governing body, as a group of
volunteers and as representatives of the community in upholding the public
interest served by the organization.
Transparency and Accountability
Nonprofts have a legal and ethical obligation to their constituents and the
public to conduct their activities with accountability and transparency. Non-
profts should regularly and openly convey information to the public about
their mission, activities, fnances, accomplishments and decision-making
processes. Information from a nonproft organization should be easily ac-
cessible to the public. It should establish external visibility and build public
understanding and trust in the organization.
Financial Management
Nonprofts have an obligation to act as responsible stewards in managing
their fnancial resources. Nonprofts must comply with all legal and fnan-
cial requirements and should adhere to sound accounting principles that
produce reliable fnancial information, ensure fscal responsibility and build
public trust. Nonprofts should use their fnancial resources to accomplish
their missions in effective and effcient ways and should establish clear
policies and practices to regularly monitor how funds are used. Nonproft
organizations should seek to maintain or sustain a business model that will
offer reliable, fexible and diverse resources to accomplish the organization’s
mission.
Fundraising
Nonproft organizations provide opportunities for individuals and institu-
tions to voluntarily contribute to causes of their choosing. By engaging the
interests and relationships of individuals, nonprofts can help develop a
culture of philanthropy where people feel their values can be expressed and
contributions effectively used to improve their communities. To honor this
trust, nonprofts should be good stewards and conduct their fundraising ac-
cording to the highest ethical standards with regard to solicitation, accep-
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Principles and Practices for Nonprofit Excellence
tance, recording, reporting and use of funds. Nonprofts should adopt clear
policies for fundraising activities to ensure responsible use of funds and
open, transparent communication with contributors and other constituents.
Evaluation
Evaluation is a distinct process, different from reporting to funders and
other stakeholders. While reporting is largely an administrative task focused
on accountability, evaluation is a strategic process focused on improvement.
The evaluation process allows nonprofts to increase the effectiveness and
effciency of delivery of services. Each nonproft should use evaluation to
measure the impact of its actions, assess how those actions align with its
mission, and act upon this information. The public also has a stake in non-
proft performance and is entitled to information regarding organizational
results. Nonprofts should share evaluation results with their constituents
and the public as well as use them to continually improve the quality of
their processes, programs and activities.
Planning
The process of organizational planning sets the overall direction, activi-
ties and strategies a nonproft uses to fulfll its mission and ties planned
activities to a sustainable business model and the annual budgeting pro-
cess. Organizations should adopt clear strategic priorities that can be acted
upon, guide the organization’s decision-making and are revisited regularly.
Planning benefts from participation from the breadth of the organization,
including stakeholder input (with particular attention to the people served
by the organization), assessments of operational and competitive environ-
ments, and performance information on the organization’s work.
Civic Engagement and Public Policy
Infuencing public decision-making is a critical and legal means for non-
proft organizations to accomplish their missions. Open communication
between policymakers and constituents contributes to well-informed
policies and their effective implementation. To the highest extent possible,
nonproft organizations should educate their community, provide oppor-
tunities to deliberate on public policies and engage their constituents in
advocacy activities in order to achieve their missions, and promote com-
munity interests. Because participation in government decision-making is
a highly regulated and sometimes contentious area, nonproft leaders need
to be familiar with the regulations and requirements for nonproft organiza-
tions to participate in policy making. They also need to know the reporting
requirements and restrictions on partisan political campaign activity.
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The Principles of Nonproft Excellence (continued)
Strategic Alliances
Sustaining a variety of nonproft organizations is positive and healthy for a
community as it provides for a wide-array of approaches, leadership oppor-
tunities, individual choices and customization at the local level. However,
the effectiveness of a community’s nonproft organizations also depends on
successful relationships with one another as well as with businesses and
government. Regardless of form, these strategic alliances can serve a variety
of purposes, including resource sharing, policy infuence and improved
operational effciency. While nonprofts operate in both cooperative and
competitive environments, strong relationships between nonprofts can
strengthen both the capacity of individual organizations and the sector as a
whole.
Human Resources
The ability of an organization to make the best use of the energy, time and
talents of its employees is essential to accomplish the organization’s mis-
sion. Nonproft organizations should place a high priority on exercising fair
and equitable practices that attract, retain and actively engage qualifed
employees. Nonprofts have an obligation to comply with and stay current
on all applicable employment laws and to provide a safe and productive
work environment. Each nonproft organization should establish specifc
policies and practices that promote cooperation and open and effective
communication among employees so that they can productively work to-
gether to advance the organization’s mission.
Volunteer Management
Volunteers’ ideas, energy and ability to connect with others are crucial
resources for nonproft organizations to perform their role in society. Engag-
ing volunteers is an essential part of the early stages of the life cycle of many
nonprofts and also builds the capacity of nonprofts at any stage of the orga-
nization cycle. Volunteers provide a critical connection between nonprofts
and their communities. They bring needed skills, connections, insights and
resources. They also serve as valuable advocates and public relations ambas-
sadors. Nonprofts have an obligation to act as responsible stewards of the
skills, energy and time that volunteers bring to the organization. Nonprofts
should create thoughtful structures and processes to manage volunteer time
and abilities and direct volunteer energies to effectively advance the organi-
zation’s mission.
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Leadership and Organizational Culture
Nonproft organizations beneft from broad participation in important
discussions and decision-making. By engaging diverse groups of people who
care about the organization’s work and the people it serves, from perspec-
tives inside and outside the organization, nonprofts are able to mobilize
support, learn from peers and respond to community concerns. Nonproft
leaders have a complex task, carrying out challenging missions with limited
resources and sometimes conficting demands, in the midst of constantly
evolving networks of organizational and personal relationships. Open and
interactive leadership practices and organizational cultures strengthen the
ability of nonprofts to interpret and adapt to opportunities in this shifting
environment and to make the most effective use of the ideas and resources
available in their organizations, networks and communities.
Principles and Practices for Nonprofit Excellence
10
Governance
Board Characteristics and Qualifcations
1. Nonprofts should strive to have board members who are representative
of the organization’s constituents.
2. Board members should be committed to the mission and the success of
the nonproft.
3. Board members should actively develop an understanding of the
mission, ongoing activities, fnances, business model and changes in
the operating environment of the organization.
4. Board members should value diversity and understand the role of broad
participation and the importance of including diverse groups of people
in the current and future success of the organization’s work.
5. To demonstrate their personal stake in the organization, board
members are expected to volunteer their time, help raise external funds
and make personal fnancial contributions to the organization.
6. Board members should receive no monetary compensation for their
board duties other than reimbursement for board-related expenses.
Board Composition
7. Nonproft boards should be made up of individual volunteers who are
committed to representing the best interests of the organization, its
mission and the community it serves.
8. To be open to new viewpoints and community members, boards should
seek out new potential board members from outside the organization’s
traditional circles and should include board representatives from the
communities the organization serves.
A nonproft’s board of directors is responsible for developing, defning and
reviewing the organization’s mission and for providing overall leadership
and strategic direction to the organization. Boards are not owners of the
organization but are stewards of the organization’s mission and resources.
Each nonproft board should actively set policy and ensure that the orga-
nization has adequate resources to carry out its mission, provide direct
oversight and direction for the executive director and the organization as a
whole, and evaluate its own effectiveness as a governing body, as a group of
volunteers and as representatives of the community in upholding the public
interest served by the organization.
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Principles and Practices for Nonprofit Excellence
9. To allow for careful, thorough deliberation during decision-making and
a diversity of perspectives, nonproft boards should consist of at least
seven individuals.
10. Nonproft boards must have a chair and a treasurer and should have
a vice-chair and secretary. No one should serve in more than one of-
fcer position in the same organization at the same time.
11. If staff membership on the board is deemed necessary, it should be
limited to the executive director. The executive director should not
serve as the chair, vice-chair, secretary or treasurer.
Board Responsibilities
12. Board members should gain a full understanding of their board roles
and responsibilities to the organization and to the public by being
provided with:
• a clear set of expectations and responsibilities,
• bylaws, articles and other key documents of the organization,
• an introduction to the work of the organization, and
• ongoing opportunities to discuss and review responsibilities.
13. Board members are responsible for fully understanding their legal and
fduciary responsibilities and carrying out their duties in the following
areas:
• Strategic planning
• Policy approval and ongoing review
• Annual review of the executive director’s performance and
compensation
• Succession planning
• Setting of compensation structure
• Annual budget and revenue plans
• Financial procedures
• Risk management
• Regulatory flings
14. Board members are responsible for the ongoing fnancial health of the
organization and should understand the content and signifcance of
the organization’s fnancial statements and audit.
15. Board members are responsible for keeping suitably informed in order
to actively participate in decision-making.
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Governance (continued)
16. Nonproft board members are responsible to make decisions in the
best interest of the organization and no other party, including them-
selves. Each board should have a confict of interest policy that
includes a disclosure form, which is signed by board members annu-
ally, and procedures for managing conficts of interest and handling
situations in which public and private interests intersect.
17. Nonproft board members are responsible for upholding the
organization’s mission and using its resources wisely and in accor-
dance with the law.
18. Board members should be willing to publicly advocate for the
organization, help widen the organization’s reach and develop connec-
tions with the community and its leaders.
Board Operations
19. Boards should have at least six meetings a year and expect regular
attendance of members.
20. To ensure broad public participation, vitality and diversity, the board
should establish term limits of no more than nine consecutive years.
21. Boards should adopt practices that maximize participation, including
accommodating remote or electronic participation in meetings, delib-
erations or decision-making.
22. Boards should organize committees as needed so that they can
effectively structure their roles and responsibilities in order to prop-
erly exercise their duties.
23. The board chair is responsible for presiding over board meetings. The
board chair should also make sure that board members have access to
key organizational documents and training. The board chair should
pay particular attention to helping the board be aware of its obliga-
tions with regard to conficts of interest, board attendance, board
evaluation and compliance with board policies.
24. The board of directors, led by the board chair, should annually
evaluate its own performance and review the results with an eye
toward improving its practices.
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Transparency and Accountability
Accountability
1. A nonproft must comply with all legally required reporting
procedures, including fling the IRS Form 990 and annual
reports with the Offce of the Minnesota Attorney General.
2. A nonproft has an obligation to responsibly use its resources toward its
mission and to beneft the community. The organization’s board should
approve its fnancial audits; the executive director and the principal
fnancial manager should attest to the audit’s fndings.
3. A nonproft has a responsibility to establish clear performance
measurements, compare results with other organizations when possible
and share these results and methodology with its constituents.
4. Each nonproft has a responsibility to adhere to the established industry
and regulatory standards that apply to its particular activity area.
Accessibility and Public Input
5. Boards of directors should make information available to the
organization’s constituents that describes the board’s decisions and
decision-making processes.
6. A nonproft should provide its constituents with ongoing
opportunities to interact with the organization’s leadership about its
activities and be responsive to raised concerns.
Public Information
7. A nonproft should produce an annual report (either printed or
electronic) that contains information on its activities and performance.
The annual report should include:
• an explanation of the organization’s mission, activities, results
and impact;
• information on how individuals can access its programs and
services;
Nonprofts have a legal and ethical obligation to their constituents and the
public to conduct their activities with accountability and transparency. Non-
profts should regularly and openly convey information to the public about
their mission, activities, fnances, accomplishments and decision-making
processes. Information from a nonproft organization should be easily ac-
cessible to the public. It should establish external visibility and build public
understanding and trust in the organization.
14
Transparency and Accountability (continued)
• fnancial information, including income and expense statement,
balance sheet and functional expense allocation; and
• a list of board members, management, staff and contributors.
8. Each nonproft organization must make certain data available
to the public, including:
• IRS Form 990 for the previous three years, including clear
statements of program service accomplishments in Part III; and
• IRS Form 1023, Application for Recognition of Exemption.
9. A nonproft should provide multiple ways for constituents to request
information or provide input.
Fairness and Equity Practices
10. Nonprofts should ensure nondiscriminatory service to their
constituents in accordance with state and federal law.
11. Nonprofts should disclose how constituent information will be used
and ensure that the organization complies with an individual’s ex-
pressed confdentiality and privacy preferences.
12. Information regarding fees and services should be made readily
available to the public, including available discounts and scholarships.
When charging for services, nonprofts have an obligation to set fair
prices and seek ways to accommodate an individual’s ability to pay,
keeping in mind the need to balance the organization’s revenue and
expenses.
15
Financial Management
Nonprofts have an obligation to act as responsible stewards in managing
their fnancial resources. Nonprofts must comply with all legal and fnan-
cial requirements and should adhere to sound accounting principles that
produce reliable fnancial information, ensure fscal responsibility and build
public trust. Nonprofts should use their fnancial resources to accomplish
their missions in effective and effcient ways and should establish clear
policies and practices to regularly monitor how funds are used. Nonproft
organizations should seek to maintain or sustain a business model that will
offer reliable, fexible and diverse resources to accomplish the organization’s
mission.
Functions
1. The board should annually review and approve a detailed written
budget of revenues and expenditures and gain a suffcient understand-
ing of the assumptions behind the budget’s development when doing
so.
2. Individuals responsible for an organization’s fnancial reporting should
prepare and present to the board consistent, timely and accurate fnan-
cial reports at least bimonthly, with comparisons to the organization’s
budget.
3. A nonproft should ensure separation of fnancial duties to serve as a
checks and balances system to prevent theft, fraud or inaccurate report-
ing to the greatest extent possible. This system of internal controls
should be formally adopted by the board and appropriate to the size of
the organization’s fnancial and human resources.
4. Nonproft organizations should adopt written fnancial procedures and
have appropriate fnancial management software to record revenues
and govern major expenses and use of assets, including:
• cash and in-kind contributions,
• payroll,
• leases,
• expense reimbursements,
• travel,
• contracts,
• consultants,
• investments, and
• use of debt.
16
Financial Management (continued)
5. Nonproft organizations accepting funds from government entities
should be conscientious in negotiating contract terms to ensure that
payment levels, conditions and reporting requirements are consistent
with the mission of the organization and the interest of the people be-
ing served.
6. Nonprofts should periodically assess their risks, take appropriate
actions to minimize these risks and purchase appropriate types and
levels of insurance to wisely manage their liabilities.
7. A nonproft’s board should use comparable market data to set
compensation for the organization’s executive director and stay in-
formed of compensation levels for other key personnel.
8. A nonproft’s board should strictly prohibit fnancial loans to board
members, the executive director and other key personnel.
9. Board members and key staff should clearly understand how to read
and interpret fnancial statements, including the limits on the use of
restricted funds in nonproft organizations and the role of debt.
10. The board treasurer should take a leadership role in helping the board
understand its duties with regard to fnancial management. The
treasurer also should foster board awareness of the organization’s cur-
rent fnancial condition, forecasted revenue and need to make timely
adjustments in expenditures to keep the organization healthy.
Compliance
11. Nonproft organizations must comply with all fnancial
regulations, such as withholding and payment of federal, state
and Social Security taxes, and manage donated funds accord-
ing to their restrictions.
12. Nonproft organizations must complete the relevant version
of the IRS Form 990 annually. The organization’s board should
be provided with a copy of the completed IRS Form 990 before
it is submitted. The organization should seek to meet the initial four-
and-a-half-month reporting deadline to the IRS.
17
Principles & Practices for Nonproft Excellence
13. If a Minnesota nonproft organization’s total revenues for the
previous fscal year exceed $750,000, it must have its fnancial
statements audited, certifed and prepared in accordance with
general accepting accounting principles (GAAP). The board should
designate a board committee to hire the auditor, oversee the audit pro-
cess, meet with the auditor to review the audit’s content and present
the audit’s fndings to the full board for its review and approval.
14. Nonproft organizations should have systems in place, including a
whistleblower policy, to protect individuals who report fnancial mis-
conduct from any negative repercussions for doing so.
Sustainability
15. A nonproft organization must openly communicate the
annual reporting information contained in its IRS Form 990
for the previous three years to make available to those who
request it. The organization should make this information available on
its website.
16. Nonproft organizations should secure appropriate levels of funding to
carry out their missions and activities and, when possible, diversify
their revenue sources to avoid being dependent on a single funding
type.
17. Nonproft organizations should work diligently to avoid recurring
defcits and aim towards building up suffcient operating reserves.
18. Nonprofts must spend funds in compliance with conditions
attached to their funding. Organizations should develop a sys-
tem to ensure that donor funding restrictions are maintained.
19. A nonproft organization has a responsibility to ensure that its assets
are used solely for the beneft of the organization and not for personal
or other gains. To carry out this duty, an organization should have a
clear confict of interest policy that is annually signed by board mem-
bers and key staff and actively enforced by the offcers of the board.
18
Fundraising
Policies
1. A nonproft’s board of directors has a responsibility to adopt a
fundraising plan and systems to ensure that suffcient charitable contri-
butions are raised to meet budgeted objectives.
2. A nonproft should have a policy that sets out conditions under which
it would decline funds or in-kind donations given for purposes outside
the scope of its mission or that would otherwise bring about adverse
conditions for the organization or its constituents.
3. Nonprofts should ensure that a high percentage of each dollar raised
goes directly to funding its programs and services. These percentages
should be in accordance with practices of comparable organizations
and with representations made by the organization to contributors and
the public.
4. Compensation for fundraising personnel and contractors should not be
based on a percentage of funds raised or other commission-based for-
mulas.
5. A nonproft should ensure that any outside individual or organization
that solicits funds on its behalf meets the Minnesota Attorney General’s
registration requirements and all other regulations governing the activi-
ties of professional fundraisers. Fundraisers should be closely moni-
tored to ensure they follow accountable fundraising practices, make
required disclosures, and work as responsible stewards of the organiza-
tion’s goodwill.
Nonproft organizations provide opportunities for individuals and institu-
tions to voluntarily contribute to causes of their choosing. By engaging the
interests and relationships of individuals, nonprofts can help develop a
culture of philanthropy where people feel their values can be expressed and
contributions effectively used to improve their communities. To honor this
trust, nonprofts should be good stewards and conduct their fundraising
according to the highest ethical standards with regard to solicitation, accep-
tance, recording, reporting and use of funds. Nonprofts should adopt clear
policies for fundraising activities to ensure responsible use of funds and
open, transparent communication with contributors and other constituents.
19
Principles & Practices for Nonprofit Excellence
Accountability to Donors
6. Nonprofts must comply with all federal, state and local laws
concerning fundraising practices. This includes registration and
annual reporting with the Offce of the Minnesota Attorney
General and with any state in which the organization is soliciting chari-
table contributions.
7. Nonproft organizations are responsible for conducting their
fundraising activities in a manner that upholds the public’s trust in
stewardship of contributed funds.
8. Nonprofts must use funds consistent with donor intent and
comply with specifc conditions placed upon donations.
9. Nonprofts should strive for a balance between publicly
recognizing charitable contributions and maintaining donor
confdentiality when requested.
10. Nonprofts should respect donor preferences in the handling of their
information and should implement systems and policies that secure
this information, effectively use it to communicate with donors and
prevent its use for improper purposes. Nonprofts are allowed to share
but they must not trade or sell contact information for any donor
without prior permission from the donor.
Communication with Donors
11. Organizational communications, including fundraising appeals,
must include clear, accurate and honest information about the
organization, its activities, and when, where and for whom the
funds will be used in addition to the tax treatment of a contribution.
12. Nonprofts must send a written acknowledgment to all donors
who make a “quid pro quo” donation (that is, a payment made
partly as a contribution and partly for goods and/or services) in
excess of $75 and must also send a written acknowledgment to all do-
nors who made contributions of $250 or more in cash or property in
the previous calendar year. For donors who have not given more than
$250 in the previous calendar year, nonprofts should send an annual
statement of giving.
20
Fundraising (continued)
13. When developing a fundraising campaign, nonprofts should honor
donor preferences regarding how often donors are contacted and how
they receive that communication.
14. Nonprofts should regularly communicate with constituents regarding
their activities and should make such information available through
free and paid media.
15. A nonproft should plan its communications to tell the story of the
organization and maintain consistent, mission-focused and timely
communication with donors.
16. Nonprofts should establish a thorough understanding of their key
audiences and regularly assess the effectiveness of communication
strategies and tools used to reach those audiences. A nonproft should
adjust its strategies over time to best match technologies to its audi-
ences’ communication preferences.
21
Evaluation
Evaluation is a distinct process, different from reporting to funders and
other stakeholders. While reporting is largely an administrative task focused
on accountability, evaluation is a strategic process focused on improvement.
The evaluation process allows nonprofts to increase the effectiveness and
effciency of delivery of services. Each nonproft should use evaluation to
measure the impact of its actions, assess how those actions align with its
mission, and act upon this information. The public also has a stake in non-
proft performance and is entitled to information regarding organizational
results. Nonprofts should share evaluation results with their constituents
and the public as well as use them to continually improve the quality of
their processes, programs and activities.
Components of Evaluation
1. Nonprofts should have a defned, ongoing, systematic and sustainable
process for improving their services, programs and internal processes,
using methods appropriate to the size of the organization.
2. Nonproft programs should take into account and respond to the
experience, needs and satisfaction of the constituents they serve.
3. Nonprofts should conduct program evaluations in ways that are
culturally sensitive and appropriate for the community served.
4. An organization’s measurement systems should be practical and useful
to improve ongoing processes, activities and results.
5. Performance measures should be realistic and appropriate to the size
and scope of the organization and those it serves.
6. Measurement should include information on outputs, outcomes,
impact and satisfaction with activities and services provided.
7. Performance measures should be specifc and based on evidence
gathered before, during and after program development and
implementation.
8. Measurements may include both qualitative and quantitative data.
9. Measurements should include data on effciency and effectiveness.
22
10. Nonproft organizations should strive to improve the evaluation skills
of staff while contracting with other organizations or consultants to
serve as external evaluators when appropriate and feasible.
11. Nonprofts should include realistic evaluation expenses in all project
budgets.
12. Personal information collected from individuals through the
evaluation process must be kept confdential unless they give consent
for its release.
Uses of Evaluation
13. Nonprofts should use evaluation results to gauge organizational
effectiveness, improve programs and activities, and inform strategic
and annual workplans.
14. Nonprofts should share evaluation results with a broad range of
constituents to demonstrate the organization’s impact, the commu-
nity’s ongoing need and the lessons learned.
15. Nonproft evaluation should be ongoing for continuous improvement
and should include input from a wide variety of stakeholders.
16. Nonprofts should be open to receiving feedback from members of the
public who are interested in the organization’s effectiveness.
Evaluation (continued)
23
Planning
The process of organizational planning sets the overall direction, activi-
ties and strategies a nonproft uses to fulfll its mission and ties planned
activities to a sustainable business model and the annual budgeting pro-
cess. Organizations should adopt clear strategic priorities that can be acted
upon, guide the organization’s decision-making and are revisited regularly.
Planning benefts from participation from the breadth of the organization,
including stakeholder input (with particular attention to the people served
by the organization), assessments of operational and competitive environ-
ments, and performance information on the organization’s work.
Mission, Vision and Values
1. Nonprofts should establish and regularly review mission, vision and
values statements that are specifc enough to effectively guide the over-
all goals and activities of the organization.
2. The mission statement should be linked to the values of the
organization and its vision for the future.
3. The mission, vision and values should be evaluated regularly by the
board to determine if they still meet the evolving needs of the organiza-
tion’s constituents and the public.
Components of Planning
4. Plans should align with the organization’s mission, vision and values.
5. Organizations should actively make adjustments to plans to ensure that
assumptions and activities adapt to changing organizational and envi-
ronmental realities.
6. Plans should be based on a careful assessment of the multiple
resources necessary for implementation, including human resources,
fnancial, relational, and organizational commitment.
7. Organizations should create plans with evaluation in mind, assessing
what processes and goals they intend to use and how they will measure
their successful completion.
8. Plans should be informed by a review of the external factors that affect
the organization’s operating environment, taking into account the op-
portunities for action or collaboration and threats to success or
sustainability.
24
Planning (continued)
9. Nonproft organizations should be responsive to community needs
and actively engage and gather input from a variety of sources, such as
the board, staff and community members, and other constituents.
10. Nonprofts should confer with their counterparts to determine the
need for services, the best practices in delivering them and the effec-
tive use of community resources.
11. Nonproft organizations should provide timely notice of signifcant
changes to partner organizations or constituents who depend on or
are making plans reliant on the organization’s availability of services.
Plan Types
Strategic Plans
12. The board of directors should establish a rigorous process of setting
clearly defned, long-term goals and objectives to accomplish the orga-
nization’s mission.
13. Strategic planning should articulate how the strategies chosen are
expected to accomplish the organization’s stated goals.
14. Goals and objectives should be reasonably attainable given staffng,
resources, constituents and the number of people being served.
15. Nonproft organizations should continually scan the environment for
external factors that may impact the success of the organization’s
strategies, including changes in the political, economic, demographic,
legal or competitive environments, and make necessary adjustments
to respond to these changes.
Operational/Annual Workplan
16. A nonproft organization should annually create a written operational
plan that specifes how its activities will be implemented.
17. Operational plans should support the nonproft’s strategic goals and
objectives in order to advance the mission of the organization.
18. The operational plan should clearly defne specifc program, fnancial,
personnel and evaluation activities; establish timelines; assign specifc
responsibility for implementation; and be tied to an approved budget.
25
19. The operational plan should be used as a management tool for
tracking and evaluating activities and outcomes.
Contingency Plans
20. Nonproft organizations should develop contingency plans for
appropriate areas of the organization, weighing the likelihood, impact
on resources, opportunity and ease of planning as they create these
plans.
21. Plans should include instructions for overcoming potential challenges
in their implementation.
22. Nonproft organizations should have a plan for how to communicate
with key stakeholders in the event of unforeseen events.
23. Nonproft organizations should purchase insurance policies
appropriate to entities of their size and activities to cover property and
liability risks, directors and offcers, employment practices and other
specialized needs.
Principles & Practices for Nonprofit Excellence
26
Civic Engagement and Public Policy
Infuencing public decision-making is a critical and legal means for non-
proft organizations to accomplish their missions. Open communication
between policymakers and constituents contributes to well-informed
policies and their effective implementation. To the highest extent possible,
nonproft organizations should educate their community, provide opportu-
nities to deliberate on public policies, engage their constituents in advocacy
activities, and promote community interests. Because participation in gov-
ernment decision-making is a highly regulated and sometimes contentious
area, nonproft leaders need to be familiar with the regulations and require-
ments for nonproft organizations to participate in policy making. They
also need to know the reporting requirements and restrictions on partisan
political campaign activity.
Promoting Participation
1. Nonprofts should help their clients, members, volunteers and donors
learn how relevant policies affect them, develop their skills and knowl-
edge in public policy making, and help them take advantage of opportu-
nities to participate in the public policy process.
2. Nonprofts should promote nonpartisan efforts to encourage voting
and other participation in federal, state, county and city policy making.
3. 501(c)(3) organizations should consider promoting awareness
of elections and issues, including sponsoring nonpartisan candidate
forums and legislative score cards.
Advocacy and Public Policy
4. Nonproft boards should consider taking organizational positions on
policy issues that impact the mission of the organization, its constitu-
ents or the nonproft sector as a whole.
5. Nonprofts should maintain a sound understanding of the current
public policy environment in their activity area and how that impacts
the communities they serve.
6. If engaged in public policy and advocacy activities, nonprofts should
adopt a written policy that clarifes the scope of the work as well as the
time and resources to be dedicated to those activities.
27
Principles & Practices for Nonprofit Excellence
7. Nonprofts should join together in strategic alliances around policy
issues to strengthen their impact on public policy.
8. In situations where an organization’s mission is directly affected by a
public policy, nonprofts should lead advocacy efforts regarding the
policy, which may involve a variety of advocacy activities including
direct lobbying.
Lobbying
9. Lobbying by nonproft organizations and using funds (within
limits) to infuence legislation is specifcally authorized by feder-
al law with mandatory reporting on IRS Form 990.
10. Nonprofts that engage in lobbying activities are subject to state
and federal lobbyist registration and reporting requirements
and must fle accurate and timely reports on their lobbying
activities.
11. Nonprofts that are engaged in lobbying activities must be
aware of their funding sources’ limitations on the use of funds
and must organize their legislative work so that only funds not
restricted in this way are used for lobbying.
Political Campaign Activity
12. 501(c)(3) organizations must not take positions or spend funds
to support or oppose a candidate for political offce or coordi-
nate their activities with a candidate, political party or other
organization supporting or opposing political candidates.
13. Nonproft representatives, including board or staff members, should
distinguish between their personal positions or endorsements and the
nonpartisan stance of their organization. They should refrain from
situations that create the appearance of any organizational endorse-
ment for candidates or political parties.
28
Strategic Alliances
Sustaining a variety of nonproft organizations is positive and healthy for a
community as it provides for a wide-array of approaches, leadership oppor-
tunities, individual choices and customization at the local level. However,
the effectiveness of a community’s nonproft organizations also depends on
successful relationships with one another as well as with businesses and
government. Regardless of form, these strategic alliances can serve a variety
of purposes, including resource sharing, policy infuence and improved
operational effciency. While nonprofts operate in both cooperative and
competitive environments, strong relationships between nonprofts can
strengthen both the capacity of individual organizations and the sector as a
whole.
Strategy for Creating Connections
1. Nonprofts should be aware of ongoing developments and changes in
their feld, including opportunities for coordination or joint action with
other organizations.
2. Nonprofts should seek appropriate strategic partnerships and alliances
to achieve organizational goals, increase impact and strengthen con-
nections with constituents and others in the communities they serve.
3. Decisions regarding strategic alliances should be consistent with the
strategic goals and advance the missions of the participating organiza-
tions.
Assessment/Decision-making
4. Organizations should determine what resources would be required in a
potential alliance, the availability of those resources and the estimated
cost in comparison to the anticipated beneft to accomplishing the
organization’s mission.
5. Alliance agreements should establish clear roles and responsibilities.
They should also include ways to ensure accountability and rules that
allow for changing the alliance agreement or ending it.
6. Organizations should assess on an ongoing basis whether resources
are being used wisely and participating organizations are fulflling their
agreed-upon roles.
29
Principles & Practices for Nonprofit Excellence
7. A charitable organization that participates in a business venture
with a taxable entity (i.e., a for-proft business) must ensure
that its assets do not improperly beneft the taxable entity.
Coordination
8. Nonprofts should coordinate their activities with other organizations
providing similar or complementary services in their communities.
9. Nonprofts should work to establish communication channels, mutual
understanding and benefcial alliances among government, nonproft
and for-proft sectors to take advantage of the total resources and inter-
ests of the community.
10. When possible and appropriate, nonprofts should assist other
nonprofts in the community through alliances and sharing of resourc-
es, connections and expertise.
30
Human Resources
The ability of an organization to make the best use of the energy, time and
talents of its employees is essential to accomplish the organization’s mis-
sion. Nonproft organizations should place a high priority on exercising fair
and equitable practices that attract, retain and actively engage qualifed
employees. Nonprofts have an obligation to comply with and stay current
on all applicable employment laws and to provide a safe and productive
work environment. Each nonproft organization should establish specifc
policies and practices that promote cooperation and open and effective
communication among employees so that they can productively work to-
gether to advance the organization’s mission.
Employee Policies
1. Nonprofts must comply with all federal, state and local
employment laws when hiring, employing and dismissing
personnel.
2. Nonprofts must comply with employment mandates,
including:
• payroll taxes,
• workers’ compensation,
• unemployment compensation,
• accurate designation of employees and contractors, and
• wage and hour laws.
3. Nonproft organizations should adopt a set of board-approved policies
and procedures for managing employees. Organizations should review
and update these regularly.
4. Nonprofts should provide a safe and healthy work environment for
their employees.
5. Nonprofts should establish a clear confict of interest policy for
employees. It should include disclosure of relationships and interested
party transactions.
6. Nonprofts should adopt procedures that allow employees the
opportunity to rectify their grievances.
7. Nonprofts should adopt a whistleblower policy to protect personnel
when they report violations of organizational policy or applicable laws.
31
Principles & Practices for Nonprofit Excellence
Recruitment and Retention
9. Nonprofts should employ skilled individuals who are suitable for the
positions they occupy and are committed to the goals, values and objec-
tives of the organization.
10. Nonprofts should conduct background checks on employees,
particularly if their positions involve working with children or vulner-
able adults, performing fnancial duties or serving in other sensitive
areas.
11. Background checks should be conducted in a uniform and
consistent way, and nonprofts must follow applicable laws
with respect to background checks of prospective employees.
12. Nonproft organizations should provide personnel with clear, current
job descriptions, a comprehensive orientation, and the resources they
need to produce quality work.
13. Nonproft organizations should defne their compensation philosophy,
balancing internal equity with market-based and livable compensation
for all employees.
14. To the extent of their ability, nonprofts should provide employees
with adequate benefts, including health insurance, and the opportu-
nity to fnancially contribute to retirement plans.
15. Nonproft organizations should create a culture of transparency and
open communication where internal information is shared as appro-
priate. This also includes being open to input from personnel regard-
ing the organization’s activities and results on a continual basis.
16. Nonprofts should develop a plan for how vacancies in senior
leadership positions will be flled, including in the event of voluntary
and unexpected departures.
17. When employees depart, nonproft organizations should conduct exit
interviews to learn from the employee’s employment experience.
18. When employees are terminated, nonprofts should provide adequate
notice and information about beneft continuation, unemployment
compensation, references and job placement assistance when pos-
sible.
Human Resources (continued)
32
Diversity and Inclusion
19. Nonprofts should strive toward creating a workplace that welcomes
and supports employees who refect the diversity of their community.
20. Nonprofts must establish and abide by a broad and
encompassing equal opportunity employment policy.
Training and Development
21. Nonprofts should promote staff education and development and
provide opportunities for growth and advancement of personnel.
22. Nonproft boards should budget for the professional development of
their staff.
23. Nonproft personnel should receive ongoing performance-related
feedback and a formal performance evaluation at least annually.
Volunteer Engagement
1. Nonprofts should assess the capacity of their organization to engage,
supervise and support volunteers with the necessary level of attention,
priority and resources before recruiting volunteers.
2. Nonprofts should develop a volunteer plan that states how volunteers
advance the organization’s mission.
3. Nonprofts should allocate resources (including staff) to recruit,
engage, supervise, recognize and retain volunteers.
4. Nonprofts should put risk management procedures in place to assess,
manage or lessen potential risks to volunteers, the organization and its
clients, members and participants that may result from the delivery of
a volunteer-led program or service. This should include obtaining ad-
equate levels of insurance for volunteers and the use of liability waivers
where appropriate.
5. Board members should make an intentional distinction between their
governance role as volunteer board members and any activities they
conduct as program-based volunteers.
6. While volunteers and employees work closely together in many
organizations, nonprofts must abide by the distinctions between the
legally allowed activities of volunteers and employees:
a. Employees of an organization may volunteer for the
organization as long as the volunteer duties are outside of
33
Volunteer Management
Volunteers’ ideas, energy and ability to connect with others are crucial
resources for nonproft organizations to perform their role in society. Engag-
ing volunteers is an essential part of the early stages of the life cycle of many
nonprofts and also builds the capacity of nonprofts at any stage of the orga-
nization cycle. Volunteers provide a critical connection between nonprofts
and their communities. They bring needed skills, connections, insights and
resources. They also serve as valuable advocates and public relations ambas-
sadors. Nonprofts have an obligation to act as responsible stewards of the
skills, energy and time that volunteers bring to the organization. Nonprofts
should create thoughtful structures and processes to manage volunteer time
and abilities and direct volunteer energies to effectively advance the organi-
zation’s mission.
34
Volunteer Management (continued)
regular employee assignments, outside of normal working hours,
predominantly for the employee’s beneft and without any pen-
alty to the employee for not volunteering.
b. Financial and in-kind benefts to volunteers should be
limited to reimbursement for business-related expenses,
minor fringe benefts and/or nominal fees for services.
Volunteer stipends should not be tied to the amount of
hours engaged in volunteer activities and must be recorded as
taxable income where appropriate.
Recruitment and Screening
7. Before recruiting volunteers, organizations should develop a clear
description of the scope of the work, necessary skills, expected time
commitment and the impact and benefts of the volunteer’s service.
8. Where appropriate, nonprofts should seek to match volunteer
opportunities to the potential volunteer’s needs and interests.
9. Nonproft organizations must conduct background checks if
the volunteer will be working directly with vulnerable people.
10. Volunteer recruitment should incorporate a broad range of
internal and external strategies to reach out to diverse sources of
volunteers.
Engagement and Supervision
11. Volunteers should be welcomed and treated as valued and integral
members of the organization’s human resources.
12. Volunteers should be provided with an orientation appropriate to their
role. Orientation programs should include a clear written position
description, a manual addressing relevant organization policies, infor-
mation on disciplinary practices and other essential organization or
position-related information.
13. Nonprofts should structure their volunteer program so that each
volunteer has a direct connection with an identifed supervisor and
receives a level of support and supervision appropriate for their role.
35
Principles & Practices for Nonprofit Excellence
14. Nonproft organizations should have clearly articulated and
documented accountability and discipline procedures for volun-
teers that address lack of performance or policy violations as well as
grounds for termination when necessary.
15. Nonprofts should provide formal and informal opportunities to
recognize the impact and value of volunteers in advancing the organi-
zation’s mission.
16. Volunteers should receive ongoing performance-related feedback and
a formal performance evaluation at a level appropriate to their in-
volvement in the organization. They also should have the opportunity
to provide feedback to the organization.
17. The volunteer program should be evaluated periodically to assess the
impact of the program, as well as the cost and benefts involved in
recruiting, engaging and supervising volunteers.
36
Leadership and Organizational Culture
Nonproft organizations beneft from broad participation in important
discussions and decision-making. By engaging diverse groups of people who
care about the organization’s work and the people it serves, from perspec-
tives inside and outside the organization, nonprofts are able to mobilize
support, learn from peers and respond to community concerns. Nonproft
leaders have a complex task, carrying out challenging missions with limited
resources and sometimes conficting demands, in the midst of constantly
evolving networks of organizational and personal relationships. Open and
interactive leadership practices and organizational cultures strengthen the
ability of nonprofts to interpret and adapt to opportunities in this shifting
environment and to make the most effective use of the ideas and resources
available in their organizations, networks and communities.
Decision-making
1. Nonproft leaders should make clear the decision making structures
and processes of the organization and its governing body.
2. Nonproft leaders should devote time and attention to analyze the
changing environment and steer the organization through those
changes.
3. Nonproft leaders should actively seek to understand underlying causes
of mission-related issues and use this awareness to focus organization
activities.
4. Nonproft leaders should prioritize organizational goals and negotiate
external relationships to buffer against excessive control of the orga-
nization by funding sources, government regulators or other external
infuences.
5. Nonproft leaders should recognize and navigate the organization’s
response to the sometimes competing interests of funders, clients, con-
stituents, the board, the public and volunteers.
6. Nonproft leaders should discern a sustainable business model for the
organization that takes into account the organization’s size, focus, fund-
ing sources and activities.
37
Principles & Practices for Nonprofit Excellence
Communications
7. Nonproft leaders should help the organization cope with multiple
demands by focusing the organization’s attention on timely mission-
relevant issues and opportunities.
8. Leaders should advocate for their organization and its mission,
championing the cause in and outside of the organization.
9. Leaders should actively communicate how the organization’s activities
produce the intended change in the community and inspire others to
affect that change through fundraising, advocacy and programming.
10. Nonproft leaders should ensure that suffcient time and energy is
invested in the organization’s communication capacity.
Culture
11. Nonproft leaders should continually develop the skills, knowledge
and abilities of others at all levels of the organization to take on
greater responsibility for carrying out the organization’s mission and
engaging community members.
12. Nonproft leaders should create and sustain an organizational culture
that best advances the nonproft’s mission and goals.
13. Nonproft leaders should push the organization to make diffcult and
timely decisions, challenge others in the organization when necessary,
and permit conficting views to be expressed on the way to reaching
resolution.
14. Nonproft leaders should foster a culture of information sharing and
interaction between the board and others in the organization so that
innovation and creativity can come from diverse parts of the organiza-
tion.
15. Nonproft leaders should identify and implement opportunities that
enhance a positive working environment.
16. Nonproft leaders should demonstrate the behaviors they expect of
their colleagues.
38
17. Nonproft leaders should encourage their organization’s staff and
board to seek out, recognize and leverage the shared and different
values of diverse cultures.
18. Nonproft leaders should pay attention to and attend to their need for
professional and personal renewal and encourage the same in others.
19. Nonproft leaders should allow for and encourage questions and
refections on the organization’s strategies, effectiveness and ability to
change.
Leadership and Organizational Culture (continued)
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doc_666006226.pdf
The Principles and Practices for Nonprofit Excellence are based on the fundamental values of quality, responsibility and accountability. The 11 accountability principles distinguish the nonprofit sector from government and the business sector.
1
Principles & Practices
for Nonproft Excellence
A guide for nonproft staff and board members
A guide for nonproft staff and board members
The Minnesota Council of Nonprofts (MCN) is a statewide
association of more than 2,000 Minnesota nonproft
organizations. Through its website, publications, workshops
and events, cost-saving programs and advocacy, MCN works
to inform, promote, connect and strengthen individual
nonprofts and the nonproft sector.
Copyright © 2014 by the Minnesota Council of Nonprofts. All rights reserved. No part of this publi-
cation may be reproduced or transmitted in any form or by means electronic or mechanical without
the written consent of the Minnesota Council of Nonprofts.
Principles & Practices
for Nonproft Excellence
2
Introduction
IN 1994 THE MINNESOTA COUNCIL OF NONPROFITS (MCN) became
the frst state association of nonprofts to develop a set of accountability
principles and management practices. This revised edition completely up-
dates those original standards while remaining true to MCN’s longstanding
goal of open access to our comprehensive policies for strong public account-
ability.
The Principles and Practices for Nonproft Excellence are based on the fun-
damental values of quality, responsibility and accountability. The 11
accountability principles distinguish the nonproft sector from government
and the business sector. The 192 management practices provide specifc
guidelines for individual organizations to evaluate and improve their opera-
tions, governance, human resources, advocacy, fnancial management and
fundraising.
This document has three intended purposes. The frst is to provide indi-
vidual organizations striving for excellence with a tool for strategic planning
and operational evaluation relative to the rest of the nonproft sector. The
second is to support the growth and quality of the sector. The third is to
increase public understanding of the role and contributions of the nonproft
sector.
The Principles and Practices for Nonproft Excellence are not meant for use
by funders or government to evaluate nonproft organizations, nor are they
intended as a substitute for the wisdom of directors or trustees of individual
organizations. Given some blurring of the lines between the three sectors of
the economy, this document is designed to support the effective functioning
of our sector by recommending specifc best practices.
This revised edition of the Principles and Practices for Nonproft Excellence
was developed by a 37-member committee representing the diversity of
Minnesota’s nonproft community. A complete list of members can be found
on page 5.
Every nonproft organization needs a strong foundation of compliance and a
broad organizational awareness of laws and regulations related to fundrais-
ing, licensing, fnancial accountability, human resources, lobbying, politi-
cal advocacy and taxation. The Principles and Practices presume that each
organization is in compliance with applicable laws, including Minnesota
Chapter 317A (the Minnesota Nonproft Corporation Act); relevant sections
of the Internal Revenue Code; and other federal and state laws dealing with
employment, occupational health and safety, and more.
3
Principles and Practices for Nonprofit Excellence
Minnesotans join together throughout the state to form associations and
organizations of every type. The Principles and Practices for Nonproft
Excellence are of particular interest to 501(c)(3) organizations. However,
the information and concepts apply broadly to all types of nonproft orga-
nizations. Because of the sector’s diversity by size, region and activity area,
each organization must determine whether or not an individual practice is
appropriate for its current situation.
Nonproft organizations have proven essential to the vitality of communi-
ties. They enrich quality of life, epitomize the highest societal values and
strengthen democracy. Volunteers, board members and employees become
involved with a nonproft because of the organization’s public beneft mis-
sion. Therefore the continued success of Minnesota’s nonproft organiza-
tions requires broad public support and confdence. This document publicly
testifes the nonproft sector’s commitment to excellence—always for the
beneft of society.
The critical role of nonprofts in democratic societies underscores the im-
portance of knowing how to form, govern and manage these organizations.
The growth and progress of the nonproft sector depends on developing
and improving this body of knowledge. Since its founding by Minnesota’s
nonprofts, MCN has provided research, education and technical assistance
to strengthen nonproft management and governance. The Principles and
Practices form an ongoing framework for MCN’s trainings, publications
and other educational materials. MCN’s website also provides access to
templates, samples and techniques to help organizations easily and cost-
effectively implement the Principles and Practices.
Note to Readers: Please be aware that certain words have particular
meanings in this document:
• “Must” is used to describe practices required by state or federal law,
and is noted with this symbol ; the online version of the
Principles and Practices (located at www.minnesotanonprofts.
org) will soon include direct web links to relevant federal and state
statutes and reporting forms.
• “Should” is used to describe highly recommended practices.
• “Constituents” describes people with a stake in the success of the
organization and may include members, neighbors, clients,
volunteers and contributors.
4
An Updated History of the Principles and Practices
THE MINNESOTA COUNCIL OF NONPROFITS BEGAN THIS DOCU-
MENT on nonproft accountability at its 1993 Annual Conference. We
continued to develop it through community meetings, workshops and dis-
cussions throughout the state. Under the leadership of Dr. James P. Shannon
and James V. Toscano, MCN joined with two organizations—the Charities
Review Council of Minnesota and MAP for Nonprofts—to convene discus-
sions on nonproft standards and to develop principles of sound nonproft
management and accountability. The frst draft of the Principles and Prac-
tices for Nonproft Excellence was circulated to nonproft and philanthropic
leaders throughout Minnesota and the United States in 1994 and was ap-
proved by MCN’s board of directors in 1998.
In 2005, MCN conducted a major revision of the Principles and Practices,
led by James V. Toscano. In 2013, MCN gathered a new group of nonproft
leaders through the Principles and Practices Advisory Committee to review
necessary changes. James V. Toscano returned as a co-chair of the commit-
tee joined by Rinal Ray and Armando Camacho, with Laura Johansson as
facilitator. The new draft incorporated input from these nonproft leaders
from across the state, who are listed on the following page.
Over the past ten years, a growing number of associations of nonproft
organizations throughout the United States have used MCN’s Principles
and Practices for Nonproft Excellence as the basis for similar documents in
their states. MCN has been pleased to give permission to adapt the Prin-
ciples and Practices for Nonproft Excellence to statewide organizations,
including:
• Arkansas Coalition for Excellence
• Colorado Nonproft Association
• Connecticut Association of Nonprofts
• Kentucky Nonproft Leadership
• Maine Association of Nonprofts
• Michigan Nonproft Association
• Mississippi Center for Nonprofts
• Nonproft Association of the Midlands (Nebraska)
• North Carolina Center for Nonprofts
• South Carolina Association of Nonproft Organizations
• Texas Association of Nonproft Organizations
• Center for Community Based and Nonproft Organizations (Texas)
MCN will cooperate with these associations and others to develop and share
educational tools and resources to strengthen the accountability and
effectiveness of nonprofts everywhere.
5
• Armando Camacho, Opportunity Partners (co-chair), Minnetonka
• Rinal Ray, formerly with Minnesota Justice Foundation (co-chair), Minneapolis
• James V. Toscano, Toscano Advisors, LLC (co-chair), Saint Paul
• Judy Alnes, MAP for Nonprofts, Saint Paul
• Shannon Benolken, formerly with Itasca County Habitat for Humanity,
Grand Rapids
• Kerrie Blevins, The Patrick and Aimee Butler Family Foundation, Saint Paul
• Susie Brown, Minnesota Council of Nonprofts, Saint Paul
• David Brown, CBIZ, Saint Paul
• Shelly Chamberlain, Minnesota Council of Nonprofts, Saint Paul
• Bobbi Cordano, Amherst H. Wilder Foundation, Saint Paul
• Christine Durand, Minnesota Environmental Partnership, Saint Paul
• Amel Gorani, Consultant, Northfeld
• Phil Hansen, American Red Cross Twin Cities Area Chapter, Minneapolis
• Mary Jones, YWCA of Minneapolis, Minneapolis
• Jason Kujanen, formerly with MACC CommonWealth, Minneapolis
• Jeff Larson, Mille Lacs Band of Ojibwe Health and Human Services, Onamia
• Anne Long, Plymouth Christian Youth Center, Minneapolis
• Paul Masiarchin, Minnesota Council of Nonprofts, Saint Paul
• Sonja Merrild, Blandin Foundation, Grand Rapids
• Heidi Neff Christianson, Nilan Johnson Lewis, Minneapolis
• Katie Nelsen, Animal Humane Society, Golden Valley
• Janet Ogden-Brackett, Nonprofts Assistance Fund, Minneapolis
• Jon Pratt, Minnesota Council of Nonprofts, Saint Paul
• Sondra Reis, Minnesota Council of Nonprofts, Saint Paul
• Robert Routhieaux, Hamline University School of Business, Saint Paul
• Patrick Rowan, Metro Meals on Wheels, Inc., Minneapolis
• Jenna Salinas, Charities Review Council, Saint Paul
• Lori Saroya, Council on American - Islamic Relations, Minnesota, Minneapolis
• Tim Schmutzer, Pine Habilitation and Supported Employment, Sandstone
• Rich Smith, Family Pathways, Cambridge
• Sheila Smith, Minnesota Citizens for the Arts, Saint Paul
• Linda Tacke, Carl and Eloise Pohlad Family Foundation, Minneapolis
• Paul Vliem, Minnesota Council of Nonprofts, Saint Paul
• Melinda Wedzina, Feeding Our Communities Partners, Mankato
• John Wurm, Minnesota Council of Nonprofts, Saint Paul
• Reid Zimmerman, RA Zimmerman Consulting, Pine City
MCN’s board of directors approved this revision of Principles and
Practices for Nonproft Excellence on May 20, 2014.
Principles and Practices Advisory Committee
THE PRINCIPLES AND PRACTICES FOR NONPROFIT EXCELLENCE
are meant to educate nonproft leaders, board members, managers, volun-
teers and staff about the fundamental roles and responsibilities of nonproft
organizations. As their adoption spreads, MCN believes they will strengthen
both individual nonprofts and the sector as a whole.
The Minnesota Council of Nonprofts is sensitive to the large amount of
sometimes contradictory advice directed at nonprofts. MCN expects that
the Principles and Practices will be useful to virtually every nonproft
organization as they form a set of reference tools that can be adapted to
meet particular needs and circumstances.
Clearly a large list of recommended practices presents challenges for small
organizations with limited resources. Small and mid-sized organizations
may have limited or no staff, or lack specialized positions to develop recom-
mended policies and systems. To make this task more practical and achiev-
able, MCN provides additional tools and resources on its website to help
organizations prioritize practices for different sizes and stages of organiza-
tions. These tools address questions about why practices are recommended
and the steps organizations can take to achieve them.
The creativity and diversity of the nonproft sector and the signifcant
variations in local conditions means that some practices may not ft every
situation and will necessarily vary in application. In adapting and adopting
the Principles and Practices, each organization will face dozens of specifc
choices about how to accomplish its mission and structure its work, requir-
ing deliberation and modifcations by board members and managers.
They are not intended for use by funders or by government to evaluate orga-
nizations nor are they intended as a substitute for the wisdom of directors
or trustees of individual organizations. Nevertheless, the nature of nonproft
activity requires that organizations fully commit to public accountability
and devote the time and attention necessary to be transparent and respon-
sive to the community.
MCN welcomes your feedback. Please let us know how you applied the
Principles and Practices for Nonproft Excellence in your organization.
Additional information, links to tools and templates, and a feedback form
are available on MCN’s website at www.minnesotanonprofts.org.
Advice for Users
4
Principles & Practices
for Nonproft Excellence
6
The Principles of Nonproft Excellence
Governance
A nonproft’s board of directors is responsible for developing, defning and
reviewing the organization’s mission and for providing overall leadership
and strategic direction to the organization. Boards are not owners of the
organization but are stewards of the organization’s mission and resources.
Each nonproft board should actively set policy and ensure that the orga-
nization has adequate resources to carry out its mission, provide direct
oversight and direction for the executive director and the organization as a
whole, and evaluate its own effectiveness as a governing body, as a group of
volunteers and as representatives of the community in upholding the public
interest served by the organization.
Transparency and Accountability
Nonprofts have a legal and ethical obligation to their constituents and the
public to conduct their activities with accountability and transparency. Non-
profts should regularly and openly convey information to the public about
their mission, activities, fnances, accomplishments and decision-making
processes. Information from a nonproft organization should be easily ac-
cessible to the public. It should establish external visibility and build public
understanding and trust in the organization.
Financial Management
Nonprofts have an obligation to act as responsible stewards in managing
their fnancial resources. Nonprofts must comply with all legal and fnan-
cial requirements and should adhere to sound accounting principles that
produce reliable fnancial information, ensure fscal responsibility and build
public trust. Nonprofts should use their fnancial resources to accomplish
their missions in effective and effcient ways and should establish clear
policies and practices to regularly monitor how funds are used. Nonproft
organizations should seek to maintain or sustain a business model that will
offer reliable, fexible and diverse resources to accomplish the organization’s
mission.
Fundraising
Nonproft organizations provide opportunities for individuals and institu-
tions to voluntarily contribute to causes of their choosing. By engaging the
interests and relationships of individuals, nonprofts can help develop a
culture of philanthropy where people feel their values can be expressed and
contributions effectively used to improve their communities. To honor this
trust, nonprofts should be good stewards and conduct their fundraising ac-
cording to the highest ethical standards with regard to solicitation, accep-
7
Principles and Practices for Nonprofit Excellence
tance, recording, reporting and use of funds. Nonprofts should adopt clear
policies for fundraising activities to ensure responsible use of funds and
open, transparent communication with contributors and other constituents.
Evaluation
Evaluation is a distinct process, different from reporting to funders and
other stakeholders. While reporting is largely an administrative task focused
on accountability, evaluation is a strategic process focused on improvement.
The evaluation process allows nonprofts to increase the effectiveness and
effciency of delivery of services. Each nonproft should use evaluation to
measure the impact of its actions, assess how those actions align with its
mission, and act upon this information. The public also has a stake in non-
proft performance and is entitled to information regarding organizational
results. Nonprofts should share evaluation results with their constituents
and the public as well as use them to continually improve the quality of
their processes, programs and activities.
Planning
The process of organizational planning sets the overall direction, activi-
ties and strategies a nonproft uses to fulfll its mission and ties planned
activities to a sustainable business model and the annual budgeting pro-
cess. Organizations should adopt clear strategic priorities that can be acted
upon, guide the organization’s decision-making and are revisited regularly.
Planning benefts from participation from the breadth of the organization,
including stakeholder input (with particular attention to the people served
by the organization), assessments of operational and competitive environ-
ments, and performance information on the organization’s work.
Civic Engagement and Public Policy
Infuencing public decision-making is a critical and legal means for non-
proft organizations to accomplish their missions. Open communication
between policymakers and constituents contributes to well-informed
policies and their effective implementation. To the highest extent possible,
nonproft organizations should educate their community, provide oppor-
tunities to deliberate on public policies and engage their constituents in
advocacy activities in order to achieve their missions, and promote com-
munity interests. Because participation in government decision-making is
a highly regulated and sometimes contentious area, nonproft leaders need
to be familiar with the regulations and requirements for nonproft organiza-
tions to participate in policy making. They also need to know the reporting
requirements and restrictions on partisan political campaign activity.
8
The Principles of Nonproft Excellence (continued)
Strategic Alliances
Sustaining a variety of nonproft organizations is positive and healthy for a
community as it provides for a wide-array of approaches, leadership oppor-
tunities, individual choices and customization at the local level. However,
the effectiveness of a community’s nonproft organizations also depends on
successful relationships with one another as well as with businesses and
government. Regardless of form, these strategic alliances can serve a variety
of purposes, including resource sharing, policy infuence and improved
operational effciency. While nonprofts operate in both cooperative and
competitive environments, strong relationships between nonprofts can
strengthen both the capacity of individual organizations and the sector as a
whole.
Human Resources
The ability of an organization to make the best use of the energy, time and
talents of its employees is essential to accomplish the organization’s mis-
sion. Nonproft organizations should place a high priority on exercising fair
and equitable practices that attract, retain and actively engage qualifed
employees. Nonprofts have an obligation to comply with and stay current
on all applicable employment laws and to provide a safe and productive
work environment. Each nonproft organization should establish specifc
policies and practices that promote cooperation and open and effective
communication among employees so that they can productively work to-
gether to advance the organization’s mission.
Volunteer Management
Volunteers’ ideas, energy and ability to connect with others are crucial
resources for nonproft organizations to perform their role in society. Engag-
ing volunteers is an essential part of the early stages of the life cycle of many
nonprofts and also builds the capacity of nonprofts at any stage of the orga-
nization cycle. Volunteers provide a critical connection between nonprofts
and their communities. They bring needed skills, connections, insights and
resources. They also serve as valuable advocates and public relations ambas-
sadors. Nonprofts have an obligation to act as responsible stewards of the
skills, energy and time that volunteers bring to the organization. Nonprofts
should create thoughtful structures and processes to manage volunteer time
and abilities and direct volunteer energies to effectively advance the organi-
zation’s mission.
9
Leadership and Organizational Culture
Nonproft organizations beneft from broad participation in important
discussions and decision-making. By engaging diverse groups of people who
care about the organization’s work and the people it serves, from perspec-
tives inside and outside the organization, nonprofts are able to mobilize
support, learn from peers and respond to community concerns. Nonproft
leaders have a complex task, carrying out challenging missions with limited
resources and sometimes conficting demands, in the midst of constantly
evolving networks of organizational and personal relationships. Open and
interactive leadership practices and organizational cultures strengthen the
ability of nonprofts to interpret and adapt to opportunities in this shifting
environment and to make the most effective use of the ideas and resources
available in their organizations, networks and communities.
Principles and Practices for Nonprofit Excellence
10
Governance
Board Characteristics and Qualifcations
1. Nonprofts should strive to have board members who are representative
of the organization’s constituents.
2. Board members should be committed to the mission and the success of
the nonproft.
3. Board members should actively develop an understanding of the
mission, ongoing activities, fnances, business model and changes in
the operating environment of the organization.
4. Board members should value diversity and understand the role of broad
participation and the importance of including diverse groups of people
in the current and future success of the organization’s work.
5. To demonstrate their personal stake in the organization, board
members are expected to volunteer their time, help raise external funds
and make personal fnancial contributions to the organization.
6. Board members should receive no monetary compensation for their
board duties other than reimbursement for board-related expenses.
Board Composition
7. Nonproft boards should be made up of individual volunteers who are
committed to representing the best interests of the organization, its
mission and the community it serves.
8. To be open to new viewpoints and community members, boards should
seek out new potential board members from outside the organization’s
traditional circles and should include board representatives from the
communities the organization serves.
A nonproft’s board of directors is responsible for developing, defning and
reviewing the organization’s mission and for providing overall leadership
and strategic direction to the organization. Boards are not owners of the
organization but are stewards of the organization’s mission and resources.
Each nonproft board should actively set policy and ensure that the orga-
nization has adequate resources to carry out its mission, provide direct
oversight and direction for the executive director and the organization as a
whole, and evaluate its own effectiveness as a governing body, as a group of
volunteers and as representatives of the community in upholding the public
interest served by the organization.
11
Principles and Practices for Nonprofit Excellence
9. To allow for careful, thorough deliberation during decision-making and
a diversity of perspectives, nonproft boards should consist of at least
seven individuals.
10. Nonproft boards must have a chair and a treasurer and should have
a vice-chair and secretary. No one should serve in more than one of-
fcer position in the same organization at the same time.
11. If staff membership on the board is deemed necessary, it should be
limited to the executive director. The executive director should not
serve as the chair, vice-chair, secretary or treasurer.
Board Responsibilities
12. Board members should gain a full understanding of their board roles
and responsibilities to the organization and to the public by being
provided with:
• a clear set of expectations and responsibilities,
• bylaws, articles and other key documents of the organization,
• an introduction to the work of the organization, and
• ongoing opportunities to discuss and review responsibilities.
13. Board members are responsible for fully understanding their legal and
fduciary responsibilities and carrying out their duties in the following
areas:
• Strategic planning
• Policy approval and ongoing review
• Annual review of the executive director’s performance and
compensation
• Succession planning
• Setting of compensation structure
• Annual budget and revenue plans
• Financial procedures
• Risk management
• Regulatory flings
14. Board members are responsible for the ongoing fnancial health of the
organization and should understand the content and signifcance of
the organization’s fnancial statements and audit.
15. Board members are responsible for keeping suitably informed in order
to actively participate in decision-making.
12
Governance (continued)
16. Nonproft board members are responsible to make decisions in the
best interest of the organization and no other party, including them-
selves. Each board should have a confict of interest policy that
includes a disclosure form, which is signed by board members annu-
ally, and procedures for managing conficts of interest and handling
situations in which public and private interests intersect.
17. Nonproft board members are responsible for upholding the
organization’s mission and using its resources wisely and in accor-
dance with the law.
18. Board members should be willing to publicly advocate for the
organization, help widen the organization’s reach and develop connec-
tions with the community and its leaders.
Board Operations
19. Boards should have at least six meetings a year and expect regular
attendance of members.
20. To ensure broad public participation, vitality and diversity, the board
should establish term limits of no more than nine consecutive years.
21. Boards should adopt practices that maximize participation, including
accommodating remote or electronic participation in meetings, delib-
erations or decision-making.
22. Boards should organize committees as needed so that they can
effectively structure their roles and responsibilities in order to prop-
erly exercise their duties.
23. The board chair is responsible for presiding over board meetings. The
board chair should also make sure that board members have access to
key organizational documents and training. The board chair should
pay particular attention to helping the board be aware of its obliga-
tions with regard to conficts of interest, board attendance, board
evaluation and compliance with board policies.
24. The board of directors, led by the board chair, should annually
evaluate its own performance and review the results with an eye
toward improving its practices.
13
Transparency and Accountability
Accountability
1. A nonproft must comply with all legally required reporting
procedures, including fling the IRS Form 990 and annual
reports with the Offce of the Minnesota Attorney General.
2. A nonproft has an obligation to responsibly use its resources toward its
mission and to beneft the community. The organization’s board should
approve its fnancial audits; the executive director and the principal
fnancial manager should attest to the audit’s fndings.
3. A nonproft has a responsibility to establish clear performance
measurements, compare results with other organizations when possible
and share these results and methodology with its constituents.
4. Each nonproft has a responsibility to adhere to the established industry
and regulatory standards that apply to its particular activity area.
Accessibility and Public Input
5. Boards of directors should make information available to the
organization’s constituents that describes the board’s decisions and
decision-making processes.
6. A nonproft should provide its constituents with ongoing
opportunities to interact with the organization’s leadership about its
activities and be responsive to raised concerns.
Public Information
7. A nonproft should produce an annual report (either printed or
electronic) that contains information on its activities and performance.
The annual report should include:
• an explanation of the organization’s mission, activities, results
and impact;
• information on how individuals can access its programs and
services;
Nonprofts have a legal and ethical obligation to their constituents and the
public to conduct their activities with accountability and transparency. Non-
profts should regularly and openly convey information to the public about
their mission, activities, fnances, accomplishments and decision-making
processes. Information from a nonproft organization should be easily ac-
cessible to the public. It should establish external visibility and build public
understanding and trust in the organization.
14
Transparency and Accountability (continued)
• fnancial information, including income and expense statement,
balance sheet and functional expense allocation; and
• a list of board members, management, staff and contributors.
8. Each nonproft organization must make certain data available
to the public, including:
• IRS Form 990 for the previous three years, including clear
statements of program service accomplishments in Part III; and
• IRS Form 1023, Application for Recognition of Exemption.
9. A nonproft should provide multiple ways for constituents to request
information or provide input.
Fairness and Equity Practices
10. Nonprofts should ensure nondiscriminatory service to their
constituents in accordance with state and federal law.
11. Nonprofts should disclose how constituent information will be used
and ensure that the organization complies with an individual’s ex-
pressed confdentiality and privacy preferences.
12. Information regarding fees and services should be made readily
available to the public, including available discounts and scholarships.
When charging for services, nonprofts have an obligation to set fair
prices and seek ways to accommodate an individual’s ability to pay,
keeping in mind the need to balance the organization’s revenue and
expenses.
15
Financial Management
Nonprofts have an obligation to act as responsible stewards in managing
their fnancial resources. Nonprofts must comply with all legal and fnan-
cial requirements and should adhere to sound accounting principles that
produce reliable fnancial information, ensure fscal responsibility and build
public trust. Nonprofts should use their fnancial resources to accomplish
their missions in effective and effcient ways and should establish clear
policies and practices to regularly monitor how funds are used. Nonproft
organizations should seek to maintain or sustain a business model that will
offer reliable, fexible and diverse resources to accomplish the organization’s
mission.
Functions
1. The board should annually review and approve a detailed written
budget of revenues and expenditures and gain a suffcient understand-
ing of the assumptions behind the budget’s development when doing
so.
2. Individuals responsible for an organization’s fnancial reporting should
prepare and present to the board consistent, timely and accurate fnan-
cial reports at least bimonthly, with comparisons to the organization’s
budget.
3. A nonproft should ensure separation of fnancial duties to serve as a
checks and balances system to prevent theft, fraud or inaccurate report-
ing to the greatest extent possible. This system of internal controls
should be formally adopted by the board and appropriate to the size of
the organization’s fnancial and human resources.
4. Nonproft organizations should adopt written fnancial procedures and
have appropriate fnancial management software to record revenues
and govern major expenses and use of assets, including:
• cash and in-kind contributions,
• payroll,
• leases,
• expense reimbursements,
• travel,
• contracts,
• consultants,
• investments, and
• use of debt.
16
Financial Management (continued)
5. Nonproft organizations accepting funds from government entities
should be conscientious in negotiating contract terms to ensure that
payment levels, conditions and reporting requirements are consistent
with the mission of the organization and the interest of the people be-
ing served.
6. Nonprofts should periodically assess their risks, take appropriate
actions to minimize these risks and purchase appropriate types and
levels of insurance to wisely manage their liabilities.
7. A nonproft’s board should use comparable market data to set
compensation for the organization’s executive director and stay in-
formed of compensation levels for other key personnel.
8. A nonproft’s board should strictly prohibit fnancial loans to board
members, the executive director and other key personnel.
9. Board members and key staff should clearly understand how to read
and interpret fnancial statements, including the limits on the use of
restricted funds in nonproft organizations and the role of debt.
10. The board treasurer should take a leadership role in helping the board
understand its duties with regard to fnancial management. The
treasurer also should foster board awareness of the organization’s cur-
rent fnancial condition, forecasted revenue and need to make timely
adjustments in expenditures to keep the organization healthy.
Compliance
11. Nonproft organizations must comply with all fnancial
regulations, such as withholding and payment of federal, state
and Social Security taxes, and manage donated funds accord-
ing to their restrictions.
12. Nonproft organizations must complete the relevant version
of the IRS Form 990 annually. The organization’s board should
be provided with a copy of the completed IRS Form 990 before
it is submitted. The organization should seek to meet the initial four-
and-a-half-month reporting deadline to the IRS.
17
Principles & Practices for Nonproft Excellence
13. If a Minnesota nonproft organization’s total revenues for the
previous fscal year exceed $750,000, it must have its fnancial
statements audited, certifed and prepared in accordance with
general accepting accounting principles (GAAP). The board should
designate a board committee to hire the auditor, oversee the audit pro-
cess, meet with the auditor to review the audit’s content and present
the audit’s fndings to the full board for its review and approval.
14. Nonproft organizations should have systems in place, including a
whistleblower policy, to protect individuals who report fnancial mis-
conduct from any negative repercussions for doing so.
Sustainability
15. A nonproft organization must openly communicate the
annual reporting information contained in its IRS Form 990
for the previous three years to make available to those who
request it. The organization should make this information available on
its website.
16. Nonproft organizations should secure appropriate levels of funding to
carry out their missions and activities and, when possible, diversify
their revenue sources to avoid being dependent on a single funding
type.
17. Nonproft organizations should work diligently to avoid recurring
defcits and aim towards building up suffcient operating reserves.
18. Nonprofts must spend funds in compliance with conditions
attached to their funding. Organizations should develop a sys-
tem to ensure that donor funding restrictions are maintained.
19. A nonproft organization has a responsibility to ensure that its assets
are used solely for the beneft of the organization and not for personal
or other gains. To carry out this duty, an organization should have a
clear confict of interest policy that is annually signed by board mem-
bers and key staff and actively enforced by the offcers of the board.
18
Fundraising
Policies
1. A nonproft’s board of directors has a responsibility to adopt a
fundraising plan and systems to ensure that suffcient charitable contri-
butions are raised to meet budgeted objectives.
2. A nonproft should have a policy that sets out conditions under which
it would decline funds or in-kind donations given for purposes outside
the scope of its mission or that would otherwise bring about adverse
conditions for the organization or its constituents.
3. Nonprofts should ensure that a high percentage of each dollar raised
goes directly to funding its programs and services. These percentages
should be in accordance with practices of comparable organizations
and with representations made by the organization to contributors and
the public.
4. Compensation for fundraising personnel and contractors should not be
based on a percentage of funds raised or other commission-based for-
mulas.
5. A nonproft should ensure that any outside individual or organization
that solicits funds on its behalf meets the Minnesota Attorney General’s
registration requirements and all other regulations governing the activi-
ties of professional fundraisers. Fundraisers should be closely moni-
tored to ensure they follow accountable fundraising practices, make
required disclosures, and work as responsible stewards of the organiza-
tion’s goodwill.
Nonproft organizations provide opportunities for individuals and institu-
tions to voluntarily contribute to causes of their choosing. By engaging the
interests and relationships of individuals, nonprofts can help develop a
culture of philanthropy where people feel their values can be expressed and
contributions effectively used to improve their communities. To honor this
trust, nonprofts should be good stewards and conduct their fundraising
according to the highest ethical standards with regard to solicitation, accep-
tance, recording, reporting and use of funds. Nonprofts should adopt clear
policies for fundraising activities to ensure responsible use of funds and
open, transparent communication with contributors and other constituents.
19
Principles & Practices for Nonprofit Excellence
Accountability to Donors
6. Nonprofts must comply with all federal, state and local laws
concerning fundraising practices. This includes registration and
annual reporting with the Offce of the Minnesota Attorney
General and with any state in which the organization is soliciting chari-
table contributions.
7. Nonproft organizations are responsible for conducting their
fundraising activities in a manner that upholds the public’s trust in
stewardship of contributed funds.
8. Nonprofts must use funds consistent with donor intent and
comply with specifc conditions placed upon donations.
9. Nonprofts should strive for a balance between publicly
recognizing charitable contributions and maintaining donor
confdentiality when requested.
10. Nonprofts should respect donor preferences in the handling of their
information and should implement systems and policies that secure
this information, effectively use it to communicate with donors and
prevent its use for improper purposes. Nonprofts are allowed to share
but they must not trade or sell contact information for any donor
without prior permission from the donor.
Communication with Donors
11. Organizational communications, including fundraising appeals,
must include clear, accurate and honest information about the
organization, its activities, and when, where and for whom the
funds will be used in addition to the tax treatment of a contribution.
12. Nonprofts must send a written acknowledgment to all donors
who make a “quid pro quo” donation (that is, a payment made
partly as a contribution and partly for goods and/or services) in
excess of $75 and must also send a written acknowledgment to all do-
nors who made contributions of $250 or more in cash or property in
the previous calendar year. For donors who have not given more than
$250 in the previous calendar year, nonprofts should send an annual
statement of giving.
20
Fundraising (continued)
13. When developing a fundraising campaign, nonprofts should honor
donor preferences regarding how often donors are contacted and how
they receive that communication.
14. Nonprofts should regularly communicate with constituents regarding
their activities and should make such information available through
free and paid media.
15. A nonproft should plan its communications to tell the story of the
organization and maintain consistent, mission-focused and timely
communication with donors.
16. Nonprofts should establish a thorough understanding of their key
audiences and regularly assess the effectiveness of communication
strategies and tools used to reach those audiences. A nonproft should
adjust its strategies over time to best match technologies to its audi-
ences’ communication preferences.
21
Evaluation
Evaluation is a distinct process, different from reporting to funders and
other stakeholders. While reporting is largely an administrative task focused
on accountability, evaluation is a strategic process focused on improvement.
The evaluation process allows nonprofts to increase the effectiveness and
effciency of delivery of services. Each nonproft should use evaluation to
measure the impact of its actions, assess how those actions align with its
mission, and act upon this information. The public also has a stake in non-
proft performance and is entitled to information regarding organizational
results. Nonprofts should share evaluation results with their constituents
and the public as well as use them to continually improve the quality of
their processes, programs and activities.
Components of Evaluation
1. Nonprofts should have a defned, ongoing, systematic and sustainable
process for improving their services, programs and internal processes,
using methods appropriate to the size of the organization.
2. Nonproft programs should take into account and respond to the
experience, needs and satisfaction of the constituents they serve.
3. Nonprofts should conduct program evaluations in ways that are
culturally sensitive and appropriate for the community served.
4. An organization’s measurement systems should be practical and useful
to improve ongoing processes, activities and results.
5. Performance measures should be realistic and appropriate to the size
and scope of the organization and those it serves.
6. Measurement should include information on outputs, outcomes,
impact and satisfaction with activities and services provided.
7. Performance measures should be specifc and based on evidence
gathered before, during and after program development and
implementation.
8. Measurements may include both qualitative and quantitative data.
9. Measurements should include data on effciency and effectiveness.
22
10. Nonproft organizations should strive to improve the evaluation skills
of staff while contracting with other organizations or consultants to
serve as external evaluators when appropriate and feasible.
11. Nonprofts should include realistic evaluation expenses in all project
budgets.
12. Personal information collected from individuals through the
evaluation process must be kept confdential unless they give consent
for its release.
Uses of Evaluation
13. Nonprofts should use evaluation results to gauge organizational
effectiveness, improve programs and activities, and inform strategic
and annual workplans.
14. Nonprofts should share evaluation results with a broad range of
constituents to demonstrate the organization’s impact, the commu-
nity’s ongoing need and the lessons learned.
15. Nonproft evaluation should be ongoing for continuous improvement
and should include input from a wide variety of stakeholders.
16. Nonprofts should be open to receiving feedback from members of the
public who are interested in the organization’s effectiveness.
Evaluation (continued)
23
Planning
The process of organizational planning sets the overall direction, activi-
ties and strategies a nonproft uses to fulfll its mission and ties planned
activities to a sustainable business model and the annual budgeting pro-
cess. Organizations should adopt clear strategic priorities that can be acted
upon, guide the organization’s decision-making and are revisited regularly.
Planning benefts from participation from the breadth of the organization,
including stakeholder input (with particular attention to the people served
by the organization), assessments of operational and competitive environ-
ments, and performance information on the organization’s work.
Mission, Vision and Values
1. Nonprofts should establish and regularly review mission, vision and
values statements that are specifc enough to effectively guide the over-
all goals and activities of the organization.
2. The mission statement should be linked to the values of the
organization and its vision for the future.
3. The mission, vision and values should be evaluated regularly by the
board to determine if they still meet the evolving needs of the organiza-
tion’s constituents and the public.
Components of Planning
4. Plans should align with the organization’s mission, vision and values.
5. Organizations should actively make adjustments to plans to ensure that
assumptions and activities adapt to changing organizational and envi-
ronmental realities.
6. Plans should be based on a careful assessment of the multiple
resources necessary for implementation, including human resources,
fnancial, relational, and organizational commitment.
7. Organizations should create plans with evaluation in mind, assessing
what processes and goals they intend to use and how they will measure
their successful completion.
8. Plans should be informed by a review of the external factors that affect
the organization’s operating environment, taking into account the op-
portunities for action or collaboration and threats to success or
sustainability.
24
Planning (continued)
9. Nonproft organizations should be responsive to community needs
and actively engage and gather input from a variety of sources, such as
the board, staff and community members, and other constituents.
10. Nonprofts should confer with their counterparts to determine the
need for services, the best practices in delivering them and the effec-
tive use of community resources.
11. Nonproft organizations should provide timely notice of signifcant
changes to partner organizations or constituents who depend on or
are making plans reliant on the organization’s availability of services.
Plan Types
Strategic Plans
12. The board of directors should establish a rigorous process of setting
clearly defned, long-term goals and objectives to accomplish the orga-
nization’s mission.
13. Strategic planning should articulate how the strategies chosen are
expected to accomplish the organization’s stated goals.
14. Goals and objectives should be reasonably attainable given staffng,
resources, constituents and the number of people being served.
15. Nonproft organizations should continually scan the environment for
external factors that may impact the success of the organization’s
strategies, including changes in the political, economic, demographic,
legal or competitive environments, and make necessary adjustments
to respond to these changes.
Operational/Annual Workplan
16. A nonproft organization should annually create a written operational
plan that specifes how its activities will be implemented.
17. Operational plans should support the nonproft’s strategic goals and
objectives in order to advance the mission of the organization.
18. The operational plan should clearly defne specifc program, fnancial,
personnel and evaluation activities; establish timelines; assign specifc
responsibility for implementation; and be tied to an approved budget.
25
19. The operational plan should be used as a management tool for
tracking and evaluating activities and outcomes.
Contingency Plans
20. Nonproft organizations should develop contingency plans for
appropriate areas of the organization, weighing the likelihood, impact
on resources, opportunity and ease of planning as they create these
plans.
21. Plans should include instructions for overcoming potential challenges
in their implementation.
22. Nonproft organizations should have a plan for how to communicate
with key stakeholders in the event of unforeseen events.
23. Nonproft organizations should purchase insurance policies
appropriate to entities of their size and activities to cover property and
liability risks, directors and offcers, employment practices and other
specialized needs.
Principles & Practices for Nonprofit Excellence
26
Civic Engagement and Public Policy
Infuencing public decision-making is a critical and legal means for non-
proft organizations to accomplish their missions. Open communication
between policymakers and constituents contributes to well-informed
policies and their effective implementation. To the highest extent possible,
nonproft organizations should educate their community, provide opportu-
nities to deliberate on public policies, engage their constituents in advocacy
activities, and promote community interests. Because participation in gov-
ernment decision-making is a highly regulated and sometimes contentious
area, nonproft leaders need to be familiar with the regulations and require-
ments for nonproft organizations to participate in policy making. They
also need to know the reporting requirements and restrictions on partisan
political campaign activity.
Promoting Participation
1. Nonprofts should help their clients, members, volunteers and donors
learn how relevant policies affect them, develop their skills and knowl-
edge in public policy making, and help them take advantage of opportu-
nities to participate in the public policy process.
2. Nonprofts should promote nonpartisan efforts to encourage voting
and other participation in federal, state, county and city policy making.
3. 501(c)(3) organizations should consider promoting awareness
of elections and issues, including sponsoring nonpartisan candidate
forums and legislative score cards.
Advocacy and Public Policy
4. Nonproft boards should consider taking organizational positions on
policy issues that impact the mission of the organization, its constitu-
ents or the nonproft sector as a whole.
5. Nonprofts should maintain a sound understanding of the current
public policy environment in their activity area and how that impacts
the communities they serve.
6. If engaged in public policy and advocacy activities, nonprofts should
adopt a written policy that clarifes the scope of the work as well as the
time and resources to be dedicated to those activities.
27
Principles & Practices for Nonprofit Excellence
7. Nonprofts should join together in strategic alliances around policy
issues to strengthen their impact on public policy.
8. In situations where an organization’s mission is directly affected by a
public policy, nonprofts should lead advocacy efforts regarding the
policy, which may involve a variety of advocacy activities including
direct lobbying.
Lobbying
9. Lobbying by nonproft organizations and using funds (within
limits) to infuence legislation is specifcally authorized by feder-
al law with mandatory reporting on IRS Form 990.
10. Nonprofts that engage in lobbying activities are subject to state
and federal lobbyist registration and reporting requirements
and must fle accurate and timely reports on their lobbying
activities.
11. Nonprofts that are engaged in lobbying activities must be
aware of their funding sources’ limitations on the use of funds
and must organize their legislative work so that only funds not
restricted in this way are used for lobbying.
Political Campaign Activity
12. 501(c)(3) organizations must not take positions or spend funds
to support or oppose a candidate for political offce or coordi-
nate their activities with a candidate, political party or other
organization supporting or opposing political candidates.
13. Nonproft representatives, including board or staff members, should
distinguish between their personal positions or endorsements and the
nonpartisan stance of their organization. They should refrain from
situations that create the appearance of any organizational endorse-
ment for candidates or political parties.
28
Strategic Alliances
Sustaining a variety of nonproft organizations is positive and healthy for a
community as it provides for a wide-array of approaches, leadership oppor-
tunities, individual choices and customization at the local level. However,
the effectiveness of a community’s nonproft organizations also depends on
successful relationships with one another as well as with businesses and
government. Regardless of form, these strategic alliances can serve a variety
of purposes, including resource sharing, policy infuence and improved
operational effciency. While nonprofts operate in both cooperative and
competitive environments, strong relationships between nonprofts can
strengthen both the capacity of individual organizations and the sector as a
whole.
Strategy for Creating Connections
1. Nonprofts should be aware of ongoing developments and changes in
their feld, including opportunities for coordination or joint action with
other organizations.
2. Nonprofts should seek appropriate strategic partnerships and alliances
to achieve organizational goals, increase impact and strengthen con-
nections with constituents and others in the communities they serve.
3. Decisions regarding strategic alliances should be consistent with the
strategic goals and advance the missions of the participating organiza-
tions.
Assessment/Decision-making
4. Organizations should determine what resources would be required in a
potential alliance, the availability of those resources and the estimated
cost in comparison to the anticipated beneft to accomplishing the
organization’s mission.
5. Alliance agreements should establish clear roles and responsibilities.
They should also include ways to ensure accountability and rules that
allow for changing the alliance agreement or ending it.
6. Organizations should assess on an ongoing basis whether resources
are being used wisely and participating organizations are fulflling their
agreed-upon roles.
29
Principles & Practices for Nonprofit Excellence
7. A charitable organization that participates in a business venture
with a taxable entity (i.e., a for-proft business) must ensure
that its assets do not improperly beneft the taxable entity.
Coordination
8. Nonprofts should coordinate their activities with other organizations
providing similar or complementary services in their communities.
9. Nonprofts should work to establish communication channels, mutual
understanding and benefcial alliances among government, nonproft
and for-proft sectors to take advantage of the total resources and inter-
ests of the community.
10. When possible and appropriate, nonprofts should assist other
nonprofts in the community through alliances and sharing of resourc-
es, connections and expertise.
30
Human Resources
The ability of an organization to make the best use of the energy, time and
talents of its employees is essential to accomplish the organization’s mis-
sion. Nonproft organizations should place a high priority on exercising fair
and equitable practices that attract, retain and actively engage qualifed
employees. Nonprofts have an obligation to comply with and stay current
on all applicable employment laws and to provide a safe and productive
work environment. Each nonproft organization should establish specifc
policies and practices that promote cooperation and open and effective
communication among employees so that they can productively work to-
gether to advance the organization’s mission.
Employee Policies
1. Nonprofts must comply with all federal, state and local
employment laws when hiring, employing and dismissing
personnel.
2. Nonprofts must comply with employment mandates,
including:
• payroll taxes,
• workers’ compensation,
• unemployment compensation,
• accurate designation of employees and contractors, and
• wage and hour laws.
3. Nonproft organizations should adopt a set of board-approved policies
and procedures for managing employees. Organizations should review
and update these regularly.
4. Nonprofts should provide a safe and healthy work environment for
their employees.
5. Nonprofts should establish a clear confict of interest policy for
employees. It should include disclosure of relationships and interested
party transactions.
6. Nonprofts should adopt procedures that allow employees the
opportunity to rectify their grievances.
7. Nonprofts should adopt a whistleblower policy to protect personnel
when they report violations of organizational policy or applicable laws.
31
Principles & Practices for Nonprofit Excellence
Recruitment and Retention
9. Nonprofts should employ skilled individuals who are suitable for the
positions they occupy and are committed to the goals, values and objec-
tives of the organization.
10. Nonprofts should conduct background checks on employees,
particularly if their positions involve working with children or vulner-
able adults, performing fnancial duties or serving in other sensitive
areas.
11. Background checks should be conducted in a uniform and
consistent way, and nonprofts must follow applicable laws
with respect to background checks of prospective employees.
12. Nonproft organizations should provide personnel with clear, current
job descriptions, a comprehensive orientation, and the resources they
need to produce quality work.
13. Nonproft organizations should defne their compensation philosophy,
balancing internal equity with market-based and livable compensation
for all employees.
14. To the extent of their ability, nonprofts should provide employees
with adequate benefts, including health insurance, and the opportu-
nity to fnancially contribute to retirement plans.
15. Nonproft organizations should create a culture of transparency and
open communication where internal information is shared as appro-
priate. This also includes being open to input from personnel regard-
ing the organization’s activities and results on a continual basis.
16. Nonprofts should develop a plan for how vacancies in senior
leadership positions will be flled, including in the event of voluntary
and unexpected departures.
17. When employees depart, nonproft organizations should conduct exit
interviews to learn from the employee’s employment experience.
18. When employees are terminated, nonprofts should provide adequate
notice and information about beneft continuation, unemployment
compensation, references and job placement assistance when pos-
sible.
Human Resources (continued)
32
Diversity and Inclusion
19. Nonprofts should strive toward creating a workplace that welcomes
and supports employees who refect the diversity of their community.
20. Nonprofts must establish and abide by a broad and
encompassing equal opportunity employment policy.
Training and Development
21. Nonprofts should promote staff education and development and
provide opportunities for growth and advancement of personnel.
22. Nonproft boards should budget for the professional development of
their staff.
23. Nonproft personnel should receive ongoing performance-related
feedback and a formal performance evaluation at least annually.
Volunteer Engagement
1. Nonprofts should assess the capacity of their organization to engage,
supervise and support volunteers with the necessary level of attention,
priority and resources before recruiting volunteers.
2. Nonprofts should develop a volunteer plan that states how volunteers
advance the organization’s mission.
3. Nonprofts should allocate resources (including staff) to recruit,
engage, supervise, recognize and retain volunteers.
4. Nonprofts should put risk management procedures in place to assess,
manage or lessen potential risks to volunteers, the organization and its
clients, members and participants that may result from the delivery of
a volunteer-led program or service. This should include obtaining ad-
equate levels of insurance for volunteers and the use of liability waivers
where appropriate.
5. Board members should make an intentional distinction between their
governance role as volunteer board members and any activities they
conduct as program-based volunteers.
6. While volunteers and employees work closely together in many
organizations, nonprofts must abide by the distinctions between the
legally allowed activities of volunteers and employees:
a. Employees of an organization may volunteer for the
organization as long as the volunteer duties are outside of
33
Volunteer Management
Volunteers’ ideas, energy and ability to connect with others are crucial
resources for nonproft organizations to perform their role in society. Engag-
ing volunteers is an essential part of the early stages of the life cycle of many
nonprofts and also builds the capacity of nonprofts at any stage of the orga-
nization cycle. Volunteers provide a critical connection between nonprofts
and their communities. They bring needed skills, connections, insights and
resources. They also serve as valuable advocates and public relations ambas-
sadors. Nonprofts have an obligation to act as responsible stewards of the
skills, energy and time that volunteers bring to the organization. Nonprofts
should create thoughtful structures and processes to manage volunteer time
and abilities and direct volunteer energies to effectively advance the organi-
zation’s mission.
34
Volunteer Management (continued)
regular employee assignments, outside of normal working hours,
predominantly for the employee’s beneft and without any pen-
alty to the employee for not volunteering.
b. Financial and in-kind benefts to volunteers should be
limited to reimbursement for business-related expenses,
minor fringe benefts and/or nominal fees for services.
Volunteer stipends should not be tied to the amount of
hours engaged in volunteer activities and must be recorded as
taxable income where appropriate.
Recruitment and Screening
7. Before recruiting volunteers, organizations should develop a clear
description of the scope of the work, necessary skills, expected time
commitment and the impact and benefts of the volunteer’s service.
8. Where appropriate, nonprofts should seek to match volunteer
opportunities to the potential volunteer’s needs and interests.
9. Nonproft organizations must conduct background checks if
the volunteer will be working directly with vulnerable people.
10. Volunteer recruitment should incorporate a broad range of
internal and external strategies to reach out to diverse sources of
volunteers.
Engagement and Supervision
11. Volunteers should be welcomed and treated as valued and integral
members of the organization’s human resources.
12. Volunteers should be provided with an orientation appropriate to their
role. Orientation programs should include a clear written position
description, a manual addressing relevant organization policies, infor-
mation on disciplinary practices and other essential organization or
position-related information.
13. Nonprofts should structure their volunteer program so that each
volunteer has a direct connection with an identifed supervisor and
receives a level of support and supervision appropriate for their role.
35
Principles & Practices for Nonprofit Excellence
14. Nonproft organizations should have clearly articulated and
documented accountability and discipline procedures for volun-
teers that address lack of performance or policy violations as well as
grounds for termination when necessary.
15. Nonprofts should provide formal and informal opportunities to
recognize the impact and value of volunteers in advancing the organi-
zation’s mission.
16. Volunteers should receive ongoing performance-related feedback and
a formal performance evaluation at a level appropriate to their in-
volvement in the organization. They also should have the opportunity
to provide feedback to the organization.
17. The volunteer program should be evaluated periodically to assess the
impact of the program, as well as the cost and benefts involved in
recruiting, engaging and supervising volunteers.
36
Leadership and Organizational Culture
Nonproft organizations beneft from broad participation in important
discussions and decision-making. By engaging diverse groups of people who
care about the organization’s work and the people it serves, from perspec-
tives inside and outside the organization, nonprofts are able to mobilize
support, learn from peers and respond to community concerns. Nonproft
leaders have a complex task, carrying out challenging missions with limited
resources and sometimes conficting demands, in the midst of constantly
evolving networks of organizational and personal relationships. Open and
interactive leadership practices and organizational cultures strengthen the
ability of nonprofts to interpret and adapt to opportunities in this shifting
environment and to make the most effective use of the ideas and resources
available in their organizations, networks and communities.
Decision-making
1. Nonproft leaders should make clear the decision making structures
and processes of the organization and its governing body.
2. Nonproft leaders should devote time and attention to analyze the
changing environment and steer the organization through those
changes.
3. Nonproft leaders should actively seek to understand underlying causes
of mission-related issues and use this awareness to focus organization
activities.
4. Nonproft leaders should prioritize organizational goals and negotiate
external relationships to buffer against excessive control of the orga-
nization by funding sources, government regulators or other external
infuences.
5. Nonproft leaders should recognize and navigate the organization’s
response to the sometimes competing interests of funders, clients, con-
stituents, the board, the public and volunteers.
6. Nonproft leaders should discern a sustainable business model for the
organization that takes into account the organization’s size, focus, fund-
ing sources and activities.
37
Principles & Practices for Nonprofit Excellence
Communications
7. Nonproft leaders should help the organization cope with multiple
demands by focusing the organization’s attention on timely mission-
relevant issues and opportunities.
8. Leaders should advocate for their organization and its mission,
championing the cause in and outside of the organization.
9. Leaders should actively communicate how the organization’s activities
produce the intended change in the community and inspire others to
affect that change through fundraising, advocacy and programming.
10. Nonproft leaders should ensure that suffcient time and energy is
invested in the organization’s communication capacity.
Culture
11. Nonproft leaders should continually develop the skills, knowledge
and abilities of others at all levels of the organization to take on
greater responsibility for carrying out the organization’s mission and
engaging community members.
12. Nonproft leaders should create and sustain an organizational culture
that best advances the nonproft’s mission and goals.
13. Nonproft leaders should push the organization to make diffcult and
timely decisions, challenge others in the organization when necessary,
and permit conficting views to be expressed on the way to reaching
resolution.
14. Nonproft leaders should foster a culture of information sharing and
interaction between the board and others in the organization so that
innovation and creativity can come from diverse parts of the organiza-
tion.
15. Nonproft leaders should identify and implement opportunities that
enhance a positive working environment.
16. Nonproft leaders should demonstrate the behaviors they expect of
their colleagues.
38
17. Nonproft leaders should encourage their organization’s staff and
board to seek out, recognize and leverage the shared and different
values of diverse cultures.
18. Nonproft leaders should pay attention to and attend to their need for
professional and personal renewal and encourage the same in others.
19. Nonproft leaders should allow for and encourage questions and
refections on the organization’s strategies, effectiveness and ability to
change.
Leadership and Organizational Culture (continued)
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