Part I: Ethics and Accountability



TContents TOC \o "1-3" \h \z \u Part I: Ethics and Accountability PAGEREF _Toc370200601 \h 13Sample Mission Statements PAGEREF _Toc370200602 \h 15Sample #1 PAGEREF _Toc370200603 \h 15Sample #2 PAGEREF _Toc370200604 \h 16Sample #3 PAGEREF _Toc370200605 \h 16Sample #4 PAGEREF _Toc370200606 \h 16Sample Vision Statements PAGEREF _Toc370200607 \h 16Sample #1 PAGEREF _Toc370200608 \h 17Sample #2 PAGEREF _Toc370200609 \h 17Sample #3 PAGEREF _Toc370200610 \h 17Sample Values Statements PAGEREF _Toc370200611 \h 19Sample #1 PAGEREF _Toc370200612 \h 19Sample #2 PAGEREF _Toc370200613 \h 20Sample #3 PAGEREF _Toc370200614 \h 21Sample #4 PAGEREF _Toc370200615 \h 22Sample Codes of Ethics PAGEREF _Toc370200616 \h 23Sample Codes of Ethics PAGEREF _Toc370200617 \h 24Sample #1 PAGEREF _Toc370200618 \h 24Sample #2 PAGEREF _Toc370200619 \h 25Sample #3 PAGEREF _Toc370200620 \h 26Sample #4 PAGEREF _Toc370200621 \h 26Sample #5 PAGEREF _Toc370200622 \h 27Sample #6 PAGEREF _Toc370200623 \h 28Sample Diversity Statements PAGEREF _Toc370200624 \h 32Sample Diversity Statements PAGEREF _Toc370200625 \h 33Sample #1 PAGEREF _Toc370200626 \h 33Sample #2 PAGEREF _Toc370200627 \h 34Sample #3 PAGEREF _Toc370200628 \h 34Sample #4 PAGEREF _Toc370200629 \h 34Sample #5 PAGEREF _Toc370200630 \h 35Sample Conflict-of-Interest Policies PAGEREF _Toc370200631 \h 36Sample Conflict-of-Interest Policies PAGEREF _Toc370200632 \h 38Sample #1 PAGEREF _Toc370200633 \h 38Sample #2 PAGEREF _Toc370200634 \h 39Sample #3 PAGEREF _Toc370200635 \h 41Sample #4 PAGEREF _Toc370200636 \h 44Sample #5 PAGEREF _Toc370200637 \h 45Sample #6 PAGEREF _Toc370200638 \h 48Sample #7 PAGEREF _Toc370200639 \h 50Sample #8 PAGEREF _Toc370200640 \h 55Sample #9 PAGEREF _Toc370200641 \h 58Sample #10 PAGEREF _Toc370200642 \h 61Sample Confidentiality Policies PAGEREF _Toc370200643 \h 64Sample Confidentiality Policies PAGEREF _Toc370200644 \h 66Sample #1 PAGEREF _Toc370200645 \h 66Sample #2 PAGEREF _Toc370200646 \h 66Sample #3 PAGEREF _Toc370200647 \h 67Sample #4 PAGEREF _Toc370200648 \h 68Sample #5 PAGEREF _Toc370200649 \h 68Sample #6 PAGEREF _Toc370200650 \h 70Sample Whistleblower Protection Policies PAGEREF _Toc370200651 \h 72Sample #1 PAGEREF _Toc370200652 \h 73Sample #2 PAGEREF _Toc370200653 \h 75Sample #3 PAGEREF _Toc370200654 \h 78Sample #4 PAGEREF _Toc370200655 \h 80Sample Record Retention and Document Destruction Policies PAGEREF _Toc370200656 \h 83Sample #1 PAGEREF _Toc370200657 \h 83Sample #2 PAGEREF _Toc370200658 \h 87Sample #3 PAGEREF _Toc370200659 \h 89Sample #4 PAGEREF _Toc370200660 \h 92Part II – Role of the Board PAGEREF _Toc370200661 \h 94Sample #1 PAGEREF _Toc370200662 \h 96Sample #2 PAGEREF _Toc370200663 \h 96Sample #3 PAGEREF _Toc370200664 \h 97Sample #4 PAGEREF _Toc370200665 \h 99Sample #5 PAGEREF _Toc370200666 \h 100Sample #1 PAGEREF _Toc370200667 \h 103Sample #2 PAGEREF _Toc370200668 \h 104Sample #3 PAGEREF _Toc370200669 \h 105Sample #4 PAGEREF _Toc370200670 \h 105Sample #5 PAGEREF _Toc370200671 \h 106Sample Board Chair Job Descriptions PAGEREF _Toc370200672 \h 109Introduction PAGEREF _Toc370200673 \h 109Sample #1 PAGEREF _Toc370200674 \h 110Sample #2 PAGEREF _Toc370200675 \h 110Sample #3 PAGEREF _Toc370200676 \h 110Sample #4 PAGEREF _Toc370200677 \h 111Sample #5 PAGEREF _Toc370200678 \h 111Sample #6 PAGEREF _Toc370200679 \h 112Sample #7 PAGEREF _Toc370200680 \h 113Sample Board Officer Job Descriptions PAGEREF _Toc370200681 \h 116Sample #1 PAGEREF _Toc370200682 \h 117Sample #2 PAGEREF _Toc370200683 \h 118Sample #3 PAGEREF _Toc370200684 \h 118Sample #4 PAGEREF _Toc370200685 \h 118Sample #5 PAGEREF _Toc370200686 \h 119Sample #6 PAGEREF _Toc370200687 \h 120Sample #7 PAGEREF _Toc370200688 \h 121Sample #8 PAGEREF _Toc370200689 \h 121Sample #9 PAGEREF _Toc370200690 \h 122Sample #10 PAGEREF _Toc370200691 \h 122Sample #11 PAGEREF _Toc370200692 \h 123Part III: Board Practices PAGEREF _Toc370200693 \h 124Board Terms PAGEREF _Toc370200694 \h 125Sample #1 PAGEREF _Toc370200695 \h 126Sample #2 PAGEREF _Toc370200696 \h 126Sample #1 PAGEREF _Toc370200697 \h 128Sample #2 PAGEREF _Toc370200698 \h 129Compensation of Board Members PAGEREF _Toc370200699 \h 129Sample #1 PAGEREF _Toc370200700 \h 131Sample #2 PAGEREF _Toc370200701 \h 131Sample #3 PAGEREF _Toc370200702 \h 131Sample #4 PAGEREF _Toc370200703 \h 132Sample #5 PAGEREF _Toc370200704 \h 133Board Member Expense Reimbursement PAGEREF _Toc370200705 \h 133Sample #1 PAGEREF _Toc370200706 \h 134Sample #2 PAGEREF _Toc370200707 \h 134Sample #3 PAGEREF _Toc370200708 \h 135Sample #4 PAGEREF _Toc370200709 \h 135Sample #5 PAGEREF _Toc370200710 \h 136Board Self-Assessment PAGEREF _Toc370200711 \h 139Sample #1 PAGEREF _Toc370200712 \h 140Sample #2 PAGEREF _Toc370200713 \h 140Sample #3 PAGEREF _Toc370200714 \h 141Sample #4 PAGEREF _Toc370200715 \h 141Election of Officers PAGEREF _Toc370200716 \h 143Sample #1 PAGEREF _Toc370200717 \h 144Sample #2 PAGEREF _Toc370200718 \h 144Sample #3 PAGEREF _Toc370200719 \h 144Sample #4 PAGEREF _Toc370200720 \h 145Sample #5 PAGEREF _Toc370200721 \h 145Board Member Removals PAGEREF _Toc370200722 \h 146Sample #1 PAGEREF _Toc370200723 \h 146Sample #2 PAGEREF _Toc370200724 \h 147Sample #3 PAGEREF _Toc370200725 \h 147Sample #4 PAGEREF _Toc370200726 \h 147Sample #5 PAGEREF _Toc370200727 \h 147Sabbaticals PAGEREF _Toc370200728 \h 149Sample #1 PAGEREF _Toc370200729 \h 149Sample #2 PAGEREF _Toc370200730 \h 150Vacancy Filling PAGEREF _Toc370200731 \h 151Sample #2 PAGEREF _Toc370200732 \h 152Sample #3 PAGEREF _Toc370200733 \h 152CEO on Board PAGEREF _Toc370200734 \h 153Sample #1 PAGEREF _Toc370200735 \h 153Sample #2 PAGEREF _Toc370200736 \h 153Quorum for Board Meetings PAGEREF _Toc370200737 \h 154Sample #1 PAGEREF _Toc370200738 \h 155Sample #2 PAGEREF _Toc370200739 \h 156Sample #1 PAGEREF _Toc370200740 \h 157Sample #2 PAGEREF _Toc370200741 \h 157Sample #3 PAGEREF _Toc370200742 \h 158Sample #4 PAGEREF _Toc370200743 \h 158Virtual Meetings and e-Voting PAGEREF _Toc370200744 \h 159Sample #1 PAGEREF _Toc370200745 \h 160Sample #2 PAGEREF _Toc370200746 \h 161Sample #3 PAGEREF _Toc370200747 \h 161Sample #4 PAGEREF _Toc370200748 \h 161Notice of Meetings PAGEREF _Toc370200749 \h 162Sample #1 PAGEREF _Toc370200750 \h 163Sample #2 PAGEREF _Toc370200751 \h 163Sample Executive Session Policies PAGEREF _Toc370200752 \h 164Sample #1 PAGEREF _Toc370200753 \h 165Sample #2 PAGEREF _Toc370200754 \h 166Sample #3 PAGEREF _Toc370200755 \h 166Sample #4 PAGEREF _Toc370200756 \h 166Imdemnification PAGEREF _Toc370200757 \h 169Sample #1 PAGEREF _Toc370200758 \h 170Sample #2 PAGEREF _Toc370200759 \h 170Dissolution PAGEREF _Toc370200760 \h 171Sample #1 PAGEREF _Toc370200761 \h 172Sample #2 PAGEREF _Toc370200762 \h 172Sample #3 PAGEREF _Toc370200763 \h 173Part IV: Chief Executive PAGEREF _Toc370200764 \h 174Sample #1 PAGEREF _Toc370200765 \h 176Sample #2 PAGEREF _Toc370200766 \h 177Sample #3 PAGEREF _Toc370200767 \h 178Sample #4 PAGEREF _Toc370200768 \h 179Sample #5 PAGEREF _Toc370200769 \h 180Sample #6 PAGEREF _Toc370200770 \h 182Chief Executive Performance Evaluation Policies PAGEREF _Toc370200771 \h 186Sample #1 PAGEREF _Toc370200772 \h 187Sample #2 PAGEREF _Toc370200773 \h 187Sample #3 PAGEREF _Toc370200774 \h 188Executive Compensation Policies PAGEREF _Toc370200775 \h 189Sample #1 PAGEREF _Toc370200776 \h 191Sample #2 PAGEREF _Toc370200777 \h 192Sample #3 PAGEREF _Toc370200778 \h 196Executive Transition Policies PAGEREF _Toc370200779 \h 198Sample #1 PAGEREF _Toc370200780 \h 199Sample #2 PAGEREF _Toc370200781 \h 199Sample #3 PAGEREF _Toc370200782 \h 200Sample #4 PAGEREF _Toc370200783 \h 200Part V: Finance and Investments PAGEREF _Toc370200784 \h 202Budgeting Policies PAGEREF _Toc370200785 \h 203Sample #1 PAGEREF _Toc370200786 \h 204Sample #2 PAGEREF _Toc370200787 \h 204Sample #3 PAGEREF _Toc370200788 \h 205Sample #1 PAGEREF _Toc370200789 \h 208Sample #2 PAGEREF _Toc370200790 \h 208Capital Expenditures Policies Introduction PAGEREF _Toc370200791 \h 210Sample #1 PAGEREF _Toc370200792 \h 212Sample #2 PAGEREF _Toc370200793 \h 213Financial Controls Policies PAGEREF _Toc370200794 \h 213Sample #1 PAGEREF _Toc370200795 \h 215Sample #2 PAGEREF _Toc370200796 \h 215Sample #3 PAGEREF _Toc370200797 \h 216Sample #4 PAGEREF _Toc370200798 \h 216Sample #5 PAGEREF _Toc370200799 \h 217Sample #6 PAGEREF _Toc370200800 \h 217Sample #7 PAGEREF _Toc370200801 \h 217Sample #8 PAGEREF _Toc370200802 \h 218Investment Policies PAGEREF _Toc370200803 \h 218Sample #1 PAGEREF _Toc370200804 \h 220Sample #2 PAGEREF _Toc370200805 \h 225Sample #3 PAGEREF _Toc370200806 \h 230Sample #4 PAGEREF _Toc370200807 \h 233Sample #5 PAGEREF _Toc370200808 \h 233Sample #6 PAGEREF _Toc370200809 \h 235Sample #1 PAGEREF _Toc370200810 \h 246Sample #2 PAGEREF _Toc370200811 \h 247Sample #3 PAGEREF _Toc370200812 \h 249Sample #4 PAGEREF _Toc370200813 \h 249Sample #5 PAGEREF _Toc370200814 \h 249Sample #1 PAGEREF _Toc370200815 \h 252Sample #2 PAGEREF _Toc370200816 \h 252Sample #3 PAGEREF _Toc370200817 \h 253Sample #1 PAGEREF _Toc370200818 \h 257Sample #2 PAGEREF _Toc370200819 \h 257Sample #1 PAGEREF _Toc370200820 \h 260Sample #2 PAGEREF _Toc370200821 \h 260Sample #3 PAGEREF _Toc370200822 \h 261Risk Management Policies PAGEREF _Toc370200823 \h 262Sample #1 PAGEREF _Toc370200824 \h 263Sample #2 PAGEREF _Toc370200825 \h 263Sample #3 PAGEREF _Toc370200826 \h 264Sample #4 PAGEREF _Toc370200827 \h 264Part VI: Fundraising PAGEREF _Toc370200828 \h 266Sample #1 PAGEREF _Toc370200829 \h 268Sample #2 PAGEREF _Toc370200830 \h 268Sample #3 PAGEREF _Toc370200831 \h 269Sample #4 PAGEREF _Toc370200832 \h 269Sample #6 PAGEREF _Toc370200833 \h 270Sample #7 PAGEREF _Toc370200834 \h 270Donor Relations Policies PAGEREF _Toc370200835 \h 273Sample #1 PAGEREF _Toc370200836 \h 274Sample #2 PAGEREF _Toc370200837 \h 275Sample #3 PAGEREF _Toc370200838 \h 275Gift Acceptance Policies PAGEREF _Toc370200839 \h 277Sample #1 PAGEREF _Toc370200840 \h 278Sample #2 PAGEREF _Toc370200841 \h 278Sample #3 PAGEREF _Toc370200842 \h 278Sample #4 PAGEREF _Toc370200843 \h 279Sample #5 PAGEREF _Toc370200844 \h 279Sample #6 PAGEREF _Toc370200845 \h 281Sample #7 PAGEREF _Toc370200846 \h 282Sponsorship Policies PAGEREF _Toc370200847 \h 286Sample #1 PAGEREF _Toc370200848 \h 288Sample #2 PAGEREF _Toc370200849 \h 289Sample #3 PAGEREF _Toc370200850 \h 290Sample #4 PAGEREF _Toc370200851 \h 292Sample #5 PAGEREF _Toc370200852 \h 293Sample #6 PAGEREF _Toc370200853 \h 298Part VII: Personnel Policies PAGEREF _Toc370200854 \h 302Human Resources Responsibility Policies PAGEREF _Toc370200855 \h 303Sample #1 PAGEREF _Toc370200856 \h 304Sample #2 PAGEREF _Toc370200857 \h 304Equal Employment Opportunity Policies Introduction PAGEREF _Toc370200858 \h 306Sample #1 PAGEREF _Toc370200859 \h 307Sample #2 PAGEREF _Toc370200860 \h 307Sample #3 PAGEREF _Toc370200861 \h 308Sample #4 PAGEREF _Toc370200862 \h 308Sample #5 PAGEREF _Toc370200863 \h 309Nepotism Policies PAGEREF _Toc370200864 \h 311Sample #1 PAGEREF _Toc370200865 \h 312Sample #2 PAGEREF _Toc370200866 \h 312Sample #3 PAGEREF _Toc370200867 \h 312Sample #4 PAGEREF _Toc370200868 \h 313Sexual Harassment Policies Introduction PAGEREF _Toc370200869 \h 315Sample #1 PAGEREF _Toc370200870 \h 315Sample #2 PAGEREF _Toc370200871 \h 316Sample #3 PAGEREF _Toc370200872 \h 318Sample #4 PAGEREF _Toc370200873 \h 320Workplace Environment Policies PAGEREF _Toc370200874 \h 324Sample #1 PAGEREF _Toc370200875 \h 326Sample #2 PAGEREF _Toc370200876 \h 327Sample #3 PAGEREF _Toc370200877 \h 328Sample #4 PAGEREF _Toc370200878 \h 329Sample #5 PAGEREF _Toc370200879 \h 330Sample #6 PAGEREF _Toc370200880 \h 330Sample #7 PAGEREF _Toc370200881 \h 331Sample #8 PAGEREF _Toc370200882 \h 333Performance Review Policies PAGEREF _Toc370200883 \h 335Sample #1 PAGEREF _Toc370200884 \h 336Sample #2 PAGEREF _Toc370200885 \h 336Sample #3 PAGEREF _Toc370200886 \h 337Staff Complaint Policies PAGEREF _Toc370200887 \h 341Sample #1 PAGEREF _Toc370200888 \h 342Sample #2 PAGEREF _Toc370200889 \h 343Sample #3 PAGEREF _Toc370200890 \h 343Sample #4 PAGEREF _Toc370200891 \h 344Sample #5 PAGEREF _Toc370200892 \h 345Sample #6 PAGEREF _Toc370200893 \h 347Severance Pay Policies Introduction Severance pay refers to compensation that an employee may receive when he or she has been laid off, the position has been eliminated, or there has been a mutual agreement of separation. Some organizations have a formal written policy or general guidelines, but many have no explicit policy and handle specific situations as they arise. Executive staff often have a separation pay clause in their employment contract but no law requires organizations to provide severance pay. Providing severance pay can contribute to a positive mindset for other employees, however, who may see it as proof that the organization cares for its employees. Key Elements PAGEREF _Toc370200894 \h 349Sample #1 PAGEREF _Toc370200895 \h 350Sample #2 PAGEREF _Toc370200896 \h 350Sample #3 PAGEREF _Toc370200897 \h 351Sample #4 PAGEREF _Toc370200898 \h 351Sustainability Policies PAGEREF _Toc370200899 \h 352Sample #1 PAGEREF _Toc370200900 \h 353Sample #2 PAGEREF _Toc370200901 \h 353Sample #3 PAGEREF _Toc370200902 \h 354Part VIII: Communications PAGEREF _Toc370200903 \h 356Sample #1 PAGEREF _Toc370200904 \h 358Sample #2 PAGEREF _Toc370200905 \h 358Sample #3 PAGEREF _Toc370200906 \h 359Sample #4 PAGEREF _Toc370200907 \h 359Sample #5 PAGEREF _Toc370200908 \h 361Social Media Policies PAGEREF _Toc370200909 \h 362Sample #1 PAGEREF _Toc370200910 \h 363Sample #2 PAGEREF _Toc370200911 \h 364Sample #3 PAGEREF _Toc370200912 \h 364Sample #4 PAGEREF _Toc370200913 \h 365Electronic Media Policies PAGEREF _Toc370200914 \h 367Sample #1 PAGEREF _Toc370200915 \h 368Sample #2 PAGEREF _Toc370200916 \h 368Crisis Communication Policies PAGEREF _Toc370200917 \h 371Sample #1 PAGEREF _Toc370200918 \h 372Sample #2 PAGEREF _Toc370200919 \h 373Lobbying and Political Activity Policies PAGEREF _Toc370200920 \h 376Sample #1 PAGEREF _Toc370200921 \h 377Sample #2 PAGEREF _Toc370200922 \h 379Sample #3 PAGEREF _Toc370200923 \h 380Part IX: Committees PAGEREF _Toc370200924 \h 384Committee Creation Policies PAGEREF _Toc370200925 \h 387Sample #1 PAGEREF _Toc370200926 \h 387Sample #2 PAGEREF _Toc370200927 \h 387Sample #3 PAGEREF _Toc370200928 \h 388Governance Committee Job Descriptions PAGEREF _Toc370200929 \h 390Sample #1 PAGEREF _Toc370200930 \h 391Sample #2 PAGEREF _Toc370200931 \h 391Sample #3 PAGEREF _Toc370200932 \h 392Sample #4 PAGEREF _Toc370200933 \h 392Financial Committees Job Descriptions PAGEREF _Toc370200934 \h 394Sample #1 PAGEREF _Toc370200935 \h 395Sample #2 PAGEREF _Toc370200936 \h 396Sample #3 PAGEREF _Toc370200937 \h 396Sample #4 PAGEREF _Toc370200938 \h 397Sample #5 PAGEREF _Toc370200939 \h 398Sample #6 PAGEREF _Toc370200940 \h 398Sample #7 PAGEREF _Toc370200941 \h 399Sample #8 PAGEREF _Toc370200942 \h 402Sample #9 PAGEREF _Toc370200943 \h 402Development Committee Job Descriptions PAGEREF _Toc370200944 \h 404Sample #1 PAGEREF _Toc370200945 \h 405Sample #2 PAGEREF _Toc370200946 \h 405Sample #3 PAGEREF _Toc370200947 \h 406Sample #4 PAGEREF _Toc370200948 \h 407Sample #5 PAGEREF _Toc370200949 \h 407Sample #6 PAGEREF _Toc370200950 \h 408Executive Committee Job Descriptions PAGEREF _Toc370200951 \h 409Sample #1 PAGEREF _Toc370200952 \h 411Sample #2 PAGEREF _Toc370200953 \h 411Sample #3 PAGEREF _Toc370200954 \h 411Sample #4 PAGEREF _Toc370200955 \h 412Sample #5 PAGEREF _Toc370200956 \h 412Job Descriptions for Other Common Committees PAGEREF _Toc370200957 \h 414Sample #1 PAGEREF _Toc370200958 \h 416Sample #2 PAGEREF _Toc370200959 \h 417Sample #3 PAGEREF _Toc370200960 \h 419Sample #4 PAGEREF _Toc370200961 \h 421Sample #5 PAGEREF _Toc370200962 \h 421Sample #6 PAGEREF _Toc370200963 \h 422Sample #7 PAGEREF _Toc370200964 \h 423Sample #8 PAGEREF _Toc370200965 \h 423Sample # 9 PAGEREF _Toc370200966 \h 424Sample #10 PAGEREF _Toc370200967 \h 425Sample #11 PAGEREF _Toc370200968 \h 426Sample #12 PAGEREF _Toc370200969 \h 427Sample #13 PAGEREF _Toc370200970 \h 429Advisory Council Job Descriptions PAGEREF _Toc370200971 \h 431Sample #1 PAGEREF _Toc370200972 \h 432Sample #2 PAGEREF _Toc370200973 \h 433Sample #3 PAGEREF _Toc370200974 \h 433Sample #4 PAGEREF _Toc370200975 \h 434Committee Chair Job Descriptions PAGEREF _Toc370200976 \h 436Sample #1 PAGEREF _Toc370200977 \h 436Sample #2 PAGEREF _Toc370200978 \h 437Sample #3 PAGEREF _Toc370200979 \h 438Sample #4 PAGEREF _Toc370200980 \h 439Sample #5 PAGEREF _Toc370200981 \h 440Part X: Mission-Related Issues PAGEREF _Toc370200982 \h 442Proxy Policies for Associations PAGEREF _Toc370200983 \h 443Sample #1 PAGEREF _Toc370200984 \h 444Sample #2 PAGEREF _Toc370200985 \h 444Membership Quorum Policies for Associations PAGEREF _Toc370200986 \h 445Membership Meeting Notice Policies for Associations PAGEREF _Toc370200987 \h 448Sample #1 PAGEREF _Toc370200988 \h 448Member Access to Records Policies PAGEREF _Toc370200989 \h 450Sample #1 PAGEREF _Toc370200990 \h 450Sample #2 PAGEREF _Toc370200991 \h 451Discretionary Giving Policies for Foundations PAGEREF _Toc370200992 \h 452Sample #1 PAGEREF _Toc370200993 \h 454Sample #2 PAGEREF _Toc370200994 \h 454Sample #3 PAGEREF _Toc370200995 \h 454Deaccession Policies for Museums PAGEREF _Toc370200996 \h 455Sample #1 PAGEREF _Toc370200997 \h 456Sample #2 PAGEREF _Toc370200998 \h 457Sample #3 PAGEREF _Toc370200999 \h 457Space Rental Policies for Museums PAGEREF _Toc370201000 \h 463Sample #1 PAGEREF _Toc370201001 \h 464Sample #2 PAGEREF _Toc370201002 \h 465Part I: Ethics and Accountability Mission and VisionValuesCode of EthicsDiversity StatementConflicts of InterestConfidentialityWhistleblower Protection Record Retention and Document Destruction 1. Mission and Vision IntroductionThe mission statement reflects the heart of the nonprofit organization. It explains why the organization exists and what it hopes to achieve in the future. It serves as the touchstone for all decisions and activities, whether carried out by the board, staff, or volunteers. The mission statement reflects the organization’s essential nature, connects to its values, shapes programs and services, and provides the foundation for all fundraising activities. It is not a policy but a statement — the written expression of the organization’s purpose that is referred to as a source of guidance and motivation.The vision statement describes the future aspirations of the organization; it defines the dream, the long-term goals, and the overall direction of the organization. When crafting an effective vision statement, it is essential to focus on innovation and creativity while avoiding shortsightedness. The statement should not be based on future funding, obstacles, or current resources. Although the vision statement may describe an idealized goal, it should not be unrealistic; the best vision statements have reachable goals and serve to motivate the organization toward achieving these goals. A helpful way to think of a vision statement is as an outcome goal rather than as an organizational goal. For example, a food bank’s vision statement might be “No one in our town will go hungry” rather than “Our food bank will feed everyone in need.” Two organizations may have similar vision statements but very different mission statements. For instance, a homeless shelter and a job-training center for the unemployed have quite different missions, but both seek to improve the lives of all community members.Key ElementsA mission statement captures the issue the organization wishes to focus on and adds a simple, powerful statement of what the organization is doing to address the issue.A clear mission statement is inspirational yet realistic, emotional as well as informative, concise and complete. It is positive and focuses on achievable accomplishments.Some mission statements take a practical approach and define the difference the organization makes, for whom, and how. Others create an image with just a few words. Regardless of the approach, a mission statement should be easy to remember and share.A mission statement serves as the starting point for other overarching statements and goals, such as a tag line for marketing or a case statement for fundraising.The mission statement is always about purpose. The vision statement is about goals.A vision statement should not be so unrealistic and lofty that it seems impossible; it should outline a reachable goal.Practical TipsAn organization’s purpose is defined in its organization document, often briefly and broadly, to allow for programmatic flexibility — within certain parameters — over time. Consider developing a more compelling, more articulate mission statement for regular internal and external use.Be sure to use the mission statement as a tool when reaching out to constituents, recruiting board members and volunteers, convincing supporters of the difference the organization is out to make, and simply explaining the primary purpose and value of the organization to any potential or present stakeholder.Use the creation of the vision statement as a team-building tool. Have all board members share the ideals and values of what lies ahead for their work. Keep in mind the BHAG concept — dream about Big Hairy Audacious Goals. Sample Mission Statements The sample mission statements reveal different aspects of the organization through the way they are framed.Sample #1This simple, direct mission statement explains what the organization does and ends with a statement of a core value.XYZ’s mission is to provide assistance to individuals in need in the community through an informational network staffed by volunteers. Its belief is that no matter where you are, you are not alone.Sample #2This straightforward mission statement defines the organization’s goals and values. To provide customers with high quality water services at a reasonable cost while promoting the preservation of watershed land and aquifers.Reused with permission from the South Central Connecticut Regional Water Authority.Sample #3This mission statement identifies various services and frames them within a common goal outlined in the last item. This, too, can be adapted easily to fit different types of organizations.XYZ’s purpose shall beto study care and maintain treatment and early childhood programs for children and their familiesto provide foster care for children with professional direction of the child’s needs, and to provide social services to children and their families in their own homessuch other and varied programs as may be found by the board to be necessary for the fostering of the physical, intellectual, and emotional development of all such children and their familiesSample #4This mission statement inspires positive change beyond the organization’s work. The mission of XYZ is to promote full gender equality through education, development, and empowerment of leaders. The legacy of XYZ provides the foundation and the beacon to develop critical leadership skills and inspire others to become agents of positive change.Reused with permission from the Alice Paul Institute.Sample Vision Statements These vision statements vary from envisioning to inspiring major societal changes. Sample #1This vision statement inspires every individual to make a difference.Gender equality is a basic human right. The XYZ Institute seeks to fulfill the life-long mission of suffragist and equal rights activist XYZ to achieve full gender equality worldwide. The XYZ Institute is in a unique position to develop future generations of leaders and human rights activists by demonstrating the extraordinary difference one person can make.Reused with permission from the Alice Paul Institute.Sample #2This vision statement envisions a better world.Our goal is to live in a world without hunger.Sample #3This vision statement demonstrates compassion and is focused locally.There is a greater community respect for the elderly in general and particularly for the frail and chronically ill elderly. The elderly in our community lead higher quality lives characterized by more independence, greater freedom of choice, and stronger sense of self-worth.Suggested ResourcesGrace, Kay Sprinkel, Amy McClellan, and John A. Yankey. The Nonprofit Board’s Role in Mission, Planning, and Evaluation, Second Edition. Washington, DC: BoardSource, 2009.Fisman, Raymond, Rakesh Khurana, and Edward Martenson. “Mission-Driven Governance.” Stanford Social Innovation Review, Summer 2009. Hesselbein, Frances. The Organization of the Future 2: Visions, Strategies, and Insights on Managing in a New Era. San Francisco: Jossey-Bass, 2009.Independent Sector. “Checklist for Developing a Statement of Values and Code of Ethics.” ValuesIntroductionNonprofit organizations are mission-oriented and values-driven. As boards work to gain a sense of mission and create and reaffirm mission statements, it is imperative to know and express your organizational values. Values are embedded in the mission and vision of the organization; they should resonate with individuals who read the organization’s materials or experience its products and services. Like a mission statement, a values statement is not a policy, yet it serves as a guide for the organization and its staff, board, and volunteers who deliver services to the community. It sets the standard for all aspects of the organization’s programs and operations, from workplace environment and donor relations to client services and vendor relations. Key ElementsAn overarching theme can serve as a helpful starting point for articulating the organization’s values. For example, a school for children with learning difficulties might specify a strong belief that “Having a language-based learning disability does not predict academic failure.” And, a cancer support group might begin with: “People are not defined by their disease.”A values statement should accurately reveal the organization’s unique qualities and character. While values often seem universal, organizations should identify those principles and beliefs that are most important to their mission. When using common values — such as integrity, quality, trust — they should be tailored to the particular organization and the people or purpose it serves.Practical TipsThe true benefit of values statements is the collective process and adoption of the values themselves. To make a values statement meaningful, the entire staff should be involved in the development phase. Active support and true ownership is always easier when those who must live by the rules have participated in their development.Involve the board appropriately in shaping the values statement. At the very least, the board will approve the final values statement and, of course, abide by it in its own deliberations and actions.In your values statement, incorporate the notion of inclusivity. Your personnel policies may already address equal employment opportunities (see Part VII: Personnel, Section 2), but non-discrimination is a much broader, values-based issue. Include your customers, clients, and members, as well as board and vendors in a wider-ranging statement about inclusivity. Sample Values StatementsThe first three values statements are clear and concise, beginning with a generic statement and ending with one that articulates values in terms of organizational practices. The fourth sample offers a policy related to inclusivity.Sample #1This example, which describes commonly articulated values, uses an acronym to aid in memorization.STARS: Service, Teamwork, Accountability, Respect and Safety?Service: We provide prompt, courteous service to both our customers and our coworkers. We continually strive to make the customer experience better for all.Teamwork: We build on each other’s strengths. Through efficiency and innovation, we work together, operating as a team, in a spirit of mutual trust and openness, to achieve success.Accountability: We are responsible for our actions. We are honest and ethical. Integrity is at the heart of everything we do.Respect: We treat with respect everyone with whom we come in contact while doing our jobs. We promote diversity and embrace individuality.Safety: We are a safe workforce. Safety is owned by each and every employee. We all benefit when safety is part of our daily lives.Reused with permission from the South Central Connecticut Regional Water Authority.Sample #2This values statement distinguishes among the values that guide different aspects of the organization, from staff to services to the organization in general. StaffWe value everyone’s opinion and contribution, with which we will create a shared vision for XYZ and share in the responsibility for making that vision a reality.We select the best possible people and make certain they are put in a position that maximizes their strengths and opportunity for success.We will strive to uphold the highest standards of conduct and ethics.We will maintain professional facilities while creating an enjoyable and fulfilling atmosphere for families, children, staff, and the community.We eliminate bureaucracy by empowering people to do what they feel is best for our clients, our organization, and our staff.We believe that we will succeed as an organization by holding ourselves accountable for our individual success and striving to be well-rounded employees with balanced lives.We will continually seek out and implement ideas that will help us remain a leader in the field of ____.ServicesWe believe that early intervention services should be available for all children, regardless of their family’s ability to pay.We provide the highest quality services possible, and strive for excellence in everything we do. We know that families are the key to each child’s long-term success, so we empower parents by encouraging them to be active participants in all therapy/group sessions and by giving them the information, encouragement, and support they need to care for their child.We promote early identification and make every attempt to maximize children’s progress by helping them access services as soon as possible.We attempt to meet the needs of the whole child and family. When appropriate, we team multiple services from multiple disciplines.We strive to reach our goal to meet the early intervention needs of the children who are referred to us. When we are not the best organization to meet their needs, we will provide referrals to other resources.provide services to children over three years of age who are in need of medically based therapy. Our focus is on helping them achieve functional goals and life-long anizationWe know that even as we grow, we need to continue to act like a small organization that values interpersonal relationships, quality communication, and continuous learning.We maximize our impact and improve our sustainability through the pursuit of earned income opportunities because we believe a strong organization is a self-reliant organization. We recognize that we have a responsibility to the community. We are good stewards of the contributions from our donors and regularly and sincerely show our gratitude.We believe that taking calculated risks as individuals and as an organization encourages growth, new discovery, and continuous improvement.We recognize that the strategies needed to accomplish our values and principles change over time; therefore, we will remain flexible to achieve the ambitious goals we set for ourselves.We strive for mutually beneficial outcomes in all personal and professional relationships and collaborations.We strive to remain a healthy organization, and it is our desire to make all programs and services financially self-sufficient.Sample #3This sample begins with basic beliefs and then articulates how these beliefs are put into practice. It also addresses the unique role foundations play in philanthropy and the nonprofit sector.XYZ Foundation believes the following:Philanthropy contributes to a thriving democracy and is a privilege and a responsibility.Grantmaking is a partnership with grantees and the public, conducted in the public trust.Philanthropy must be undertaken seriously and responsibly, adhering to all laws and principles of fiduciary responsibility.Thoughtful grantmaking is informed by different perspectives, opinions, and experiences.In accordance with these beliefs, we do the following:We deal respectfully and courteously with our applicants, grantees, and donors as well as with those seeking information about our programs. We honor the confidentiality of our applicants, grantees, and donors and exercise discretion in our communications.We are clear and accessible about our goals and grantmaking processes, and make information about our application requirements, funding priorities, and programs available on a timely basis.We adhere to the highest ethical, legal, and fiduciary standards in our operations. We recognize and disclose conflicts of interest and work to avoid perceived conflicts of interest. We maintain active oversight of all financial and investment matters. We regularly assess our mission and practices, including periodic review of priorities, policies, board activity, communications, and the impact of our grantmaking. We seek to continually educate ourselves and expose ourselves to different perspectives, opinions, and experiences, and, where appropriate, to share our learning and experience with our grantees, the public, and government officials.These Guiding Beliefs and Principles are reused with permission from the Council of New Jersey GrantmakersSample #4This policy approaches the issue in terms of organizational inclusivity and extends to more than employment opportunities.XYZ is committed to promoting a wide opportunity of access at all levels. It recognizes that this policy will enhance and enrich all concerned by the inclusivity of experience gained.In accordance with state, federal, and local laws, XYZ prohibits discrimination because of race, disability, color, creed, religion, gender, age, sexual orientation, national origin, ancestry, citizenship, military or veteran status, or any other protected classification. This policy applies to all activities of XYZ, including but not limited to employment, selection of volunteers, service delivery, purchasing, and selecting vendors or consultants. Suggested ResourcesGrace, Kay Sprinkel, Amy McClellan, and John A. Yankey. The Nonprofit Board’s Role in Mission, Planning, and Evaluation, Second Edition. Washington, DC: BoardSource, 2009.Fisman, Raymond, Rakesh Khurana, and Edward Martenson. “Mission-Driven Governance.” Stanford Social Innovation Review, Summer 2009. Hesselbein, Frances. The Organization of the Future 2: Visions, Strategies, and Insights on Managing in a New Era. San Francisco: Jossey-Bass, 2009.Independent Sector. “Checklist for Developing a Statement of Values and Code of Ethics.” Sample Codes of EthicsIntroductionThere has been increasing concern about ethical behavior in nonprofit — particularly charitable — organizations in recent years. Public scandals in the nonprofit sector have drawn attention to the need for an increased level of board accountability. In response, many organizations have developed codes of ethics. These documents encompass the values of the organization and provide a code of conduct for employees and volunteers. While a values statement, discussed above, guides the organization in a strategic, fundamental way, codes of ethics shape the actions, behaviors, and decision making of an organization in a more explicit way. Although a code of ethics by itself cannot prevent wrongdoing, it conveys a strong message both internally and externally about the culture and work of the organization. Key ElementsA code of ethics serves as an overarching statement for other policies that establish standards of integrity and accountability. A code of ethics should outline the process and/or mechanism for implementing the defined culture and values within the organization from top to bottom. Sometimes a values statement may be incorporated into the code of ethics.A code of ethics is often general in nature. Some issues, such as confidentiality, conflict of interest, and nepotism, may be addressed in separate policies (see list of contents to find samples of these more specific topics).Practical TipsDefine what ethical behavior means for your organization, and clarify accepted professional standards.Separate staff and board issues. Board members and staff members often get confronted with different situations based on their role vis-à-vis the organization, its constituents, and the community at large.When discussing the code with staff and board members, it is often useful to provide examples of unacceptable behavior. As a way to stress the importance of the code, some organizations request a signature from board and staff members as a sign of understanding and acceptance of the standards.Once the code is established, it should be reviewed periodically by the staff and board for possible revision. In this way, the language of the code will continue to serve the expectations and needs of the organization.Sample Codes of EthicsThe six samples range from very general to exceedingly specific, with each reflecting the organization’s values and culture.Sample #1This brief statement provides broad ethical guidelines and expectations.Ethics PolicyXYZ believes strongly that its members must uphold the highest standards of ethical, professional behavior, and tohold paramount the safety, health, and welfare of the public in the performance of professional dutiesact in such a manner as to uphold and enhance personal and professional honor, integrity, and dignity of the professiontreat with respect and consideration all persons, regardless of race, religion, gender, abilities, age, or national originengage in carrying out XYZ’s mission in a professional mannercollaborate with and support other professionals in carrying out XYZ’s missionbuild professional reputations on the merit of services and refrain from competing unfairly with othersSample #2This policy establishes a formal statement about promoting ethical conduct.POLICY FOR THE PROMOTION OF ETHICAL CONDUCT As a nonprofit organization at the forefront of [purpose of organization], XYZ’s policy is to uphold the highest legal, ethical, and moral standards. Our donors and volunteers support XYZ because they trust us to be good stewards of their resources, and to uphold rigorous standards of conduct. Our reputation for integrity and excellence requires the careful observance of all applicable laws and regulations, as well as a scrupulous regard for the highest standards of conduct and personal integrity. XYZ will comply with all applicable laws and regulations and expects its directors, officers, and employees to conduct business in accordance with the letter and spirit of all relevant laws; to refrain from any illegal, dishonest, or unethical conduct; to act in a professional, businesslike manner; and to treat others with respect. Directors and officers should not use their positions to obtain unreasonable or excessive services or expertise from XYZ’s staff.In general, the use of good judgment based on high ethical principles will guide directors, officers, and employees with respect to lines of acceptable conduct. However, if a situation arises where it is difficult to determine the proper course of conduct, or where questions arise concerning the propriety of certain conduct by an individual or others, the matter should be brought to the attention of XYZ. Employees should contact their immediate supervisor and, if necessary, the director of human resources. Board members should raise any such concerns with the chair or the treasurer of XYZ’s board. In all questions involving ethics and conduct, the board will make relevant determinations, except that any individual whose conduct is at issue will not participate in such decisions.Sample #3This sample is a short statement affirming that a high level of integrity and caring is expected from the board and staff. Code of EthicsXYZ’s mission can only be realized through a common code of ethics upheld by our officers, board of directors, and staff.We expect integrity, honesty, and trustworthiness in our work; courage in our decisions; and dedication to XYZ’s values and beliefs.We expect responsible action on behalf of the organization and are accountable and transparent to our constituents and to one another. We share information when appropriate without sacrificing confidentiality. We expect to be treated and to treat others with respect. We respect the opinions of and the differences among individuals.We expect fairness to be evident in our actions internally and externally. We are equitable in our decisions and mindful of their impact on other groups and people.We expect our actions to demonstrate our care for others and the community as a whole. We support each other in a humane manner. We care about the well-being of each other, the community, and XYZ organization.Sample #4This ethics policy sets an affirmative tone through the introductory phrase of “We will do the following.”Code of EthicsWe, as XYZ professionals (staff and board members), dedicate ourselves to carrying out the mission of this organization. We will do the following:Recognize that the chief function of XYZ at all times is to serve the best interests of our constituency.Accept as a personal duty the responsibility to keep up-to-date on emerging issues and to conduct ourselves with professional competence, fairness, impartiality, efficiency, and effectiveness.Respect the structure and responsibilities of the board, provide them with facts and advice as a basis for their making policy decisions, and uphold and implement policies adopted by the board.Keep the community informed about issues affecting it.Conduct our organizational and operational duties with positive leadership exemplified by open communication, creativity, dedication, and compassion.Exercise whatever discretionary authority we have under the law to carry out the mission of the organization.Serve with respect, concern, courtesy, and responsiveness in carrying out the organization’s mission.Demonstrate the highest standards of personal integrity, truthfulness, honesty, and fortitude in all our activities in order to inspire confidence and trust in our activities.Avoid any interest or activity that is in conflict with the conduct of our official duties.Respect and protect privileged information to which we have access in the course of our official duties.Strive for personal and professional excellence and encourage the professional developments of others.Sample #5This code of conduct sets its standard by stating what the board and key staff will not do. It also includes a signature line and reporting procedures.Statement of Personal and Professional Standards of ConductIt is the intent of XYZ to strive for the highest ethical conduct from all board and staff. The leadership is particularly sensitive to individuals who hold management and governance positions of trust and confidence in fulfilling the mission and goals of the organization. These sensitive positions include officers, key senior staff members designated by the chief executive, and members of the board.In an effort to achieve the highest standards of conduct, each officer, key staff member, and board member is requested to acknowledge (by signing) the following adopted Code of Ethics by [month/day] each year. This acknowledgement will be kept on file in the human resource department.All officers, key staff members, and members of the board of XYZ are required and expected to exercise the highest ethical standards of conduct and practice fundamental honesty at all times.In support of XYZ’s standards of high ethical conduct, each officer, key staff member, and board member WILL NOTdeceive, defraud, or mislead XYZ board members, officers, staff members, managers, supervisors, or other associates, or those with whom XYZ has business or other relationshipsmisrepresent XYZ in any negotiations, dealings, contracts, or agreementsdivulge or release any information of a proprietary nature relating to XYZ’s plans, mission, or operational databases without appropriate approvalobtain a personal advantage or benefit due to relationships established by any officer, senior staff member, or board member by use of the organization’s nameaccept individual gifts of any kind in excess of $[100], in connection with the officer’s, key staff member’s, or board member’s relationship with XYZ. All such gifts are to be reported to the chief financial officer who shall divulge gifts received during the calendar year to the audit committeewithhold their best efforts to perform their duties to acceptable standardsengage in unethical business practices of any typeuse XYZ property, financial resources, or services of XYZ personnel for personal benefitviolate any applicable laws or ordinancesInfractions of this Statement of Personal and Professional Standards of Conduct are to be reported directly to any member of the audit committee who shall, in his or her determination, bring the infraction to the full executive committee.Signature Date Name (please print) Sample #6This comprehensive code of ethics covers many aspects of organizational management and oversight, beginning with a statement of integrity and including a specific section on the board.Code of Ethical ConductI. Personal and Professional IntegrityAll staff, board members, and volunteers of XYZ act with honesty, integrity, and openness in all their dealings as representatives of the organization. The organization promotes a working environment that values respect, fairness, and integrity.II. MissionXYZ has a clearly stated mission and purpose, approved by the board, in pursuit of the public good. All of its programs support that mission and all who work for or on behalf of the organization understand and are loyal to that mission and purpose. III. GovernanceXYZ has an active governing body, the board, which is responsible for setting the mission and strategic direction of the organization and oversight of the finances, operations, and policies of XYZ. The boardensures that its members have the requisite skills and experience to carry out their duties and that all members understand and fulfill their governance duties acting for the benefit of XYZ and its public purposehas a conflict-of-interest policy that ensures that any conflicts of interest or the appearance thereof are avoided or appropriately managed through disclosure, recusal, or other meanshas a statement of personal commitment that provides attestation to the commitment to XYZ’s goals and valuesis responsible for the hiring, firing, and regular review of the performance of its chief executive, and ensures that the compensation of the chief executive, the chief financial officer, and other senior management positions as the board deems appropriate is reasonableensures that the chief executive and appropriate staff provide the board with timely and comprehensive information so that the board can effectively carry out its dutiesensures that XYZ conducts all transactions and dealings with integrity and honestyensures that XYZ promotes working relationships with board members, staff, volunteers, and program beneficiaries that are based on mutual respect, fairness, and opennessensures that the organization is fair and inclusive in its hiring and promotion policies and practices for all board, staff, and volunteer positionsensures that policies of XYZ are in writing, clearly articulated, and officially adoptedis responsible for engaging independent auditors to perform an annual audit of XYZ’s financial statements, and has an audit committee that is responsible for overseeing the reliability of financial reporting (usually the responsibility of the finance committee), including the effectiveness of internal control over financial reporting, reviewing, and discussing the annual audited financial statements to determine whether they are complete and consistent with operational and other information known to the committee members, understanding significant risks and exposures and management’s response to minimize the risks, and understanding the audit scope and approving audit and non–audit servicesensures that the resources of XYZ are responsibly and prudently managed ensures that XYZ has the capacity to carry out its programs effectivelyIV. Responsible StewardshipXYZ manages its funds responsibly and prudently. This should include the following considerations:Spends an adequate amount on administrative expenses to ensure effective accounting systems, internal controls, competent staff, and other expenditures critical to professional managementCompensates staff and any others who may receive compensation, reasonably and appropriatelyKnows that solicitation of funds has reasonable fundraising costs, recognizing the variety of factors that affect fundraising costsDoes not accumulate operating funds excessivelyDraws prudently from endowment funds consistent with donor intent and to support the public purpose of XYZEnsures that all spending practices and policies are fair, reasonable, and appropriate to fulfill the mission of XYZEnsures that all financial reports are factually accurate and complete in all material respectsV. Openness and DisclosureXYZ provides comprehensive and timely information to the public, the media, and all stakeholders and is responsive in a timely manner to reasonable requests for information. All information about XYZ will fully and honestly reflect the policies and practices of the organization. Basic informational data about XYZ, such as the Form 990, will be posted online or otherwise made available to the public. All solicitation materials accurately represent XYZ’s policies and practices and will reflect the dignity of program beneficiaries. All financial, organizational, and program reports will be complete and accurate in all material respects. VI. Legal Compliance XYZ is knowledgeable of, and complies with, laws and regulations.VII. Program EvaluationXYZ regularly reviews program effectiveness and has mechanisms to incorporate lessons learned into future programs. The organization is committed to improving program and organizational effectiveness and develops mechanisms to promote learning from its activities and the field. XYZ is responsive to changes in its field of activity and is responsive to the needs of its constituencies.VIII. Inclusiveness and DiversityXYZ has a policy of promoting inclusiveness and its staff, board, and volunteers reflect diversity in order to enrich its programmatic effectiveness. XYZ takes meaningful steps to promote inclusiveness in its hiring, retention, promotion, board recruitment, and constituencies served. IX. FundraisingXYZ solicitation of funds from the public or from donor institutions uses material that is truthful about the organization. XYZ respects the privacy concerns of individual donors and expends funds consistent with donor intent. XYZ discloses important and relevant information to potential donors. In raising funds from the public, XYZ will respect the rights of donors, as follows:Donors will be informed of the mission of XYZ, the way the resources will be used, and their capacity to use donations effectively for their intended purpose. Further, they willbe informed of the identity of those serving on XYZ’s governing board and to expect the board to exercise prudent judgment in its stewardship responsibilitieshave access to XYZ’s most recent financial reportsbe assured their gifts will be used for purposes for which they are givenreceive appropriate acknowledgment and recognitionbe assured that information about their donations is handled with respect and with confidentiality to the extent provided by lawbe approached in a professional mannerbe informed whether those seeking donations are volunteers, employees of XYZ, or hired solicitorshave the opportunity for their names to be deleted from mailing lists that XYZ may intend to sharebe encouraged to ask questions when making a donation and to receive prompt, truthful, and forthright answers.Reporting ResponsibilityIt is the responsibility of all directors, officers, and employees to comply with the code of ethical conduct and to report violations or suspected violations to the compliance officer ([secretary/treasurer]) in accordance with the whistleblower policy. The compliance officer will notify the sender and acknowledge receipt of the reported violation or suspected violation within five business days, unless the submission of the violation is anonymous. All reports will be promptly investigated and appropriate corrective action will be taken if warranted by the investigation.?Suggested Resources“Compendium of Standards, Codes, and Principles of Nonprofit and Philanthropic Organizations.” issues/accountability/standards2.htmlEthics Resource Center: .Paul, Sarah E. and Daniel L. Kurtz. Managing Conflicts of Interest: The Board’s Guide to Unbiased Decision Making, Third Edition. Washington, DC: BoardSource, 2013.Sample Diversity StatementsIntroductionBoardSource believes that exceptional nonprofit boards recognize the role diversity plays in an organization's success. These boards see the correlation among mission, strategy, and board composition and understand that establishing an inclusive organization starts with establishing a diverse and inclusive board. The purpose of a diversity statement is to publicly declare the commitment of your organization to welcome employees, board members, and any other individuals, vendors, or collaborators who — regardless of their background — help make the organization friendlier and more effective in meeting its goals.It is not enough for the board to include members from diverse backgrounds. It is essential to create a culture where everyone feels valued, respected, and supported regardless of where they come from. Diversity describes our individual differences. Inclusion defines how we treat each other.Key ElementsThe board is responsible for drafting its own policies as well as those that guide the chief executive in handling major organizational issues. For diversity and inclusion, the tone starts at the top: It is up to the board to ensure that necessary policies and guidelines exist and that they are followed and enforced. Define the terms diversity and inclusion in your policy.Include guidelines for dealing with vendors, customers, clients, and any other individuals the organization interacts with. Indicate that the policy applies to all employment practices, including but not limited to recruitment, hiring, training and development, promotion, transfer, termination, layoff, compensation, benefits, social and recreational programs, and all other conditions and privileges of employment in accordance with applicable federal, state, and local laws.Practical TipsDo not expect any individual to represent a specific segment of society or a constituency. Focus on individuals who bring their knowledge, skills, experience, and sensitivities to your organization.Train staff and board on diversity issues and what that means in your organization. Have a skillful facilitator lead the discussion on sensitive issues.Use a matrix to identify the backgrounds and qualities you are seeking for the board.Some organizations address diversity and inclusion issues in the general ethics statement; however, having a separate policy emphasizes the importance of the issue.Include a diversity aspect in the evaluation of the chief executive’s performance.Sample Diversity StatementsThese sample policies and statements address specific issues and broad concepts. Look at all of them to get ideas for writing your own policy.Sample #1This policy is a short statement of tolerance.XYZ promotes understanding of individual differences in order to eliminate all forms of intolerance and to help build a more diverse and just community within which we operate. We promote diversity that reflects the racial, ethnic, and other characteristics of those living in the community.Our beliefs are based on mutual respect, tolerance, and encouragement, and we are working to help each other live up to these principles.Sample #2This statement is inspirational for all boards.The best boards are composed of individuals who bring a variety of skills, perspectives, backgrounds, and resources to tackle the complex and strategic challenges confronting their organizations. The variety of viewpoints that comes from different life experiences and cultures enhances the discussions and decisions of boards and often adds a much-needed layer of accountability to foundations and nonprofits for their constituents.Sample #3This statement expresses the board’s desire to accept differences.Diversity of Opinions StatementThe XYZ board practices a culture of openness and encourages candid communication.The more diversity of opinions and backgrounds the board possesses, the better foundation it has for sound decisions.Board members’ different perspectives help us address all sides of an issue.Even if “difference” is desired, there are times when the majority must take the lead. It is up to the chair to keep the peace and integrate all opinions.A culture of openness and candor defines communication.Rich communication dares to discuss the elephants in the room.Sincere conversation, however, does not include insults or hurtful words.Divergent views are explored in a respectful rather than adversarial manner.A debate is always welcome; arguments are kept out.At times board members need to weigh their words in order not to offend anyone.The board is cognizant of unacceptable terms or vocabulary.Sample #4This sample is a statement on an organization’s principles concerning diversity.Diversity is valuing, appreciating, and effectively utilizing the talents of people with a variety of backgrounds, experiences, ethnicities and perspectives.??Individuals have many dimensions which include age, appearance, beliefs, education, ethnic origin, gender, ideas, job classification, personality, physical ability, political views, race, religion, sexual orientation and more. We are committed to creating and sustaining an environment that values each individual.??Diversity is a way of life, not just a one-time initiative.? It is an ongoing responsibility with the highest priority.? To that end, we strive to attract, hire, develop and retain employees throughout the RWA who support our commitment.?By developing our skills to manage diversity, we will be able to better serve our customers and communities by exposure to the wider range of ideas and perspectives that can be found only in an organization where every individual is valued.Reused with permission from the South Central Connecticut Regional Water Authority.Sample #5This sample policy is directed to vendors and other business affiliates and states that the organization supports minority-owned businesses.Vendor PolicyWhen selecting vendors, XYZ is committed to doing business with all people and companies, without bias. We openly seek bids and request RFPs from a vast variety of sources. We give maximum opportunity to minority, women, and disabled veteran-owned companies. We do not automatically renew contracts but evaluate the performance of our vendors according to the following factors:Ability to provide quality product in a timely and consistent manner Responsiveness to emergencies Competitive pricing Favorable terms and conditions Order accuracy rate Delivery lead times Reliable support servicesSuggested Resources“Vital Voices: Lessons Learned from Board Members of Color.” BoardSource Learning Center Community Resource. Jones, Allison. “Round-Up: Tackling Diversity in the Nonprofit.” 2011 Thurman, Rosetta. “More on Nonprofit Diversity: Rethink the Rules.” Sample Conflict-of-Interest PoliciesIntroductionA conflict of interest exists when a board member or employee has a personal interest that may influence him or her when making a decision for the organization. While the law focuses primarily on financial interests and provides some guidelines, nonprofit organizations contend with a variety of potential and perceived conflicts of interest, only some of which may be detrimental to the organization. The key for nonprofit boards is not to try to avoid all possible conflict-of-interest situations, which would be impossible; rather, boards need to identify and follow a process for handling them effectively. Both board members and employees must abide by conflict-of-interest policies. Generally, conflict-of-interest policies should clarify what a conflict of interest is, what board members and employees must do to disclose possible conflicts of interest, and what board members and employees should do to avoid acting inappropriately if and when a conflict of interest does arise. How an organization ensures open and honest deliberation affects all aspects of its operations and is critical to making good decisions, avoiding legal problems and public scandals, and remaining focused on the organization’s mission.Key ElementsEvery organization needs a conflict-of-interest policy. Remember, conflicts of interest are not uncommon and not inherently illegal. Rather, they create situations that need careful attention and a process for handling them appropriately.Conflicts are not only financial in nature. Issue conflicts (for example, if a board member takes a position or supports another organization that is counter to the organization’s mission and principles) may have to be addressed as well.Conflict-of-interest policies should be applicable to the board and key staff, at a minimum; they may also include other employees and key constituents with influence over the organization (e.g., major donors).A conflict-of-interest policy should clearly define a consistent process for dealing with conflicts. This process should include, at a minimum, disclosure and recusal. It also often includes the expectation for the board member in question to leave the room for the discussion and voting and, in extreme situations, to resign.Ultimately, the policy should clarify the consequences for violating the policy, which may include dismissal.Some organizations, instead of using the term conflict of interest, use a term duality of interest. A duality of interest recognizes that, under certain circumstances, even if a board member has multiple interests, those interests do not necessarily create a conflicting situation.Practical TipsConflicts of interest are sometimes quite obvious and other times more obscure. To provide better guidance, consider including examples of what constitutes a conflict of interest for the organization. These examples may be lengthy, organization-specific, and/or distinguish among real, perceived, or potential conflicts.On the administrative side, determine who will maintain proper documentation of signed conflict-of-interest disclosure statements, as well as who has responsibility for determining whether or not an actual conflict of interest occurs. Often, these responsibilities are shared between the chief executive and a board committee.Keep in mind that many conflicts of interest arise unexpectedly and can’t be “planned” for. They may only become apparent during board discussions on a specific topicBusy and engaged people, like board members, are involved in various activities in the community, and these affiliations are likely to collide at times. At least annually, consider requiring board and staff members to disclose — in writing — any relationships that might constitute a conflict of interest. By openly and preemptively disclosing these potentially conflicting connections, the organization is better able to carry out proper due diligence.Sample Conflict-of-Interest PoliciesThe extensive collection of samples provides a range of policies and forms, giving everything from general guidance on issues related to standards of operation, to detailed examples of conflicts of interest, processes for disclosure, and even foundation-specific guidelines. Sample #1 This brief policy provides general guidelines and definitions related to conflicts of interest.Conflict-of-Interest PolicyEmployees and board members have an obligation to conduct business within guidelines that prohibit actual or potential conflicts of interest. This policy establishes only the framework within which XYZ wishes its business to operate. The purpose of these guidelines is to provide general direction so that board members and employees can seek further clarification on issues related to the subject of acceptable standards of operation.An actual or potential conflict of interest occurs when a board member or an employee is in a position to influence a decision that may result in personal gain or gain for a relative as a result of XYZ’s business dealings. For the purpose of this policy, a relative is any person who is related by blood or marriage, or whose relationship with the board member or employee is similar to that of persons who are related by blood or marriage.No presumption of a conflict is created by the mere existence of a relationship with outside firms. However, if a board member or an employee has any influence on any material business transactions, it is imperative that he or she discloses to an officer of the organization as soon as possible the existence of any actual or potential conflict of interest so that safeguards can be established to protect all parties. Personal gain may result not only in cases where a board member, an employee, or a relative has a significant ownership in a firm with which XYZ does business, but also when a board member, an employee, or a relative receives any kickback, bribe, substantial gift, or special consideration as a result of any transaction or business dealings involving XYZ.Sample #2 This solid example of a conflict-of-interest statement begins by explaining why a conflict-of-interest policy is important, and then defines key components of the policy and the process for handling conflicts.Conflict-of-Interest StatementReason for StatementXYZ, as a nonprofit, tax-exempt organization, depends on charitable contributions from the public. Maintenance of its tax-exempt status is important both for its continued financial stability and for the receipt of contributions and public support. Therefore, the operations of XYZ first must fulfill all legal requirements. They also depend on the public trust and thus are subject to scrutiny by and accountability to both governmental authorities and members of the public. Consequently, there exists between XYZ and its board, officers, and management employees a fiduciary duty that carries with it a broad and unbending duty of loyalty and fidelity. The board, officers, and management employees have the responsibility of administering the affairs of XYZ honestly and prudently, and of exercising their best care, skill, and judgment for the sole benefit of XYZ. Those persons shall exercise the utmost good faith in all transactions involved in their duties, and they shall not use their positions with XYZ or knowledge gained there from for their personal benefit. The interests of the organization must have the first priority in all decisions and actions.Persons ConcernedThis statement is directed not only to board members and officers, but to all employees who can influence the actions of XYZ. For example, this includes all who make purchasing decisions, all other persons who might be described as “management personnel,” and all who have proprietary information concerning XYZ.Key Areas in Which Conflict May AriseConflicts of interest may arise in the relations of directors, officers, and management employees with any of the following third parties:Persons and firms supplying goods and services to XYZPersons and firms from whom XYZ leases property and equipmentPersons and firms with whom XYZ is dealing or planning to deal in connection with the gift, purchase or sale of real estate, securities, or other propertyCompeting or affinity organizationsDonors and others supporting XYZRecipients of grants from XYZAgencies, organizations, and associations that affect the operations of XYZFamily members, friends, and other employeesNature of Conflicting InterestA material conflicting interest may be defined as an interest, direct or indirect, with any persons and firms mentioned in Section [ABC]. Such an interest might arise, for example, through owning stock or holding debt or other proprietary interests in any third party dealing with XYZholding office, serving on the board, participating in management, or being otherwise employed (or formerly employed) by any third party dealing with XYZreceiving remuneration for services with respect to individual transactions involving XYZusing XYZ’s time, personnel, equipment, supplies, or good will other than for approved XYZ activities, programs, and purposesreceiving personal gifts or loans from third parties dealing with XYZ. Receipt of any gift is disapproved except gifts of nominal value that could not be refused without discourtesy. No personal gift of money should ever be accepted.Interpretation of This Statement of PolicyThe areas of conflicting interest listed in Section [ABC], and the relations in those areas that may give rise to conflict, as listed in Section [DEF], are not exhaustive. Conceivably, conflicts might arise in other areas or through other relations. It is assumed that the trustees, officers, and management employees will recognize such areas and relation by analogy.The fact that one of the interests described in Section [DEF] exists does not mean necessarily that a conflict exists, or that the conflict, if it exists, is material enough to be of practical importance, or if material that upon full disclosure of all relevant facts and circumstances that it is necessarily adverse to the interests of XYZ.However, it is the policy of the board that the existence of any of the interests described in Section [DEF] shall be disclosed on a timely basis and always before any transaction is consummated. It shall be the continuing responsibility of board, officers, and management employees to scrutinize their transactions and outside business interests and relationships for potential conflicts and to immediately make such disclosures.Disclosure Policy and ProcedureDisclosure should be made according to XYZ standards. Transactions with related parties may be undertaken only if all of the following are observed:A material transaction is fully disclosed in the audited financial statements of the organization; The related party is excluded from the discussion and approval of such transaction;A competitive bid or comparable valuation exists; andThe organization’s board has acted upon and demonstrated that the transaction is in the best interest of the organization.Staff disclosures should be made to the chief executive (or if he or she is the one with the conflict, then to the designated committee), who shall determine whether a conflict exists and is material, and if the matters are material, bring them to the attention of the designated committee.Disclosure involving directors should be made to the designated committee.The board shall determine whether a conflict exists and is material, and in the presence of an existing material conflict, whether the contemplated transaction may be authorized as just, fair, and reasonable to XYZ. The decision of the board on these matters will rest in their sole discretion, and their concern must be the welfare of XYZ and the advancement of its purpose.Sample #3This comprehensive conflict-of-interest policy follows a traditional legal format and is recommended by the IRS. Part V, section 5 of IRS Form 1023 asks questions to determine if the organization has procedures on handling conflicts and makes recommendations on creating a conflict-of-interest policy if one does not exist. Sample IRS Conflict-of-Interest PolicyArticle I: PurposeThe purpose of the conflict-of-interest policy is to protect this tax-exempt organization’s (organization) interest when it is contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations. Article II: Definitions1. Interested PersonAny director, principal officer, or member of a committee with governing board–delegated powers, who has a direct or indirect financial interest, as defined below, is an interested person. [For networked organizations]If a person is an interested person with respect to any entity in the network of which the organization is a part, he or she is an interested person with respect to all entities in the network.2. Financial InterestA person has a financial interest if the person has, directly or indirectly, through business, investment, or familyan ownership or investment interest in any entity with which the organization has a transaction or arrangement a compensation arrangement with the organization or with any entity or individual with which the organization has a transaction or arrangementa potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the organization is negotiating a transaction or arrangementCompensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial. A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.Article III: Procedures1. Duty To DiscloseIn connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board-delegated powers considering the proposed transaction or arrangement. 2. Determining Whether a Conflict of Interest Exists After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he or she shall leave the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists. 3. Procedures for Addressing the Conflict of Interest a.An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he or she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest. The chair of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. After exercising due diligence, the governing board or committee shall determine whether the organization can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the organization’s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination, it shall make its decision as to whether to enter into the transaction or arrangement. 4. Violations of the Conflicts-of-Interest Policya.If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose. If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action. Article IV: Records of ProceedingsThe minutes of the governing board and all committees with board-delegated powers shall contain a.the names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was present, and the governing board’s or committee’s decision as to whether a conflict of interest in fact existedthe names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedingsArticle V: Compensationa.A voting member of the governing board who receives compensation, directly or indirectly, from the organization for services is precluded from voting on matters pertaining to that member’s compensation. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the organization for services is precluded from voting on matters pertaining to that member’s compensation. No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the organization, either individually or collectively, is prohibited from providing information to any committee regarding compensation.[For networked organizations] People who receive compensation from the organization, whether directly or indirectly or as employees or independent contractors, are precluded from membership on any committee whose jurisdiction includes compensation matters. No person, either individually or collectively, is prohibited from providing information to any committee regarding compensation.] Article VI: Annual StatementsEach director, principal officer, and member of a committee with governing board–delegated powers shall annually sign a statement that affirms such person a.has received a copy of the conflict-of-interest policy has read and understands the policy has agreed to comply with the policy understands the organization is charitable and in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes Article VII: Periodic ReviewsTo ensure the organization operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects: a.Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm’s-length bargainingWhether partnerships, joint ventures, and arrangements with management organizations conform to the organization’s written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes, and do not result in inurement, impermissible private benefit, or in an excess benefit transactionArticle VIII: Use of Outside ExpertsWhen conducting the periodic reviews as provided for in Article VII, the organization may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are conducted.Sample #4This sample is a disclosure form, asking individuals to list their affiliations with other entities that might potentially affect their independent decision making. Conflict-of-Interest Disclosure StatementPlease initial in the space at the end of Item A or complete Item B, whichever is appropriate; complete the balance of the form; sign and date the statement; and return it to the board chair.I am not aware of any relationship or interest or situation involving my family or myself that might result in, or give the appearance of being, a conflict of interest between such family member or me on one hand and XYZ on the other. Initials: The following are relationships, interests, or situations involving me or a member of my family that I consider might result in or appear to be an actual, apparent, or potential conflict of interest between such family members or myself on one hand and XYZ on the other.Initials: Corporate (either nonprofit or for-profit) directorships, positions, and employment:________________________________________________________________________________________________________________________Memberships in the following organizations:________________________________________________________________________________________________________________________Contracts, business activities, and investments with or in the following organizations:________________________________________________________________________________________________________________________Other relationships and activities:________________________________________________________________________________________________________________________My primary business or occupation at this time:I have read and understand XYZ’s conflict-of-interest policy and agree to be bound by it. I will promptly inform the board chair of XYZ of any material change that develops in the information contained in the foregoing statement.____________________________________________________________ Type/Print Name SignatureDateSample #5This more comprehensive disclosure statement is designed to also identify potential conflicts of interest based on a more expansive definition of affiliated persons.Conflict-of-Interest Disclosure QuestionnaireFor purposes herein, “affiliated persons” include the following:Any immediate family member,Any corporation or organization of which you are an officer or a partner or are, directly or indirectly, the beneficial owner of 10 percent or more of any class or equity securities, orAny trust or other estate in which you have a substantial beneficial interest or as to which you serve as a trustee or in a similar capacity.Name (please print) _________________________________________________________Capacity:( ) national board ( ) executive committee ( ) officer( ) committee member ( ) national staff( ) other, specify: _______________________________Have you or any of your affiliated persons provided services or property to XYZ in the past year? ( ) Yes ( ) NoIf yes, please describe the nature of the services or property:Have you or any of your affiliated persons purchased services or property from XYZ in the past year? ( ) Yes ( ) NoIf yes, please describe the purchased services or property:Please indicate whether you or any of your affiliated persons had, have, or will have any direct or indirect interest in any business transaction(s) in the past year to which XYZ was or is a party.( ) Yes ( )NoIf yes, describe the transaction(s):Were you or any of your affiliated persons indebted to pay money to XYZ at any time in the past year (other than travel advances or the like)? ( ) Yes ( ) NoIf yes, please describe the indebtedness:In the past year, did you or any of your affiliated persons receive, or were entitled to receive, directly or indirectly, any benefits from, or as a result of your relationship with XYZ that in the aggregate could be valued in excess of $1,000 that were not or will not be compensation directly related to your duties to XYZ? ( ) Yes ( ) NoIf yes, please describe the benefit:Are you or any of your affiliated persons a party to or have an interest in any pending legal proceedings involving XYZ? ( ) Yes ( ) NoIf yes, please describe the proceeding(s):Are you aware of any other events, transactions, arrangements, or other situations that you believe should be examined by XYZ’s board or the executive committee in accordance with the terms and intent of XYZ’s conflict-of-interest policy? ( ) Yes ( ) NoIf yes, please describe the situation(s):I HEREBY CONFIRM that I have read and understand XYZ’s Conflict-of-Interest Policy and that my responses to the above questions are complete and correct to the best of my knowledge and belief.____________________________________ __________________SignatureDateSample #6This policy acknowledges a duality of interest separate from a conflict of interest and includes a disclosure form.Conflict-of-Interest PolicyThe purpose of this conflict-of-interest policy is to prevent the institutional or personal interests of XYZ board members, officers, and staff from interfering with the performance of their duties to XYZ, and to ensure that there is no personal, professional, or political gain at the expense of XYZ. This policy is not designed to eliminate relationships and activities that may create a duality of interest, but to require the disclosure of any conflicts of interest and the recusal of any interested party in a decision relating thereto. A conflict of interest may exist when the interests or potential interests of any director, officer, or staff member, or that person’s close relative, or any individual, group, or organization to which the person associated with XYZ has allegiance, may be seen as competing with the interests of XYZ, or may impair such person’s independence or loyalty to XYZ. A conflict of interest is defined as an interest that might affect, or might reasonably appear to affect, the judgment or conduct of any director, officer, or staff member in a manner that is adverse to the interests of XYZ. ExamplesA conflict of interest may exist if a director, officer, staff member, or close relativehas a business or financial interest in any third party dealing with XYZ. This does not include ownership interest of less than 5 percent of outstanding securities of public corporations.holds office, serves on a board, participates in management, or is employed by any third party dealing with XYZ, other than direct funders to XYZderives remuneration or other financial gain from a transaction involving XYZ (other than salary reported on a W-2 or W-9 or salary and benefits expressly authorized by the board)receives gifts from any third party on the basis of his or her position with XYZ (other than occasional gifts valued at no more than $[50], or if valued at more than $[50], the gift is made available in a team space or common area for others to share — e.g., fruit baskets, boxes of candy). All other gifts should be returned to the donor with the explanation that XYZ policy does not permit the acceptance of gifts. No personal gift of money should ever be accepted.engages in any outside employment or other activity that will materially encroach on such person’s obligations to XYZ; compete with XYZ’s activities; involve any use of XYZ’s equipment, supplies, or facilities; or imply XYZ’s sponsorship or support of the outside employment or activityUse of InformationDirectors, officers, and staff shall not use information received from participation in XYZ affairs, whether expressly denominated as confidential or not, for personal gain or to the detriment of XYZ. Disclosure and RecusalWhenever any director has a conflict of interest or a perceived conflict of interest with XYZ, he or she shall notify the board chair of such conflict in writing.Whenever any staff member (paid or volunteer) has a conflict of interest or a perceived conflict of interest with XYZ, he or she shall notify the chief executive of such conflict in writing.When any conflict of interest is relevant to a matter that comes under consideration or requires action by the board, or a board committee, the interested person shall call it to the attention of the board chair and shall not be present during board or committee discussion or decision on the matter. However, that person shall provide the board or applicable committee with any and all relevant information on the particular matter.The minutes of the meeting of the board or its committee shall reflect that the conflict of interest was disclosed, that the interested person was not present during discussion or decision on the matter, and did not vote.DisseminationA copy of this conflict-of-interest policy shall be furnished to each director, officer, and staff member who is presently serving this organization or who may become associated with it. CertificationThe policy and its application shall be reviewed annually for the information and guidance of directors, officers, and staff members, each of whom has a continuing responsibility to scrutinize their transactions and outside business interests and relationships for potential conflicts of interest, and make such disclosures as described in this policy.As administered by the chief executive, each director will be asked to complete a certification of agreement with the policy and disclosure of any known conflicts of interest upon his or her election or re-election to the board and annually thereafter. As administered by the employee in charge of human resources, each senior staff member will be asked to complete such a certification upon his or her employment and on an annual basis thereafter. All certifications shall be reviewed by the board as appropriate.Conflict Certification for XYZBoard and Senior Staff I have read and agree to abide by XYZ’s conflict-of-interest policy. To the best of my knowledge, I have no conflicts as described in this Policy.___________________________ _____________________________SignatureDate___________________________Name (please print)— OR —I have read and agree to abide by XYZ’s conflict-of-interest policy. To the best of my knowledge, I have no conflicts as described in this Policy, except those noted below or on the attached paper._____________________________ ____________________________Signature____ Date______________________________ Name (please print)Sample #7This conflict-of-interest policy begins with a set of “whereas” clauses to provide the context for its policy, then presents the actual policy as a resolution, and concludes with an appendix with organization-specific examples of what does and does not constitute a material conflict of interest.XYZ Alliance To Create HousingCONFLICT-OF-INTEREST POLICYBy Resolution of XYZ board, adopted this __ day of [month], [year].Whereas, XYZ was incorporated under the laws of the state of [ABC] to provide decent affordable housing for the low- and moderate-income people of the [DEF] region, including families, the elderly, and disabled, among other charitable and educational purposes, and;Whereas, XYZ will be seeking continuing recognition of its qualification as a nonprofit corporation under Sections 501(c)(3) of the Internal Revenue Code, to expand its fundraising capabilities and otherwise accomplish its purposes, and; Whereas, XYZ must therefore ensure that its resources are not improperly diverted to the private benefit of its directors, related persons, or entities, and;Whereas, XYZ is permitted, however, to pay reasonable compensation, and its directors, related persons, or entities may be the recipients of XYZ benefits where it is only incidental to fulfillment of XYZ’s charitable and educational purposes, and;Whereas, XYZ will also be recruiting individuals to serve as XYZ directors 1) who are residents of XYZ’s projects and 2) because of their skills, contacts, and general life experiences relevant to accomplishing XYZ’s purposes, and;Whereas, the nature of XYZ activities and the background of its directors are almost certain to result in occasions where its directors have outside interests that could be affected as the result of XYZ action, presenting a conflict to the director as a decision maker on behalf of XYZ, and;Whereas, the board may act and XYZ may proceed with transactions despite such conflicts, even where it results in a contract for services to be provided by a director or related person, or to purchase property from a director, or selection of a director as recipient of XYZ’s services, so long as the transaction is conducted at “arm’s length,” in good faith, under reasonable terms, upon reasonable inquiry not otherwise prohibited by law, and is by the board, and; Whereas, directors owe a general duty of care to XYZ that includes the obligation of making reasonable inquiry to ensure they are sufficiently informed to act on behalf of XYZ, and;Whereas, directors are entitled to rely on information, opinions, reports, or statements by fellow directors, but only where it is reasonable to believe the latter is reliable and competent concerning the matter presented, so conflicts of interest must be considered, and;Whereas, the duty of loyalty that directors owe to XYZ requires in part that the best interests of XYZ take priority over the directors’ personal interests or those of related persons or entities, with respect to XYZ’s corporate activities, and;Whereas, the failure of directors to honor their duties of care and loyalty to XYZ can diminish the ability of XYZ to accomplish its purposes, and could potentially expose directors and XYZ to the risks of legal action, and;Whereas, directors must therefore understand the importance of recognizing when a conflict of interest exists and what their obligations are in this regard.Thus it is resolved as follows:(1)Directors shall be given and acknowledge receipt of a copy of this document on appointment to the board, and again each year thereafter prior to the annual meeting.(2)A conflict of interest shall be recognized as present whenever a director has a material interest in a proposed contract or transaction to which XYZ may be a party.(3)A conflict of interest shall be recognized as material, whenever the nature of the director’s interest is of such significance that it would reasonably be expected to exert an influence on the director’s judgment if the director were called upon to vote on the transaction.(4)Material conflicts may exist as the result of direct financial interests, such as where a director owns land being considered by XYZ for purchase. Directors may also have material conflicts that are indirect, as the result of employment by or some other relationships to the transaction held by one or more members of the director’s family or household (See Appendix: Specific Applications of XYZ Conflict-of-Interest Policy, with examples provided).(5)When in doubt, the prudent course of action for the directors is to treat a case on which they have doubt as one in which their conflict is material.(6)It is the duty of the directors to disclose all material conflicts of interest that they have to the board, in writing(a)prior to any action by the board, and;(b)prior to consummation of any transaction to which XYZ is a party, whether or not the board takes action.(7)The director’s disclosure shall at all times include(a)the existence of the director’s interest in the transaction, and;(b)the nature of the director’s interest in the transaction (whether arising from financial or familial relationships, professional or business affiliations, etc.)(8)The director’s disclosure shall also include all facts known to the director respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction, unless the director has a duty under law or professional canon, or a duty of confidentiality to another person, with respect to such information about the transaction in question, such that they may not make the disclosure otherwise required by this subsection.(9)Subject to these restrictions, directors shall be counted for purposes of a quorum and may be permitted to participate in discussions at board meetings about a proposed transaction, but shall not vote, and shall leave the room if the vote is being taken in person, before decisions are made on matters concerning which they have a material conflict.(10)XYZ secretary shall record in the corporate minutes book the names of directors making disclosures, the content of all disclosures, whether directors making disclosures participated in discussion on the matter involving the conflict, and whether directors making disclosures voted on the matter concerning which the disclosure was made.Appendix: Specific Applications of XYZ Conflict-of-Interest PolicyExamples of conflicts that are material because of the director’s direct financial interests:In these examples the director should not vote and should leave the room prior to the vote, because the director’s interest is so significant that it would reasonably be expected to influence his or her judgment on that vote.The director is an engineer who has an ownership share of an architecture firm that has submitted a proposal for a project to be undertaken by the nonprofit.The director owns one of a number of parcels of land that the nonprofit has identified for acquisition.The board has to decide whether to substantially raise the rent at the nonprofit’s housing units, or whether to cut costs by some means, and the director is a resident in one of those units.Examples of conflicts that are material even though the director’s interests, financial, or personal, are indirect:Here too, the director’s interest is significant enough that it would be reasonable to expect it to influence his or her judgment on that vote. As with the first examples, the director should disclose the conflict and withdraw from the vote.The director has been listed as the engineering subcontractor in a proposal by an architecture firm that has submitted a proposal for a project to be undertaken by the nonprofit.The director’s sibling owns one of a number of parcels of land that the nonprofit has identified for acquisition.The director has applied for selection by the nonprofit to become a resident in one of its housing units, and the board is deciding on the criteria for selection, where the choice of criteria or weighing of criteria will make a difference in which applicants are selected.The director is also a member of a neighborhood civic or religious organization that is protesting the nonprofit’s plan to involve local gang members in a mural painting project at the nonprofit’s housing units.Examples of conflicts that are arguably material because the director’s interests or those of related persons or entities are relatively significant:Although the director’s interests are more attenuated than in the preceding examples, they are still significant enough to make a reasonable person pause to consider the implications for themselves or the related person involved. The prudent director should in these circumstances, disclose the conflict and abstain from voting.The Director is an engineer that has done a substantial amount of work in the past with an architecture firm that has submitted a proposal for a project to be undertaken by the nonprofit. No engineer has yet been identified in the firm’s proposal, but the director is one of the few engineers the firm has previously contracted with for services on such projects, and the director wants to be considered for future work with the firm even if no work is required or available on the project in question.The wife of the director’s brother is employed by a firm that is bidding for selection by the nonprofit as a social service provider for the residents of the latter’s housing projects. The director knows she is so employed and knows further that the firm is struggling and desperately needs the contract or it may have to make layoffs.The niece of the director’s husband has applied for selection by the nonprofit to become a resident in one of its housing units, and the board is deciding on the criteria for selection, where the choice of criteria or weighing of criteria will make a difference in which applicants are selected.Examples of conflicts that involve interest too attenuated to be material:Neither of these last transactions could possibly be expected to significantly affect the company’s income to the point it would be reflected in dividends or its ability to retain or compensate its employees. Although the director technically has a potential conflicting interest in each of these examples, that interest is so attenuated that no reasonable person’s judgment could be expected to be influenced as a result. The director should be permitted to vote in such cases, but should still make a disclosure to the board concerning the conflict.The director owns a few shares in a large manufacturing company that has a small parcel of unutilized land that the nonprofit is considering for acquisition.The director’s brother works for a large engineering firm listed by an architecture firm that submitted a proposal on a project the nonprofit is undertaking, but the brother works in a division of the company that will not be involved in the nonprofit’s project under any circumstances. Moreover, the nonprofit’s project is small, the portion going to the engineering firm would be minimal, the firm consistently has plenty of work, and the director’s brother’s job is secure.Sample #8 This detailed policy recognizes the potential of structural conflicts, defines the situations with clarity, outlines the entire board process, and includes an annual disclosure form.CONFLICT-OF-INTEREST POLICY AND PROCEDURES FOR the BOARD?Policy Statement Each member of the board of XYZ has a duty of loyalty to XYZ. In furtherance of this duty, it is the policy of XYZ that directors may not use their position as directors for personal, family, or professional gain. Directors may not obtain for themselves, their relatives, or their friends a financial or material interest of any kind from their connection with XYZ. Each director has a duty to give undivided allegiance to XYZ when making decisions affecting XYZ and in any transactions, dealings, or situations involving XYZ. In furtherance of these obligations, XYZ has adopted this Conflict-of-Interest Policy and Procedures applicable to its directors.Categories of Conflicts of InterestConflict-of-Interest TransactionsA conflict of interest with respect to a transaction effected or proposed to be effected by the organization means the interest a director has respecting such transaction, ifthe director knows that he or she or a related person is a party to the transaction or has a beneficial financial or personal interest in or is so closely linked to the transaction and it is of such financial or personal significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction; orthe director knows that any of the following persons is either a party to the transaction or has a financial or personal interest in or is so closely linked to the transaction and it is of such financial or personal significance to the person that the interest would reasonably be expected to exert an influence on the director’s judgment if he or she were called upon to vote on the transaction:An entity of which the director is a director, officer, partner, equity owner, agent, or employee;A person that controls, is controlled by, or is under common control with, one or more of the entities described in subsection (a); or An individual who is a partner, principal, employer, employee, personal friend, business associate, or a significant creditor or debtor of the director.For purposes of this policy, a “related person” of a director means 1) the spouse of the director, or a parent or sibling thereof, or a child, grandchild, sibling, or parent of the director, or the spouse of any thereof, or an individual having the same home as the director, or a trust or estate of which an individual specified in this paragraph is a substantial beneficiary, or 2) a trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary.Examples of situations in which conflicts of interest may arise include, but are not limited to, the following:Transactions with persons and organizations supplying goods and commercial services to XYZTransactions with persons and organizations from which XYZ leases property and equipmentTransactions with persons and organizations with whom XYZ is dealing or planning to deal in connection with the gift, purchase, or sale of real estate, securities, or other propertyTransactions with persons representing competing or collaborating organizationsTransactions with donors and others supporting XYZTransactions with persons representing agencies, organizations, and associations that affect the operations of XYZTransactions with organizations or individuals receiving grants from XYZConflict-of-Interest RelationshipsXYZ recognizes that conflicts of interest may arise not only in the context of a transaction but also in situations where a director’s personal interests, or the interests of a related person, personal friend, business associate, an entity in which a member holds an equity interest, employer, employee, or a significant creditor or debtor of the director, could reasonably be expected to exert an influence on the director’s judgment regarding general XYZ matters and/or impair his or her ability to act in XYZ’s best interests.It is important to note that a “conflict of interest” exists if a decision could be influenced (i.e., perceived conflict of interest) — it is not necessary that influence actually take place. Structural Conflicts of Interest Because of an actual, potential, or perceived “structural” conflict of interest, directors may not sit concurrently on the boards of either The Society for ABC or the Association DEF. Participation as a member of ABC, DEF, or other related organization is not a conflict of interest as it is acknowledged that board members will participate in the broader related arena.Procedures for Identifying and Addressing Conflicts of InterestThe following procedures shall be followed when a conflict of interest arises with respect to any director:The director must promptly make full disclosure of the conflict of interest to the qualified directors of the board. The director must disclose (a) the existence and nature of the director’s conflict of interest and (b) all facts known to him or her regarding the subject matter of the transaction or situation that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction or how to deal with the situation.For purposes of this policy, a “qualified director” means any director who does not have either (a) a conflict of interest with respect to the transaction or situation, or (b) a familial, financial, professional, or employment relationship with a second director who does have a conflict of interest with respect to the transaction or situation, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director’s judgment when voting on the transaction or situation. The qualified directors will discuss the conflict of interest and, depending on the nature of the conflict of interest, vote on either (a) whether or not to continue the transaction at issue or (b) measures to address the situation at issue. Directors subject to a conflict of interest shall not be permitted to be present or to participate in the deliberations or vote of the qualified directors with respect to such conflict of interest. Recusal of the director shall require such director to physically remove himself or herself from a meeting, conference call, e-mail, listserv, or any other electric communications. The conflict-of-interest transaction or situation shall be approved only upon the affirmative vote of a majority, but no fewer than __, of those qualified directors on the board or on a duly empowered committee of the board (who voted on the transaction after required disclosure to them); provided, that action by a committee is effective only if (a) all committee members are qualified directors, and (b) committee members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board. A majority, but no fewer than __, of all the qualified directors on the board, or on the committee, constitutes a quorum for purposes of the vote described above.When a conflict exists, resolution of the matter may include (a) approving or disapproving any transaction or situation at issue; (b) requiring the director to remove himself or herself from positions in which the conflict of interest exists until there is no longer a conflict; or (c) requiring the director to discontinue, reduce, or modify his or her participation in the board, committees, or task forces where the conflict exists.In addition to the procedures described above, directors have an obligation to address any perceived conflict of interest of other directors if they are aware of such conflicts with respect to matters pertaining to XYZ.Acknowledgment and Annual Disclosure Directors will receive this conflict-of-interest policy and procedures and shall be required to sign and date the policy disclosure form at the beginning of their term of service. Directors also shall be required to sign and update the policy disclosure form at the beginning of each calendar year. Failure to update or sign the policy disclosure form, however, does not nullify a director’s obligations under this policy.ANNUAL STATEMENT CONCERNING POSSIBLE CONFLICT OF INTERESTThe undersigned acknowledges receipt of a copy of XYZ’s Conflict-of-Interest Policy and Procedures for Directors.By my signature affixed below, I acknowledge my agreement with the spirit and intent of these policies and, I agree to report to the chief executive of the organization any possible conflicts (other than those stated below) that may develop before completion of the next annual statement.________ I am not aware of any conflict of interest.________ I do or may have a conflict of interest in the following area(s):__________________________________________________________________Name: ___________________________Date: _______________Signature: ________________________Sample #9This sample policy is specifically for foundation boards, which need to have a clear policy and process in place for handling conflicts that arise when board members and staff are affiliated with potential grantees. It also has two elements that may be useful for all nonprofits — guidelines for recording conflict-of-interest proceedings and issues of compensation.XYZ FOUNDATION CONFLICT-OF-INTEREST/DUALITY-OF-INTEREST POLICYArticle I: PurposeXYZ Foundation (the “foundation”) strives to maintain the highest ethical standards in all policies, procedures, and programs and to avoid any conflicts of interest.Article II: Definitions1. Interested PersonAny trustee, officer, member of a committee with board-delegated powers, or employee who has a direct or indirect financial interest (as defined in Section 2) or duality of interest (as defined in Section 3), is an interested person.2. Financial InterestIf a member of the governing body or any committee thereof has a financial interest conflicting with the interest of the foundation in any manner (such as whether to enter into a contract with such individual or with an organization with which such individual is associated), then the individual must bring the conflict to the attention of the other members and refrain from deliberating or voting in any decision with respect to the matter.A person has a financial interest if the person has, directly or indirectly, through business, investment, or familya. An ownership or investment interest in any entity with which the foundation has a transaction or arrangement, orb. A compensation arrangement with the foundation or with any entity or individual with which the foundation has a transaction or arrangement, orc. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the foundation is negotiating a transaction or pensation includes direct and indirect remuneration as well as gifts or favors that are substantial in nature.A financial interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have a conflict of interest only if the appropriate board or committee decides that a conflict of interest exists.3.Duality of InterestA duality of interest exists when a trustee, officer, committee member, or employee of the foundation is affiliated with an organization seeking to request a grant from the foundation. Such affiliation exists if the person is a director, trustee, officer, or employee of the organization, or has an unofficial role such as significant donor, volunteer, advocate, or advisor.Article III: ProceduresDuty to Disclose In connection with any actual or possible conflict of interest or duality of interest, an interested person must disclose the existence of his or her financial interest or affiliation and all material facts to the trustees and members of committees with board-delegated powers considering the proposed transaction or arrangement. The disclosure should be made either when the interest becomes a matter of board or committee action or as part of a periodic procedure to be established by the board.2. Determining Whether a Conflict of Interest ExistsAfter disclosure of the financial interest and all material facts, and after any discussion with the interested person, he or she shall leave the board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists.3. Procedures for Addressing the InterestAn interested person may make a presentation at the board or committee meeting, but after such presentation, he or she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement that results in the conflict of interest or duality of interest. b. The chair of the board or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement.c. After exercising due diligence, the board or committee shall determine whether the foundation can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that would not give rise to a conflict of interest.d.If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the board or committee shall determine by a majority vote of the disinterested trustees whether the transaction or arrangement is in the foundation’s best interest and for its own benefit and whether the transaction is fair and reasonable to the foundation and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination.4. Violations of the PolicyIf the board or committee has reasonable cause to believe that a member has failed to disclose actual or possible conflicts of interests or duality of interest, it shall inform the member of the basis of such belief and afford the member an opportunity to explain the alleged failure to disclose.b. If, after hearing the response of the member and making such further investigation as may be warranted in the circumstances, the board or committee determines that the member has in fact failed to disclose an actual or possible conflict of interest or duality of interest, it shall take appropriate disciplinary and corrective action.Article IV: Records of ProceedingsThe minutes of the board and all committees with board-delegated powers shall contain1.The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or possible conflict of interest or duality of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest or duality of interest was present, and the board’s or committee’s decision as to whether a conflict of interest or duality of interest in fact existed?2.The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection therewithArticle V: Compensation CommitteeA voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the foundation for services is precluded from voting on matters pertaining to that member’s compensation.Article VI: Annual StatementsEach trustee, officer, member of a committee with board-delegated powers, and employee shall annually sign a statement that affirms that such personhas received a copy of the conflict-of-interest policyhas read and understands the policyhas agreed to comply with the policy, andunderstands that the foundation is a charitable organization and that in order to maintain its federal tax exemption it must engage primarily in activities that accomplish one or more of its tax-exempt purposes.As Approved by the Board [Date]Sample #10This sample policy comes from a community foundation and includes a disclosure form for trustees to record their involvement in other community businesses and nonprofits.XYZ COMMUNITY FOUNDATION CONFLICT-OF-INTEREST POLICY FOR TRUSTEES AND OFFICERSA conflict of interest is present whenever a trustee or officer of XYZ Community Foundation has a financial interest in a proposed transaction or is a director or officer of the other entity to the proposed transaction. Such transactions may include services provided by the foundation to fundholders, grants given to charitable organizations on which the trustee or officer also serves as an officer or director, purchase of services and/or tangibles from a vendor, and/or access to specialized or privileged information that can be used for personal gain.The state of [ABC] nonprofit corporation law provides that transactions between (i) a nonprofit organization such as XYZ Community Foundation and (ii) any other corporation, partnership, association, or other organization in which one or more of the nonprofit organization’s directors or officers are directors or officers, or have a financial interest, while not prohibited outright, are nonetheless subject to question. Such transactions may be void or voidable unless a good-faith disclosure of any such interest is made to the nonprofit organization prior to the nonprofit organization’s entry into the transaction. It is also possible that directors and officers who fail to comply with the requirements of this law may incur liability to the extent the nonprofit organization is damaged.Therefore, in accordance with this law, XYZ Community Foundation requires its trustees and officers to disclose all interests that they or a family member has in other for-profit or nonprofit entities where it is foreseeable that the foundation may enter into a contract or award a grant or have other business or financial dealings with the entity. This shall include, but not be limited to, financial interests, officerships, directorships, and other similar substantial interests in any such entities.Trustees and officers of XYZ Community Foundation are asked to maintain independence, objectivity and confidentiality and to do what a sense of fairness, ethics, and personal integrity dictate even though not necessarily obligated to do so by law, regulation, or custom. Trustees and officers serving on the executive committee shall refrain from voting on a proposed grant if they are in a conflict-of-interest situation and, if appropriate, shall withdraw from the meeting.In order to avoid even the appearance of a conflict of interest that might embarrass the board or the foundation, trustees and officers must disclose any actual or possible conflicts, and the nature thereof, to the board chair and to the chief executive of the foundation annually, or as such situations may arise.Adopted: [Date]XYZ COMMUNITY FOUNDATIONCONFLICT-OF-INTEREST ACKNOWLEDGMENTFOR THE PERIOD I have read and understand XYZ Community Foundation’s policy on conflict of interest. As part of XYZ Community Foundation, I understand that this policy on conflict of interest applies to me.I understand that I am expected to conduct business in accordance with the letter, spirit, and intent of all relevant conflict-of-interest laws and the conflict-of-interest policy and to refrain from any illegal, dishonest, or unethical conduct. I understand that if a situation arises where it is difficult to determine the proper course of action, the matter should be discussed openly with the board and/or with the chair or his or her designee for advice and consultation. Furthermore, I understand that this document can be amended at any time.In compliance with the foundation’s conflict-of-interest policy, the positions that I or an immediate family member hold within the community are as follows:Business and professional activities in which I or an immediate family member hold as an owner, officer, board member, partner, employee, or other beneficiary position as of ___________:Name of Business/OrganizationPosition Held/By WhomOther not-for-profit organizations with which I or a family member is associated and which might reasonably expect to apply for a grant from XYZ:Name of OrganizationPosition Held/By WhomOther activities that may produce a possible conflict of interest:In addition, I recognize the need to maintain confidentiality regarding information I might receive as a trustee or officer regarding donors, donations, and grantmaking activities of XYZ Community Foundation.SignaturePrinted NameDateSuggested ResourcesPaul, Sarah E. and Daniel L. Kurtz. Managing Conflicts of Interest: The Board’s Guide to Unbiased Decision Making, Third Edition. Washington, DC: BoardSource, 2013.Brauer, Lawrence M. and Charles F. Kaiser, III. “Tax-Exempt Health Care Organizations Revised Conflicts of Interest Policy.” pub/irs-utl/topice00.pdf. BoardSource. “Conflicts of Interest at Foundations: Avoiding the Bad and Managing the Good.” Washington, DC: BoardSource, 2005. BoardSource Learning Center Member Resource. Sample Confidentiality PoliciesIntroductionNonprofit leaders may find themselves challenged to discover the right balance between transparency and confidentiality. Nonprofit organizations are required by law to disclose certain information, such as their particular IRS Form 990. In addition, many states have sunshine laws — open meeting laws — that require certain nonprofits to make at least some portions of their board meetings open to the public. Beyond that, it becomes more complicated. On the one hand, it is often in an organization’s best interest to share information with donors, stakeholders, and the general public in order to demonstrate its positive impact on the community. On the other hand, nonprofit organizations operate in a demanding and competitive environment. Like any business, they need to plan, manage, and oversee their operations internally on a regular basis. Part of the board’s duty of loyalty is to maintain the confidentiality of core organizational information.Nonprofit organizations often deal with sensitive information about clients, donors, employees, and volunteers. Confidentiality policies are important to an organization’s credibility and reputation, and both board and staff should understand their responsibilities in this area. Key ElementsBoards are often exposed to confidential information critical to the well-being of the organization. Information that generally is considered confidential and/or privileged includes: planning documents (includes budget); business and legal negotiations; client, customer, and patient records; personnel files; anonymous donor records; security guidelines; and any other matters discussed in executive sessions.For some nonprofits, because of their service area (e.g., domestic violence) and/or organizational complexity (e.g., hospitals), it is more efficient to proactively categorize certain documents and information as confidential. For other organizations, the board may, in briefing packets and during meetings, identify specific items that are confidential, thereby reminding board members of their commitment to confidentiality. Taken further, the board may vote on whether certain sensitive issues and/or discussions are confidential in nature.Practical TipsAcknowledge the contradiction between confidentiality and transparency broadly. At the same time, educate board and staff about nonprofit public disclosure requirements. Explain that confidentiality, when properly adhered to, does not contradict the organization’s need to remain publicly accountable for its actions.Make the confidentiality policy part of the board member and new staff orientation.Discuss the reasons for confidentiality. By understanding the purpose, it is easier to abide by the policy.Connect the confidentiality policy to board members’ duty of loyalty, which obligates them to act in the best interest of the organization.Ensure that client privilege for confidentiality is respected. Do not share any information that relates to your clients — even identification of who they are, under certain circumstances. Confidentiality should be automatic in the case of lawyer-client or accountant-client relationships.In the confidentiality policy, recognize legal requirements for confidential records (e.g., HIPAA, personnel files, national security).Sample Confidentiality PoliciesThe six confidentiality policies range from overarching guidelines to detailed documents, and they take into account some concerns specific to certain kinds of nonprofits.Sample #1This very brief policy is a basic statement of values relating to confidentiality.Confidentiality is a hallmark of professionalism. XYZ employees and trusteesensure that all information that is confidential or privileged or that is not publicly available is not disclosed inappropriatelyensure that all nonpublic information about other persons or firms acquired by XYZ personnel in dealing with outside firms on behalf of XYZ is treated as confidential and not disclosedSample #2 This general policy provides board and staff members with broad guidelines for handling confidential information.It is the policy of XYZ that board members and employees of XYZ may not disclose, divulge, or make accessible confidential information belonging to, or obtained through their affiliation with XYZ to any person, including relatives, friends, and business and professional associates, other than to persons who have a legitimate need for such information and to whom XYZ has authorized disclosure. Board members and employees shall use confidential information solely for the purpose of performing services as a board member or employee for XYZ. This policy is not intended to prevent disclosure where disclosure is required by law.Board members and employees must exercise good judgment and care at all times to avoid unauthorized or improper disclosures of confidential information. Conversations in public places, such as restaurants, elevators, and airplanes, should be limited to matters that do not pertain to information of a sensitive or confidential nature. In addition, board members and employees should be sensitive to the risk of inadvertent disclosure and should, for example, refrain from leaving confidential information on desks or otherwise in plain view and refrain from the use of speakerphones to discuss confidential information if the conversation could be heard by unauthorized persons.At the end of a board member’s term in office or upon the termination of an employee’s employment, he or she shall return, at the request of XYZ, all documents, papers, and other materials, regardless of medium, that may contain or be derived from confidential information in his or her possession.Sample #3This policy identifies particular information that is confidential, and includes a disciplinary policy for staff. While parts of it are specific to membership organizations, the scope and intent of it is relevant for all organizations.Confidentiality Policy Confidentiality is a basic element of the operation of XYZ. To protect the confidentiality of fellow employees and the organization, no information concerning other employees or XYZ business is to be discussed with anyone except when necessary for the purpose of daily business.Member information shall be kept strictly confidential. Only those authorized personnel directly responsible for services to the member shall discuss or have access to this information. Care shall be exercised to be certain that unauthorized individuals do not overhear discussion of confidential information.Employees and directors of XYZ understand and agree that during their employment and/or service they may obtain information and documents which is confidential and/or privileged and proprietary in nature and which must be kept confidential both during and after their term of employment or service. As such, all employees and directors are required to return any such documents containing privileged or confidential information at the time of the termination of employment or expiration of service.Any such employee or director that divulges confidential or privileged information, whether during or after his term of employment or service, is subject to appropriate discipline, including dismissal, or other criminal sanctions. Employees and directors recognize that the employer has a proprietary interest in any such information and/or documents and would be irreparably damaged as a result of any disclosure or dissemination thereof.Breaches of confidential information are subject to disciplinary action up to and including immediate termination and/or removal.Sample #4This policy provides more specificity about what information must be kept confidential. While parts of it are specific to foundations and their grantees, the scope and intent of it is relevant for all organizations.Confidentiality Policy Any information about XYZ Foundation and its applicants, grantees, donors, prospective donors, and any personal information about employees or other confidential information obtained by board, staff, and consultants as a result of working with the foundation should be considered confidential and should be discussed only as appropriately required in connection with the foundation’s work. All information concerning an applicant, grantee, donor, prospective donor, or other confidential information must be maintained in confidence, and particular care must be taken to avoid discussion of foundation affairs with third parties, unless authorization to do so is obtained from the chief executive, or as required by law.All files, documents, and working papers of the foundation are the property of the foundation. Any board member, staff member, or consultant who purposely, or through a failure to exercise reasonable care, causes confidential information to be disclosed will be subject to disciplinary action, up to and including termination. The obligation to keep information confidential continues after an employee, board member, or consultant ceases to be employed by or affiliated with the foundation.Personal AddressesIt is the policy of the foundation not to give out staff or committee member’s personal addresses or phone numbers to outside persons (with the exception of the human resource department’s dealings with benefit providers). Anyone asking for personal information on staff or committee members should be instructed to forward all calls, mailings, or invitations to the foundation office.Sample #5This specific policy outlines what information (e.g., names and addresses) and documents may not be disclosed. A few items are specific to community foundations, but the level of detail could be easily adapted for other nonprofits.Confidentiality Policy For Board Members, Committee Members, and Staff??The following policies apply to members of the XYZ board, its staff, volunteers, and to members of committees authorized by the board. References in the policies to board members are intended also to apply to committee members.?Board and Committee Meetings: On any vote of the board, both the numbers of affirmative and negative votes and the individual votes of board members, unless specifically requested by a member otherwise, shall be confidential but the record of individual votes must be kept on file.Board, committee, and staff members shall not disclose to anyone outside of XYZ the statements, positions, or votes by any board or committee member on actions taken by the board or its committees. Only in extraordinary situations will a board or committee member disclose his or her position or vote on a board or committee action, and only after advising the board’s chair before making such a disclosure.The general “sense of the board” on a particular matter may be conveyed to an applicant, grantee, vendor, or donor when the sharing of such information is helpful in conveying the board’s concerns. However, such information should only be shared with the concerned party. In addition, such information may be shared with a donor or with another grantmaker when the information has been requested and is deemed important in helping the donor or grantmaker arrive at an informed decision on a grant proposal or opportunity.Executive Sessions: The minutes of the board meeting shall indicate when the board goes into executive session but shall not normally reflect any of the topics or discussion that occurs in executive session. However, when the board takes an action in executive session that needs to be recorded, the board chair will provide any such text that is to be included in the official minutes of the meeting. Board and Program Committee Docket: The docket prepared for the board and staff is confidential and should be treated as an internal document restricted to XYZ use. No portion of the docket may be shared, in written or oral form, with any individual or with any organization outside of XYZ. Exceptions may be made only with the consent of the chief executive.Personal Information on Staff and Board Members: The home addresses, telephone numbers, fax numbers, and e-mail addresses of board, committee, and staff members are not to be given out to any individual or organization without the express permission of the person to be rmation on a Donor’s Fund: All information concerning a donor’s fund, other than information published in the annual report, newsletter, or XYZ publication, shall remain confidential unless approved by the donor. This includes information on the size and types of grants, the size of the fund, and other such rmation on Donors and Prospects: All information obtained about donors and prospective donors will remain confidential and not discussed with any individual other than a board or staff member, unless otherwise authorized by the donor or prospective donor.The home addresses, telephone numbers, fax numbers, or e-mail addresses of donors and prospective donors are not to be given out to any individual or organization without the express permission of the person to be disclosed.When a donor requests that his or her gift or fund be treated as an anonymous gift or fund, the donor’s wishes are to be honored by both board and staff members.All staff members shall adhere to the principle that all donor and prospect information created by, or on behalf of, XYZ is the property of XYZ and shall not be transferred or utilized except on behalf of XYZ.?In signing this statement, I confirm that I have received a copy of the Confidentiality Policy and agree to abide by the guidelines set forth therein.Please print name: Board Member, Committee Member, Staff Member Signature: Board Member, Committee Member, Staff MemberDateSample #6This confidentiality policy explicitly states what information employees are prohibited from disclosing during and after their employment, and it requires a signature.Confidential InformationThe employees of XYZ manage and have access to confidential information that must stay within our organization. Confidential information includes, but is not limited to, our donors, supporters, employees, marketing processes, as well as our financial information, which includes current and future business plans, our computer and software systems and processes, personnel information, and associated documents. Employees are not permitted to share this confidential information with anyone outside the organization, or to remove or make copies of any of XYZ’s records, reports, or documents in any form, without prior management approval. Disclosure of confidential information may lead to disciplinary action, which may include termination of employment, as well as other possible legal action. Additionally, employees of XYZ are prohibited during and/or after employment from using XYZ’s confidential information in any form for their own purposes or for those of other persons or entities. Finally, all confidential information relative to XYZ, regardless of its form, must be returned to the organization at the time of termination of employment with the organization.Statement of Understanding and AgreementI am aware that, during the course of my employment, confidential information will be made available to me. Further, I understand that this information is proprietary and critical to the success of XYZ and may not be distributed or used outside of XYZ premises or with non-XYZ individuals. In the event of my termination of employment, whether voluntary or involuntary, I hereby agree that I will not utilize or exploit this information for my own personal gain, or share it with any other individual, nonprofit agency, or company.SignatureDatePrint NameSuggested Resources Paul, Sarah E. and Daniel L. Kurtz. Managing Conflicts of Interest:The Board’s Guide to Unbiased Decision Making, Third Edition. Washington, DC: BoardSource, 2013.Nathan, Charles M. “Maintaining Board Confidentiality.” Blog posted on January 23, 2010 at the Harvard Law School Forum on Corporate Governance and Financial Regulation “Executive Sessions: How to Use Them Regularly and Wisely.” BoardSource Learning Center Member Resource. Sample Whistleblower Protection PoliciesIntroductionThe Sarbanes-Oxley Act of 2002 makes it a federal crime for any organization — nonprofit and for-profit — to retaliate against a “whistleblower” who reports illegal or unacceptable (alleged or real) activity. It also requires publicly-traded companies to establish a confidential process for reporting misuse of the organization’s financial assets. In practice, it is difficult to separate the prohibition against retaliation from the reporting process. So, most whistleblower policies address both. They are also being used to address other improprieties, such as discrimination and sexual harassment. Individuals who witness any kind of unsuitable behavior must feel free to speak out. Nonprofit leaders — board and senior management together — should take complaints seriously, undertake an investigation, and rectify the situation.Key ElementsThe whistleblower policy should state, unequivocally, that fraudulent actions are not tolerated. It may also apply to other improprieties.A confidential reporting mechanism sends a message to the entire staff that fraud is not tolerated and that whistleblowers are protected. That mechanism might be automated, such as online services or phone lines. Or, it may include a hierarchy of levels within the organization, from the human resource manager and the chief executive to the audit committee and the board chair.To help supervisors handle sticky situations, clarify the hierarchy for solving internal conflicts. Staff members should contact the board directly with alleged ethical, illegal, or fraudulent actions by the chief executive or when it is impossible to get management’s attention in a serious situation. Having clear policies that are consistently enforced will help prevent employee complaints. Such policies help supervisors ensure equitable and fair treatment of employees.Practical TipsTo ensure clarity, provide definitions in the whistleblower policy that range anywhere from identifying what allegations are governed by the policy to what constitutes retaliation.The policy should also outline a clear and consistent practice for reporting alleged violations. This process should be explicit about how and to whom complaints are submitted. A whistleblower policy functions as an extension of a code of ethics and a parallel process to complaint procedures. In developing the policy and the process, consider its relationship to these other policies.Sample Whistleblower Protection PoliciesThe four samples provide different approaches to reporting procedures, whistleblower protection, and defining fraudulent activity versus misbehavior.Sample #1This policy is written in simple language and focuses on the intent behind whistleblower protection.Sample Whistleblower PolicyGeneralXYZ Code of Ethics and Conduct (“Code”) requires directors, officers, and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. As employees and representatives of the organization, we must practice honesty and integrity in fulfilling our responsibilities and comply with all applicable laws and regulations.Reporting ResponsibilityIt is the responsibility of all directors, officers, and employees to comply with the Code and to report violations or suspected violations in accordance with this Whistleblower Policy. No RetaliationNo director, officer, or employee who in good faith reports a violation of the Code shall suffer harassment, retaliation, or adverse employment consequence. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment. This Whistleblower Policy is intended to encourage and enable employees and others to raise serious concerns within the organization prior to seeking resolution outside the organization.Reporting ViolationsThe Code addresses the organization’s open-door policy and suggests that employees share their questions, concerns, suggestions, or complaints with someone who can address them properly. In most cases, an employee’s supervisor is in the best position to address an area of concern. However, if you are not comfortable speaking with your supervisor or you are not satisfied with your supervisor’s response, you are encouraged to speak with someone in the human resources department or anyone in management who you are comfortable approaching. Supervisors and managers are required to report suspected violations of the Code of Conduct to the organization’s compliance officer, who has specific and exclusive responsibility to investigate all reported violations. For suspected fraud, or when you are not satisfied or uncomfortable with following the organization’s open-door policy, individuals should contact the organization’s compliance officer pliance OfficerThe organization’s compliance officer is responsible for investigating and resolving all reported complaints and allegations concerning violations of the Code and, at his or her discretion, shall advise the chief executive and/or the audit committee. The compliance officer has direct access to the audit committee of the board and is required to report to the audit committee at least annually on compliance activity. The organization’s compliance officer is the chair of the audit committee.?Accounting and Auditing MattersThe audit committee of the board shall address all reported concerns or complaints regarding corporate accounting practices, internal controls, or auditing. The compliance officer shall immediately notify the audit committee of any such complaint and work with the committee until the matter is resolved.Acting in Good FaithAnyone filing a complaint concerning a violation or suspected violation of the Code must be acting in good faith and have reasonable grounds for believing the information disclosed indicates a violation of the Code. Any allegations that prove not to be substantiated and which prove to have been made maliciously or knowingly to be false will be viewed as a serious disciplinary offense.ConfidentialityViolations or suspected violations may be submitted on a confidential basis by the complainant or may be submitted anonymously. Reports of violations or suspected violations will be kept confidential to the extent possible, consistent with the need to conduct an adequate investigation. Handling of Reported ViolationsThe compliance officer will notify the sender and acknowledge receipt of the reported violation or suspected violation within __ business days. All reports will be promptly investigated and appropriate corrective action will be taken if warranted by the investigation. Audit Committee Compliance Officer[Organization] Management StaffCopyright 2004, National Council of Nonprofits, . Reprinted with permission.Sample #2This policy provides clear definitions and provisions for handling allegations of misconduct while protecting the organization under difficult circumstances.In keeping with the policy of maintaining the highest standards of conduct and ethics, XYZ will investigate any suspected fraudulent or dishonest use or misuse of XYZ’s resources or property by staff, board members, consultants, or volunteers.Staff, board members, consultants, and volunteers are encouraged to report suspected fraudulent or dishonest conduct (i.e., to act as “whistleblower”), pursuant to the procedures set forth below.ReportingA person’s concerns about possible fraudulent or dishonest use or misuse of resources or property should be reported to his or her supervisor or, if suspected by a volunteer, to the staff member supporting the volunteer’s work. If, for any reason, a person finds it difficult to report his or her concerns to a supervisor or staff member supporting the volunteer’s work, the person may report the concerns directly to the chief executive. Alternately, to facilitate reporting of suspected violations where the reporter wishes to remain anonymous, a written statement may be submitted to one of the individuals listed above. DefinitionsBaseless AllegationsAllegations made with reckless disregard for their truth or falsity. Individuals making such allegations may be subject to disciplinary action by XYZ, and/or legal claims by individuals accused of such conduct.Fraudulent or Dishonest ConductA deliberate act or failure to act with the intention of obtaining an unauthorized benefit. Examples of such conduct includeforgery or alteration of documentsunauthorized alteration or manipulation of computer filesfraudulent financial reportingpursuit of a benefit or advantage in violation of XYZ’s Conflict-of-Interest Policymisappropriation or misuse of XYZ resources, such as funds, supplies, or other assetsauthorizing or receiving compensation for goods not received or services not performedauthorizing or receiving compensation for hours not workedWhistleblowerAn employee, consultant, or volunteer who informs a supervisor or the chief executive about an activity relating to XYZ which that person believes to be fraudulent or dishonest.Rights and ResponsibilitiesSupervisorsSupervisors are required to report suspected fraudulent or dishonest conduct to the chief executive. Reasonable care should be taken in dealing with suspected misconduct to avoidBaseless allegationsPremature notice to persons suspected of misconduct and/or disclosure of suspected misconduct to others not involved with the investigationViolations of a person’s rights under lawDue to the important yet sensitive nature of the suspected violations, effective professional follow-up is critical. Supervisors, while appropriately concerned about “getting to the bottom” of such issues, should not in any circumstances perform any investigative or other follow-up steps on their own. Accordingly, a supervisor who becomes aware of suspected misconductshould not contact the person suspected to further investigate the matter or demand restitutionshould not discuss the case with attorneys, the media, or anyone other than the chief executiveshould not report the case to an authorized law enforcement officer without first discussing the case with the chief executiveInvestigationAll relevant matters, including suspected but unproved matters, will be reviewed and analyzed, with documentation of the receipt, retention, investigation, and treatment of the complaint. Appropriate corrective action will be taken, if necessary, and findings will be communicated to the reporting person and his or her supervisor. Investigations may warrant investigation by independent persons such as auditors and/or attorneys.Whistleblower ProtectionXYZ will protect whistleblowers as defined below:XYZ will use its best efforts to protect whistleblowers against retaliation. Whistleblowing complaints will be handled with sensitivity, discretion, and confidentiality to the extent allowed by the circumstances and the law. Generally, this means that whistleblower complaints will only be shared with those who have a need to know so that XYZ can conduct an effective investigation, determine what action to take based on the results of any such investigation, and in appropriate cases, with law enforcement personnel. (Should disciplinary or legal action be taken against a person or persons as a result of a whistleblower complaint, such persons may also have the right to know the identity of the whistleblower.)Employees, consultants, and volunteers of XYZ may not retaliate against a whistleblower for informing management about an activity which that person believes to be fraudulent or dishonest with the intent or effect of adversely affecting the terms or conditions of the whistleblower’s employment, including but not limited to, threats of physical harm, loss of job, punitive work assignments, or impact on salary or fees. Whistleblowers who believe that they have been retaliated against may file a written complaint with the chief executive. Any complaint of retaliation will be promptly investigated and appropriate corrective measures taken if allegations of retaliation are substantiated. This protection from retaliation is not intended to prohibit supervisors from taking action, including disciplinary action, in the usual scope of their duties and based on valid performance-related factors.Whistleblowers must be cautious to avoid baseless allegations (as described earlier in the definitions section of this policy).Sample #3This sample expands the list of improprieties that are subject to the whistleblower policy to include fraudulent actions and actions that violate other codes of conduct.IntroductionThe Statement of Values and Code of Ethics adopted by XYZ requires all staff, board members, and volunteers to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. As employees and representatives of XYZ, we must practice honesty and integrity in fulfilling our responsibilities and comply with all applicable laws and regulations. Set forth below is XYZ’s policy with respect to reporting good-faith concerns about the legality or propriety of XYZ actions or plans.Reporting of Concerns or Complaints It is the responsibility of all staff, board members, and volunteers to comply with XYZ’s Code of Ethics and applicable law and to report violations or suspected violations in accordance with this Whistleblower Policy. Confidentiality XYZ will treat all communications under this policy in a confidential manner, except to the extent necessary 1) to conduct a complete and fair investigation, or 2) for review of XYZ operations by XYZ’s board, its audit committee, XYZ’s independent public accountants, and XYZ’s legal counsel. Retaliation XYZ will not permit any negative or adverse actions to be taken against any employee or individual for making a good-faith report of a possible violation of its Code of Ethics or applicable law, even if the report is mistaken, or against any employee or individual who assists in the investigation of a reported violation. Retaliation in any form will not be tolerated. Any act of alleged retaliation should be reported immediately and will be promptly investigated. An employee who retaliates against someone who has reported a violation in good faith is subject to discipline up to and including termination of employment. This Whistleblower Policy is intended to encourage and enable employees and others to raise serious concerns within XYZ prior to seeking resolution outside the organization. How To Report Concerns or Complaints Employees and others may communicate suspected violations of its Code of Ethics, applicable law, or other wrongdoing or alleged retaliation by contacting XYZ’s [title, name, phone, e-mail]. If you wish to remain anonymous, it is not necessary that you give your name or position in any notification. Whether or not you identify yourself, for a proper investigation to be conducted, please provide XYZ with as much information as you can, sufficient to do a proper investigation, including where and when the incident occurred, names and titles of the individuals involved, and as much other detail as you can provide. Illustrative Types of Concerns The following is a partial list of the kinds of improprieties that should be reported: Supplying false or misleading information on XYZ’s financial or other public documents, including its Form 990Providing false information to or withholding material information from XYZ’s board or auditorsDestroying, altering, mutilating, concealing, covering up, falsifying, or making a false entry in any records that may be connected to an official proceeding, in violation of federal or state law or regulationsAltering, destroying, or concealing a document, or attempting to do so, with the intent to impair the document’s availability for use in an official proceeding or otherwise obstructing, influencing, or impeding any official proceeding, in violation of federal or state law or regulationsEmbezzling, self-dealing, private inurement (i.e., XYZ earnings inuring to the benefit of a director, officer, or senior management) and private benefit (i.e., XYZ assets being used by anyone in the organization for personal gain or benefit) Paying for services or goods that are not rendered or deliveredUsing remarks or actions of a sexual nature that are not welcome and are likely to be viewed as personally offensive, including sexual flirtations; unwelcome physical or verbal advances; sexual propositions; verbal abuse of a sexual nature; the display of sexually suggestive objects, cartoons, or pictures; and physical contact of a sexual or particularly personal nature.Using epithets, slurs, negative stereotyping, and threatening, intimidating, or hostile acts that relate to race, color, religion, gender, national origin, age, or disabilityCirculating or posting written or graphic material in the workplace that denigrates or shows hostility or aversion toward an individual or group because of race, color, religion, gender, nationality, age, or disabilityDiscriminating against an employee or potential employee due to a person’s race, color, religion, sex, sexual orientation, national origin, age, physical or mental impairment, or veteran statusViolating XYZ’s Statement of Values and Code of Ethics, Conflict-of-Interest Policy, Harassment Policy, or Equal Employment Opportunity PolicyFacilitating or concealing any of the above or similar actionsQuestions If you have any questions regarding this policy, please contact _____________________.Sample #4This policy provides a description of reporting procedures in further detail.XYZ Whistlebower PolicyThe whistleblower policy is intended to provide a mechanism for the reporting of illegal activity or the misuse of XYZ assets while protecting the employees who make such reports from retaliation.Questionable ConductThis policy is designed to address situations in which an employee suspects another employee has engaged in illegal acts or questionable conduct involving XYZ’s assets. This conduct might include outright theft (of equipment or cash), fraudulent expense reports, misstatements of any accounts to any manager or to XYZ’s auditors, or even an employee’s conflict of interest that results in financial harm to XYZ. XYZ encourages staff to report such questionable conduct and has established a system that allows them to do so anonymously.Making a ReportIf an employee suspects illegal conduct or conduct involving misuse of XYZ assets or in violation of the law, he or she may report it, anonymously if the employee wishes, and will be protected against any form of harassment, intimidation, discrimination, or retaliation for making such a report in good faith.Employees can make a report to any of the following XYZ executives at any time: chief executive, chief financial officer, or the head of human resources. XYZ will promptly conduct an investigation into matters reported, keeping the informant’s identity as confidential as possible consistent with our obligation to conduct a full and fair investigation.Alternatively, employees can make a report by calling either the board chair or the chair of the audit committee. Their names and phone numbers are posted on XYZ’s intranet.No RetaliationAn employee who has made a report of suspicious conduct and who subsequently believes he or she has been subjected to retaliation of any kind by any XYZ employee is directed to immediately report it to the chief executive, the chief financial officer, or the head of human resources as appropriate. Reports of retaliation will be investigated promptly in a manner intended to protect confidentiality as much as practicable, consistent with a full and fair investigation. The party conducting the investigation will notify the employee of the results of the investigation. XYZ strongly disapproves of and will not tolerate any form of retaliation against employees who report concerns in good faith regarding XYZ’s operations. Any employee who engages in such retaliation will be subject to discipline up to and including termination.XYZ Reporting ProceduresThe “whistleblower” procedure is intended to describe the process through which concerns about the possible misuse of XYZ assets are handled pursuant to XYZ’s whistleblower policy.An employee makes a report of suspected misuse of XYZ assets by reporting in person to an XYZ executive, or reporting anonymously to the board chair or the audit committee chair.The report is promptly reviewed by the chief executive, as well as the chief financial officer, to determine whether the report constitutes a complaint or a non-complaint, unless one of them is allegedly involved in the misconduct, in which case the report should be reviewed by only one of them. (If both of them are alleged to be involved, the report should go directly to the board chair or the audit committee chair.)A complaint means any report involving (i) questionable accounting, auditing, financial reporting, or internal controls; (ii) suspected fraud, theft, or improper use of company assets; (iii) a violation of XYZ’s conflict-of-interest policy that results in a financial harm to XYZ; or (iv) a claim of retaliation against any employee making a good-faith report regarding any of the preceding matters. A non-complaint means a report of any other matter not involving a misuse of XYZ’s assets.If the report is deemed to be a complaint, it will be promptly investigated and forwarded to the audit committee chair. If the report is deemed to be a non-complaint, it will be referred to the appropriate executive or manager for follow-up. Some non-complaints may involve serious matters and may require prompt investigation, but may nevertheless not involve misuse of XYZ’s assets.Each complaint is fully investigated, and as far as possible handled so as to protect the privacy of the employee making the complaint. A written report of the outcome of each investigation is prepared and delivered to the audit committee chair.The audit committee chair decides whether the report involves a matter that is material. If it is deemed material, it is reviewed by the full committee, which may forward it for disposition to the board or may direct senior management to take actions to resolve the situation. If the report is deemed nonmaterial, it is not reviewed by the committee but is instead addressed by the chief financial officer, as appropriate.Suggested ResourcesBoardSource and Independent Sector. “The Sarbanes-Oxley Act and Its Implications for Nonprofit Organizations.” Washington, DC: BoardSource and Independent Sector Zuckerman, Jason. “Whistleblower Protections in the Nonprofit Sector.” Nonprofit Risk Management Center Eaton, Tim V. and Michael D. Akers. “Whistleblowing and Good Governance.” The CPA Journal 2007. Record Retention and Document Destruction Policies IntroductionRecord retention and document destruction are distinct but complementary issues. Record retention balances the need for an organization to maintain accurate and appropriate files with the challenge of limited physical and electronic space for archives. All businesses need to keep documents that preserve institutional history for strategic planning, regulatory compliance, and legal purposes. The Sarbanes-Oxley Act of 2002 forbids purging of documents when any organization — nonprofit or for-profit — is under federal investigation. Document destruction policies provide guidelines for the proper disposal of records and prevent destruction of relevant documentation if the organization is involved in litigation. It is a federal crime to alter, cover up, falsify, or destroy any document to prevent its use in an official proceeding. Retention and destruction policies are helpful under any circumstances. When already in place, these policies not only help nonprofits retain appropriate historical and legal documentation, but they also clarify the steps to take if federal investigation ever takes place. Key ElementsThe document retention policy should cover employee records, accounting and tax records (e.g., bank statements, audits, IRS forms), legal documents (e.g., articles of incorporation, tax-exempt application, the determination letter, contracts, intellectual property documents, real estate records), board-related records (minutes, policies, resolutions), and e-mails and voicemails.In some cases, the applicable retention period is dictated by statute. In other cases, it is a matter of judgment. (Accordingly, in a few cases, the recommended retention periods for the sample policies may differ slightly.)When under federal investigation or where litigation is either ongoing or imminent — or even if that becomes a possibility — state clearly that all document destruction must stop and documents must be preserved.Practical TipsState that the purpose of the policy is to help establish organizational procedures for the retention, maintenance, and destruction of records, consistent with applicable legal requirements.Indicate the legal and/or desired retention periods for all records (and double check with legal counsel regarding retention periods for your unique organization).Retention of various business documents is mandated by law. Become familiar with these requirements, as the retention period varies depending on the document.Equal care should be given to electronic documents and voicemail. Network and individual computer backup systems need systematic attention and should be part of regular risk-management.Maintain a good filing system: Categorize various records appropriately so they are easy to find. Purging old, outdated documents is also a good practice. Sample Record Retention and Document Destruction PoliciesThe four samples address both record retention and document destruction guidelines, with two policies focusing on retention specifically, one on destruction, and one on both issues.Sample #1 This brief document retention policy is framed as part of compliance with Sarbanes-Oxley; it includes a list of documents and time periods.Record Retention PolicyXYZ takes seriously its obligations to preserve information relating to litigation, audits, and investigations. The Sarbanes-Oxley Act makes it a crime to alter, cover up, falsify, or destroy any document to prevent its use in an official proceeding. Failure on the part of employees to follow this policy can result in possible civil and criminal sanctions against XYZ and its employees and possible disciplinary action against responsible individuals (up to and including termination of employment). Each employee has an obligation to contact the chief executive or chief financial officer of a potential or actual litigation, external audit, investigation, or similar proceeding involving XYZ. The information listed in the retention schedule below is intended as a guideline and may not contain all the records XYZ may be required to keep in the future. Questions regarding the retention of documents not listed in this chart should be directed to the chief executive. From time to time, the chief executive may issue a notice, known as a “legal hold,” suspending the destruction of records due to pending, threatened, or otherwise reasonably foreseeable litigation, audits, government investigations, or similar proceedings. No records specified in any legal hold may be destroyed, even if the scheduled destruction date has passed, until the legal hold is withdrawn in writing by the chief executive.File CategoryItemRetention PeriodCorporate RecordsBylaws and Articles of IncorporationPermanentCorporate resolutionsPermanentBoard and committee meeting agendas and minutesPermanentConflict-of-interest disclosure forms4 years Finance and AdministrationFinancial statements (audited)PermanentAuditor management lettersPermanentPayroll recordsPermanentJournal entriesPermanentCheck register and checks[7 years/ Permanent]Bank deposits and statements7 yearsCharitable organizations registration statements (filed with [State] Attorney General)7 yearsChart of accounts7 yearsExpense reports7 yearsGeneral ledgers and journals (includes bank reconciliations, fund accounting by month, payouts allocation, securities lending, single fund allocation, trust statements)7 yearsAccounts payable ledger7 yearsInvestment performance reports7 yearsInvestment consultant reports7 yearsInvestment manager correspondence7 yearsEquipment files and maintenance records7 years after dispositionContracts and agreements7 years after all obligations endInvestment manager contracts7 years after all obligations endCorrespondence — general3 yearsInsurance RecordsPolicies — occurrence typePermanentPolicies — claims-made typePermanentAccident reports7 yearsFire inspection reports7 yearsSafety (OSHA) reports7 yearsClaims (after settlement)7 yearsGroup disability records7 years after end of benefitsReal EstateDeedsPermanentLeases (expired)7 years after all obligations endMortgages, security agreements7 years after all obligations endPurchase agreements7 years after disposition requirementTaxIRS exemption determination and related correspondencePermanentIRS Form 990sPermanentWithholding tax statements7 yearsCorrespondence with legal counsel or accountants, not otherwise listed7 years after return is filedTimecards3 yearsCommunicationsOne set of all communication documents kept on-site and one set kept off-site Press releasesPermanentAnnual reportsPermanent (5 copies)Other publications7 yearsPhotos7 yearsPress clippings7 yearsDonor ServicesFund agreements (paper and digital copies)PermanentCorrespondence — acknowledgment of gifts and grant requestsPermanentDonor fund statementsPermanentCommunity PhilanthropyRecords from advisory committee or family fund meetings, including minutes, if any, and lists of grants recommended for approval.7 yearsScholarship grant records, including applications if foundation staff participates in selection decisions 7 yearsApproved grants — all documentation supporting grant payment, including application/recommendation, due diligence, grant agreement letters, grant transmittal letters, and post–grant reporting information, if any.7 years after completion of funded program, or date of grant if general operating supportFoundation funding requests, correspondence, and reports (funding received)7 years after completion of programDeclined/withdrawn grant applications3 yearsFoundation funding requests (denied)3 yearsConsulting ServicesConsulting contracts/filed7 years after all obligations endHuman ResourcesEmployee personnel filesPermanentRetirement plan benefits (plan descriptions, plan documents)PermanentEmployee medical recordsPermanentEmployee handbooksPermanentWorkers comp claims (after settlement)7 yearsEmployee orientation and training materials7 years after use endsEmployment offer letter7 years after all obligations endEmployment applications3 yearsIRS Form I-9 (store separate from personnel file)Greater of 1 year after end of service, or 3 yearsRésumés1 yearTechnologySoftware licenses and support agreements7 years after all obligations endLibraryOther foundations’ annual reports 2 yearsDirectories and periodicals2 yearsGeneral AdministrationCorrespondence — chief executive and general7 yearsAppointment calendars — chief executive7 yearsBy: __________________________ Chief of Staff/Corporate SecretarySample #2This straightforward policy — relevant to for-profit companies but helpful because of its additional details — provides more specific guidance for different kinds of documents, and it requires an employee’s signatures.SAMPLE DOCUMENT RETENTION POLICYThe corporate records of XYZ and its subsidiaries (hereafter the “organization”) are important assets. Corporate records include essentially all records you produce as an employee, whether paper or electronic. A record may be as obvious as a memorandum, an e-mail, a contract, or a case study, or, something not as obvious, such as a computerized desk calendar, an appointment book, or an expense record. The law requires the organization to maintain certain types of corporate records, usually for a specified period of time. Failure to retain those records for those minimum periods could subject you and the organization to penalties and fines, cause the loss of rights, obstruct justice, spoil potential evidence in a lawsuit, place the organization in contempt of court, or seriously disadvantage the organization in litigation.The organization expects all employees to fully comply with any published records retention or destruction policies and schedules, provided that all employees should note the following general exception to any stated destruction schedule: If you believe, or the organization informs you, that organization records are relevant to litigation, or potential litigation (i.e., a dispute that could result in litigation), then you must preserve those records until the legal department determines the records are no longer needed. That exception supersedes any previously or subsequently established destruction schedule for those records. If you believe that exception may apply, or have any question regarding the possible applicability of that exception, please contact the legal department.From time to time the organization establishes retention or destruction policies or schedules for specific categories of records in order to ensure legal compliance, and also to accomplish other objectives, such as preserving intellectual property and cost management. Several categories of documents that bear special consideration are identified below. While minimum retention periods are suggested, the retention of the documents identified below and of documents not included in the identified categories should be determined primarily by the application of the general guidelines affecting document retention identified above, as well as any other pertinent factors.(a)Tax Records. Tax records include, but may not be limited to, documents concerning payroll, expenses, proof of deductions, business costs, accounting procedures, and other documents concerning the organization’s revenues. Tax records should be retained for at least seven years from the date of filing the applicable return.(b)Employment Records/Personnel Records. State and federal statutes require the organization to keep certain recruitment, employment, and personnel information. The organization should also keep personnel files that reflect performance reviews and any complaints brought against the organization or individual employees under applicable state and federal statutes. The organization should also keep all final memoranda and correspondence reflecting performance reviews and actions taken by or against personnel in the employee’s personnel file. Employment and personnel records should be retained for seven years.(c)Board and Board Committee Materials. Meeting minutes should be retained in perpetuity in the organization’s minute book. A clean copy of all board and board committee materials should be kept for no less than three years by the organization.(d)Press Releases/Public Filings. The organization should retain permanent copies of all press releases and publicly filed documents under the theory that the organization should have its own copy to test the accuracy of any document a member of the public can theoretically produce against that organization.(e)Legal Files. Legal counsel should be consulted to determine the retention period of particular documents, but legal documents should generally be maintained for a period of 10 years.(f)Marketing and Sales Documents. The organization should keep final copies of marketing and sales documents for the same period of time it keeps other corporate files, generally three years.An exception to the three-year policy may be sales invoices, contracts, leases, licenses, and other legal documentation. These documents should be kept for at least seven years beyond the life of the agreement.(g)Development/Intellectual Property and Trade Secrets. Development documents are often subject to intellectual property protection in their final form (e.g., patents and copyrights). The documents detailing the development process are often also of value to the organization and are protected as a trade secret where the organizationderives independent economic value from the secrecy of the informationthe organization has taken affirmative steps to keep the information confidentialThe organization should keep all documents designated as containing trade secret information for at least the life of the trade secret. (h)Contracts. Final, execution copies of all contracts entered into by the organization should be retained. The organization should retain copies of the final contracts for at least [three] years beyond the life of the agreement, and longer in the case of publicly filed contracts. Electronic Mail. E-mail that needs to be saved should be either(ii)printed in hard copy and kept in the appropriate file(ii)downloaded to a computer file and kept electronically or on disk as a separate fileThe retention period depends upon the subject matter of the e-mail, as covered elsewhere in this policy.Failure to comply with this Document Retention Policy may result in punitive action against the employee, including suspension or termination. Questions about this policy should be referred to [name, phone number, e-mail], who is in charge of administering, enforcing, and updating this policy.Read, understood, and agreed:____________________________________________Employee’s Signature____________________________________________Date“Sample Document Retention Policy,” published in conjunction within “Law Firm Document Retention Policies,” by Sharon Nelson and John Simek, published in Law Practice Today, July 2004, located online at . ? American Bar Association. Reprinted with permission. All rights reserved. This information appears in the ABA Law Practice Management Section publication, Document Management & Retention, August 2006.This information or any portion thereof may not be stored in an electronic database or retrieval system without the express written consent of the American Bar Association.Sample #3This straightforward policy covers both document retention and destruction.Sample Document Retention and Destruction PolicyPurposeIn accordance with the Sarbanes-Oxley Act, which makes it a crime to alter, cover up, falsify, or destroy any document with the intent of impeding or obstructing any official proceeding, this policy provides for the systematic review, retention, and destruction of documents received or created by XYZ in connection with the transaction of organization business. This policy covers all records and documents, regardless of physical form, contains guidelines for how long certain documents should be kept, and how records should be destroyed (unless under a legal hold). The policy is designed to ensure compliance with federal and state laws and regulations, to eliminate accidental or innocent destruction of records, and to facilitate XYZ’s operations by promoting efficiency and freeing up valuable storage space. Document Retention XYZ follows the document retention procedures outlined below. Documents that are not listed, but are substantially similar to those listed in the schedule, will be retained for the appropriate length of time. Corporate RecordsAnnual Reports to Secretary of State/Attorney GeneralPermanentArticles of Incorporation PermanentBoard Meeting and Board Committee Minutes PermanentBoard Policies/ResolutionsPermanentBylaws PermanentConstruction Documents PermanentFixed Asset Records PermanentIRS Application for Tax-Exempt Status (Form 1023) PermanentIRS Determination Letter PermanentState Sales Tax Exemption Letter PermanentContracts (after expiration)7 yearsCorrespondence (general) 3 yearsAccounting and Corporate Tax RecordsAnnual Audits and Financial StatementsPermanent Depreciation Schedules PermanentIRS Form 990 Tax ReturnsPermanentGeneral Ledgers [7 years/Permanent] Business Expense Records 7 years IRS Forms 10997 years Journal Entries7 years Invoices7 yearsSales Records (box office, concessions, gift shop) 5 years Petty Cash Vouchers 3 yearsCash Receipts 3 years Credit Card Receipts 3 years Bank RecordsCheck Registers [7 years/Permanent]Bank Deposit Slips 7 yearsBank Statements and Reconciliation 7 yearsElectronic Fund Transfer Documents7 yearsPayroll and Employment Tax RecordsPayroll Registers Permanent State Unemployment Tax RecordsPermanent Earnings Records 7 years Garnishment Records 7 yearsPayroll Tax Returns 7 years W-2 Statements 7 years Employee RecordsEmployment and Termination Agreements Permanent Retirement and Pension Plan Documents Permanent Records Relating to Promotion, Demotion, or Discharge 7 years after termination Accident Reports and Worker’s Compensation Records5 years Salary Schedules5 years Employment Applications 3 yearsI-9 Forms 3 years after termination Time Cards 2 yearsDonor and Grant RecordsDonor Records and Acknowledgment Letters 7 yearsGrant Applications and Contracts 7 years after completionLegal, Insurance, and Safety RecordsAppraisalsPermanentCopyright Registrations Permanent Environmental StudiesPermanentInsurance Policies Permanent Real Estate Documents Permanent Stock and Bond Records PermanentTrademark Registrations Permanent Leases6 years after expirationOSHA Documents5 yearsGeneral Contracts 3 years after termination Electronic Documents and Records Electronic documents will be retained as if they were paper documents. Therefore, any electronic files, including records of donations made online, that fall into one of the document types on the above schedule will be maintained for the appropriate amount of time. If a user has sufficient reason to keep an e-mail message, the message should be printed in hard copy and kept in the appropriate file or moved to an “archive” computer file folder. Backup and recovery methods will be tested on a regular basis.Emergency PlanningXYZ’s records will be stored in a safe, secure, and accessible manner. Documents and financial files that are essential to keeping XYZ operating in an emergency will be duplicated or backed up at least every week and maintained off-site. Document Destruction XYZ’s chief financial officer is responsible for the ongoing process of identifying its records, which have met the required retention period, and overseeing their destruction. Destruction of financial and personnel-related documents will be accomplished by shredding.Document destruction will be suspended immediately, upon any indication of an official investigation or when a lawsuit is filed or appears imminent. Destruction will be reinstated upon conclusion of the investigation. ComplianceFailure on the part of employees to follow this policy can result in possible civil and criminal sanctions against XYZ and its employees and possible disciplinary action against responsible individuals. The chief financial officer and finance committee chair will periodically review these procedures with legal counsel or the organization’s certified public acountant to ensure that they are in compliance with new or revised regulations.Sample #4 This short policy provides explicit guidelines on how to destroy documents containing confidential information, which is particularly important for certain kinds of health and social service providers that are subject to government regulation about client privacy.Shredding/Destruction PolicyIntroductionXYZ requires that any items or documents containing patient protected health information (PHI) that are assigned to be destroyed be shredded or marked out (redacted) with permanent ink before being placed in the garbage.Staff DutiesWhen shredding/destroying documents or items with PHI, proceed as follows:If you can still read the document even after shredding or redaction, it must be reshredded crosswise, or otherwise destroyed.Always look at your shredded document to make sure that it is completely unreadable.If a document cannot be immediately destroyed or made unreadable, it must be placed in a secure container that is not accessible to patients, visitors, or anyone else who is not on [the treatment team] and does not have permission to see the document.Do not try to tear up the document by hand because this almost never works as a way to make it unreadable.Suggested Resources“The Sarbanes-Oxley Act and Its Implications for Nonprofit Organizations.” Washington, DC: BoardSource and Independent Sector. Lexis Nexis, Applied Discovery. “Document Retention & Destruction Policies: What You Don’t Know Can Hurt You.” applieddiscovery/lawlibrary/whitePapers/ADI_WP_DocRetentionDestruction.pdf Part II: Role of the BoardRole of the BoardBoard Member AgreementsBoard Chair Job DescriptionsBoard Officer Job DescriptionsRole of the BoardIntroduction The work of the board is guided by the policies it establishes. Policies relating to the overall role of the board remind board members that they are part of a group with authority over, and liability for, the organization. These policies often involve duties of the board as a whole and/or of individual board members. While these documents take many forms — from general lists, to job descriptions, to letters of understanding — they serve a common function: to clearly communicate the board’s responsibilities as a governing body (See Part II: Role of the Board: Board Member Agreements). Key ElementsDefining accountability for the organization is a key element in defining the board’s role.While there are many ways to describe the role of the board, its fundamental responsibilities derive from three duties — care, loyalty, and obedience. These duties mean that board members must make prudent, educated, and independent decisions; place the organization above their personal preferences; and remain faithful to the mission of the organization. The policy should speak to the board as a group with collective duties. Board responsibilities fall into three broad areas: setting direction, overseeing the affairs of the organization, and ensuring adequate resources.Practical TipsDraft these policies to include legal requirements, but frame and style them according to your own board culture. Realize that policies evolve as the organization and the board evolve. Start with the basics but ensure that these documents are constantly reviewed and amended, and new policies are added as they become relevant.Sample Role of the Board StatementsThe sample policies provided range in style, offering different approaches. Some focus on the team only, some include specific responsibilities of individual board members, some stress accountability, and others spell out general expectations.Sample #1 This short statement defines the role of the board and sets clear expectations for board members.Role of the Board Act as the fiduciary and guardian of the organizational assetsReview and approve XYZ’s program budgetEstablish short- and long-term goalsAssess progress toward goalsAssume stewardship responsibility for XYZ’s financesSet policies for the overall management and operation of the agencyExpectations of the Members of the BoardAttend regularly scheduled board meetingsParticipate in committee workBecome informed about the policies and programs of XYZParticipate in fundraising activities and special events sponsored by XYZContribute financially according to abilityParticipate in board orientation activitiesAct as an informed advocate of XYZSample #2This board code of conduct provides standards for what is expected of individual board members.Board Code of ConductThe following code of conduct was adopted by the board and sets forth the standards the board expects from its members.To become familiar with and committed to the major responsibilities of a governing board:Setting mission and purposesAppointing the chief executiveSupporting the chief executiveMonitoring the chief executive’s performanceAssessing board performanceInsisting on strategic planningReviewing educational and public-service programs and Web-based initiativesEnsuring adequate resourcesEnsuring good managementPreserving institutional independenceRelating to the communityServing as court of appealsTo support the institution’s fundraising efforts through personal giving in accordance with one’s means (to both annual funds and capital drives), and to be willing to participate in the fundraising processTo devote time to learn how the institution functions — its uniqueness, strengths, needs, and its place in the industry — and share your knowledgeTo carefully prepare for, regularly attend, and actively participate in board meetings and committee assignmentsTo accept and abide by the legal and fiscal responsibilities of the board as specified by organizational charter, bylaws, and state statutes and regulationsTo vote according to one’s individual conviction, to challenge the judgment of others when necessary, yet to be willing to support the decision of the board and work with fellow board members in a spirit of cooperation; to recognize that the board chair alone speaks for the boardTo maintain the confidential nature of board deliberations and to avoid acting as spokesperson for the entire board unless specifically authorized to do soTo understand the role of the board as a policy-making body and to avoid participation in administration policyTo learn and consistently to use designated institutional channels when conducting board business (e.g., responding to staff and volunteer grievances, responding to inquiries concerning the status of a chief executive search, etc.)To comply with the conflict-of-interest policy and disclosure developed by the boardTo refrain from actions and involvement that might prove embarrassing to the organization and to resign if such actions or involvement developsTo make judgments always on the basis of what is best for the organization as a wholeSample #3 This statement is a well-organized list of responsibilities for the full board.Board ResponsibilitiesResponsibilitiesApprove the organization’s mission and review management’s performance in achieving it.Annually assess the ever-changing environment and approve the organization’s strategy to be responsive.Annually review and approve the organization’s funding plans.Review and approve the annual financial goals.Annually review and approve the organization’s budget.Approve major anizationElect, monitor, appraise, advise, stimulate, support, reward, and, if deemed necessary or desirable, change top management. Regularly discuss with the chief executive matters that are of concern to that person or to the board.Annually approve the performance review of the chief executive and establish compensation based on recommendations of the executive committee and board chair.Ensure that management succession is properly planned.Ensure that the organizational strength and employee base can substantiate long-range goals.Approve appropriate compensation and benefit policies and practices.Propose a slate of prospective trustees to members and fill vacancies as needed.Determine eligibility for and appoint members to board committees in response to recommendations of the executive committee.Annually review the performance of the board (including its composition, organization, and responsibilities) and take steps to improve its performance.OperationsReview results achieved by management as compared with the organization’s mission and annual and long-range goals. Compare performance to that of similar organizations.Be certain that the financial structure of the organization will adequately support its current needs and long-range strategy.Provide candid and constructive criticism, advice, and comments.Approve major actions of the organization such as capital expenditures on all projects over authorized limits and major changes in programs and services.AuditEnsure that the board and its committees are adequately informed of the financial condition of the organization and its operations through reports or any appropriate method.Ensure that published reports properly reflect the operating results and financial condition of the organization.Ensure that management has established appropriate policies to define and identify conflicts of interest throughout the organization and is diligent in its administration and enforcement of those policies.Appoint independent auditors subject to approval by board members.Review compliance with relevant material laws affecting the organization and its programs and operations.Sample #4 This statement elaborates on general and individual board responsibilities by outlining the areas of board focus and stating detailed expectations for fundraising and committee service.RESPONSIBILITIES OF BOARD MEMBERS The board of XYZ is responsible for overseeing the mission and purpose of the organization. Its duties include participation in strategic planning and making policy decisions, then securing the financing of them and the monitoring of their execution. Members must be willing to attend the requisite meetings, follow through on commitments, and participate fully in the decision-making process. The board also presents the organization’s image to the community and solicits its support in achieving XYZ’s goals.General ResponsibilitiesFiscal Review revenues and expenses on a quarterly basis to ensure the mission of the organization is being upheld.Strengthen XYZ’s financial base by participating in and contributing to the organization’s fundraising efforts.Participate in strategic planning and the setting of long-term goals.Legal Act on behalf of the organization and its interests, putting aside personal concerns, affiliations, or constituencies.Set procedures and policies to ensure that any affiliate is organized and administered in a manner that is in compliance with applicable law. AmbassadorshipPromote our mission, generating good will for the organization, and encouraging support for the efforts of the staff and volunteers.Make introductions to new communities, corporate sponsors, foundations, and helpful individuals.StaffHire the chief executive and review performance annually.Be willing to use individual expertise to assist in staff organization and development.Specific ResponsibilitiesAttendance and Contribution at Meetings: We expect everyone to attend and be active in __ out of the __ scheduled board meetings each year (in person or via phone).Give or Get: We ask that each board member be responsible for raising (or giving) a minimum of $__ annually. [Note: You may wish to require that a portion of the give/get be a personal contribution by the board member.]Committee Membership: Each board member must sit on at least one committee, and a board member will be asked to lead each of our committees. The full committee list with descriptions follows: Marketing Committee: Responsible for guiding the many opportunities that XYZ can take advantage of in putting our name and face into the best public light possibleIdentity Committee: Assist in the refinement of the new brand identity that has been initiatedStrategic Planning Committee: Responsible for taking the core of the strategic plan and bringing the many pieces of opportunity to lifeDevelopment Committee: Assist in guiding the many fundraising activities that XYZ has established or needs to createNominating Committee: Assist in selecting new board members who will help the organization achieve its goalsMembership Committee: Responsible for reviewing the new member applications for the local or national marketplace[Note: This applies only if your organization has affiliates. Your affiliate may not need to have the same committees or may need additional ones. Please note as well that not all of the members on these committees need to be board members.]Terms. We expect our board members to sign up for a __ year term with up to __ consecutive terms allowed for a total of __ years. Sample #5 This list of board responsibilities defines the board’s role in key activities, sets expectations of individual board member participation, and outlines basic board operations (e.g., number of meetings, conflicts of interest, etc.).ResponsibilitiesThe governing body of the organization shall be the board, which establishes policy, directs the activities of the elected officials and committees, and approves all action pertaining to the business of XYZ.The board approves the organization’s strategic plan, which shall be updated at least every __ years. An organizational business plan for each year shall be approved by the board prior to the beginning of the year of implementation.The budget of the organization shall be presented on an annual basis and approved by the board prior to its effective date.The board reviews committees’ and officers’ reports and makes recommendations concerning committees’ activities.The board authorizes the official acts of the elected officials and committees, including position papers and oral or written testimony.The board has the responsibility for retaining legal counsel and approving the retainer fee paid to legal counsel. The board evaluates the services rendered by legal counsel annually, prior to the renewal of the retainer agreement.The board has the responsibility for retaining an auditor. The board evaluates the performance by the auditor on an annual basis prior to renewal of his or her contract.The board has the responsibility for retaining a chief executive. The board evaluates the performance of the chief executive on an annual basis prior to renewal of his or her contract.The board must approve all new policies and policy revisions before they are incorporated into the policy manual.The board approves the procedure manual of each committee after the policy committee reviews it.The board will meet at least __ times during the calendar year.The board chair in consultation with the executive committee may call special meetings.Attendance of elected officials is required at all board meetings and official XYZ functions. Request to be excused shall be sent as soon as possible to the board chair.The board should evaluate itself annually.An officer owes his or her loyalty to the organization and may not, without permission of the board, use the position as officer or director to his or her own advantage.An officer or director may not be a designated representative of two organizations that have a conflict of interest.XYZ officers may not serve on the board of another organization whose primary or secondary activity is related to the activities of XYZ without prior approval of a majority of the board.Suggested ResourcesBoardSource. The Source: Twelve Principles of Governance That Power Exceptional Boards. Washington, DC: BoardSource, 2005.Chait, Richard P., William P. Ryan, and Barbara E. Taylor. Governance as Leadership: Reframing the Work of Nonprofit Boards. Hoboken, NJ: John Wiley & Sons, 2005.Hopkins, Bruce R. Legal Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Ingram, Richard T. Ten Basic Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Sample Board Member AgreementsIntroductionA board member agreement is the promise a board member makes when accepting a position for nonprofit board service. It is not a legal document but an internal agreement, asserting the board member’s commitment to the organization in addition to an understanding of the general board responsibilities (as discussed in Section 1, Role of the Board). These documents can be useful tools for recruitment purposes in that they clearly state what board service is all about; sometimes, they supplement more holistic board job descriptions. Key ElementsA board member agreement may list specific expectations for board service. Commonly found items include fundraising and personal giving, activity in committees, attendance in meetings, and promises to keep confidential issues confidential.If the organization has a separate job description for the board and/or board members, this agreement often focuses on individual pledges to serve as an active and committed member of the board.It should be clear that regardless of whether board members sign any type of “contract” with a nonprofit organization, state nonprofit corporation laws in all states automatically impose certain fiduciary duties on nonprofit board members. Board members should be made aware of those legal duties and obligations when they assume their positions. (The typical fiduciary duties imposed by law include the duty of care and the duty of loyalty, as discussed in Section 1, Role of the Board, and both of which require a certain level of diligence and prohibit conflicts of interest.)Practical TipsThe tone of the document should reflect the organization’s values and the board’s culture. What this document is called — contract, agreement, statement of understanding — will shape its style and presentation. Individual board members are often asked to sign the document to stress the importance of their commitment. They may do this once, when they join the board, or it may be an annual reaffirmation.To avoid the sense of one-sided expectations, it is useful to include in the agreement what the organization provides for the members of the board: protection from liability through D&O insurance coverage, accurate and timely reports to facilitate decision making, and gratitude and appreciation for the volunteer service.Sample Board Member AgreementsThe samples provide options for stressing the importance of board member expectations, in addition to the basic roles and responsibilities of the board. As suggested above, some also include the organization’s commitment back to the board member.Sample #1 This brief board member job description translates general board duties into individual board member expectations.Responsibilities of a Board MemberKnow and effectively articulate the mission, purpose, goals, policies, and programs of XYZ.Attend board meetings __ times per year and committee meetings __ times per year. Also, attend all XYZ events. Chair and/or participate in at least one board mit time, thought, and effort to XYZ.Participate in establishing and enforcing organizational policies.Accept responsibility for XYZ financial accountability.Make an annual financial contribution according to personal means.Participate in XYZ fundraising activities in a variety of ways.Identify friends and associates who might be prospective donors or board members.Participate in hiring and periodic evaluation of XYZ’s chief executive.Support and advise the chief executive as appropriate.Participate actively in assessing XYZ performance and setting its strategic goals and objectives.Represent XYZ to the community.Invite XYZ staff to speak at group meetings you attend — religious, professional associations, service groups.Avoid conflicts of interest.Maintain confidentiality of all XYZ board meetings.Sample #2 This short contract begins with the organization’s commitment to the board and then outlines expectations of board service.Board AgreementXYZ agrees to provide each member of the board with the following:Access to the management of XYZ, as needed for proper operation of the boardAmple notice of all meetingsMinutes of all board meetingsRelevant information to conduct his or her job as a board memberTo the extent allowed by law, indemnification from liability for a board member’s reasonable and necessary actionsReimbursement for reasonable expenses in conducting and attending to XYZ board businessD&O insurance liability coverageRespect for his or her timeThe use of his or her talent effectivelyThe board member agrees to do the following:Learn about XYZ, read financial reports and other XYZ documents, and keep up-to-date on XYZ programs, finances, and management.Attend as many board and committee meetings as practicable, and participate in all such meetings, using fair, independent judgment and due care in conducting the business of XYZ.Avoid all direct or indirect political campaign intervention (such as supporting or opposing candidates for public office) in the name of XYZ and when using XYZ assets. Contribute to the financial well-being of XYZ and seek financial support from others for XYZ as well.Avoid all conflicts of interest with XYZ.Be loyal to XYZ, always exercising board powers in the interest of XYZ, and not for the interest of yourself or others.Keep all XYZ matters confidential.Signed: _________________________ _________________________ XYZ Chief Executive Board MemberDated:_________________________Sample #3 This brief statement of understanding uses a series of “I will” statements.Board Statement of UnderstandingAs a board member of XYZ, I am fully committed and dedicated to the mission and have pledged to carry out this mission. I understand that my duties and responsibilities include the following: I am fiscally responsible, with other board members, for this organization. I will know what our budget is and take an active part in reviewing, approving, and monitoring the budget and fundraising to meet it.I am legally responsible, along with other board members, for this organization. I am responsible to know and oversee the implementation of policies and programs.I accept the bylaws and operating principles manual and understand that I am morally responsible for the health and well-being of this organization.I will give what is for me a substantial financial donation. I may give this as a one-time donation each year, or I may pledge to give a certain amount several times during the year.I will actively engage in fundraising for this organization in whatever ways are best suited for me. These may include individual solicitation, undertaking special events, writing mail appeals, and the like. I am making a good-faith agreement to do my best and to raise as much money as I can.I will actively promote XYZ, encourage and support its staff, and work in concert with the steering council.I will attend board meetings, be available for phone consultation, and serve on at least one XYZ committee. If I am not able to meet my obligations as a board member, I will offer my resignation.In signing this document, I understand that no quotas are being set, and that no rigid standards of measurement and achievement are being formed. Every board member is making a statement of faith about every other board member. We trust each other to carry out the above agreements to the best of our ability.Signed _____________________________Date____________Sample #4 This lengthier sample covers general responsibilities, but also establishes minimum financial contributions and an expectation to resign if a board member is no longer able to adhere to this contract.Board Member AgreementAs a member of the board of XYZ, I understand and agree that I am responsible, collectively with my fellow board members, for ensuring effective governance of fiscally sound programs as well as strategic direction of the organization. To that end, I understand my responsibilities require me tounderstand and ensure that XYZ reaches its mission and visionunderstand the values of XYZ and use them in my decision makingattend all regular and special board meetings and actively participate in proceedings serve on at least one committee. Attend all regular committee meetings and actively participate in the proceedings.be accessible, at least by phone or e-mail, to staff and other board members as neededparticipate in board member orientationsupport XYZ by making a meaningful financial gift to the organization of at least $__ each calendar yearsolicit the financial, in-kind, and political support of others, including employers and friends, and obtain at least $__ in actual donations made to XYZ each fiscal year, in addition to my personal contribution attend as many organization events and fundraisers as possibleshare resources and talents with the organization, including expertise, contacts for financial support, and contacts for in-kind contributionsserve as an advocate for the organization within my circles of influence — personal, business, faith, civic, etc.fulfill commitments within agreed-upon deadlinesmaintain and promote high ethical standards including good-faith board decision making and avoiding an actual or perceived conflict of interest with other activities, interests, and/or organizations with which I may be involved maintain the confidentiality of the private information of the organization, staff, clients, and other board membersunderstand and approve global XYZ policiesbe fiscally responsible for the organization by being familiar with and approving XYZ’s budgetcommunicate effectively and respect the diverse opinions of othersagree that in the event, for whatever reason, I can no longer fulfill my duties and responsibilities as an XYZ board member, I will immediately notify the board chair and make arrangements to transfer any outstanding responsibilities to other members of the boardSignaturePrinted NameDateSample #5 This document stresses the moral, fiscal, and legal role of board members. Besides listing expectations of individuals, it also states what the organization will provide in return.Statement of Covenant for Board MembersAdopted by the board of directors [month, day, year]; updated [month, day, year]As a board member of XYZ, I, _______________________, understand that my duties and responsibilities include the following:I am morally responsible for the health and well-being of this organization. As a member of the board, I have pledged myself to help realize the mission, which is: [Insert mission statement here.]I am fiscally responsible, with the other board members, for this organization. It is my duty to know what our budget is, to be active in planning that budget, and planning the fundraising to meet that budget.I am legally responsible, along with other board members, for this organization. I am responsible to know and approve all policies and programs, and to oversee the implementation of policies and programs. I will attend all board meetings unless circumstances beyond my control prevent my attendance, and I will be available for home consultation. I will read materials sent to me in advance of the board meetings. I understand that if I am absent without excuse from regularly scheduled board meetings more than __ times in a year that I will be asked to resign from the board. I know that if I neglect my duties or if I act in bad faith, it may be possible for me to be held personally liable in suits brought by a private person, a business, a governmental entity, or even the organization itself. However, I understand that I am not responsible for the day-to-day operations of the organization as these are the responsibility of the chief executive. My one direct management responsibility, along with other members of the board, is the selection and supervision of the chief executive. I will give what is for me a significant donation. I may give this as a one-time donation each year, or I may pledge to give a certain amount several times during the year.I will work to raise money for XYZ, in whatever ways are best suited for me. These may include individual solicitation, helping with special events, writing mail appeals and the like. There is no set amount of money that I must raise because I am making a good-faith agreement to do my best, and bring in as much money as I can.I will act with the care and loyalty required of board members, and put the interests of the organization first. I will observe the organization’s conflict-of-interest policy in letter and spirit, taking care to disclose publicly any conflicts that arise in the course of my business or the organization’s, and to recuse myself from decisions that create or appear to create a conflict of interest for me.I promise to preserve the investment of time and money made over years by all the donors and volunteers who created this organization and brought it to this point. Every board member is making a statement of faith to carry out the above agreements to the best of our ability, each in our own way, with knowledge, approval, and support of all.In its turn, XYZ is responsible to me in a number of ways:I will be sent, without request, regular financial reports that allow me to review XYZ’s financial position.I can call on the paid staff to discuss program and policy, goals, and objectives.Board members and staff will respond in a straightforward and thorough fashion to any questions I have that I feel are necessary to carry out my fiscal, legal, or moral responsibilities to this organization.D&O insurance will be provided.Signature of Board MemberDateFor board term beginning and ending Suggested ResourcesLakey, Berit M. The Board Building Cycle: Nine Steps to Finding, Recruiting, and Engaging Nonprofit Board Members, Second Edition. Washington, DC: BoardSource, 2007. Ingram, Richard T. Ten Basic Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Lakey, Berit M., Sandra R. Hughes, and Outi Flynn. Governance Committee. Washington, DC: BoardSource, 2004.Sample Board Chair Job Descriptions IntroductionThe job of the board chair is one of the most challenging roles in the nonprofit world. A successful chair inspires a shared vision for the organization and its work, builds and nurtures future board leadership, and manages the work of the board. This position demands exceptional commitment to the organization, first-rate leadership qualities, and personal integrity. For many boards, success may rest heavily on the individual chosen to lead it. Key ElementsAs the chief volunteer officer, the board chair’s duties run from managing the board to working closely with the chief executive. Additional duties may relate to his or her role as a spokesperson for the organization. If the board has an executive committee, the board chair also chairs this committee.In functioning as the team leader of the board, the board chair sets goals for the board, involves all board members in the work of the board (during meetings and through committee assignments), serves as the contact for all board members on board issues, and facilitates board meetings.In working closely with the chief executive, the board chair may be assigned responsibility for managing the overall board-chief executive relationship, such as developing meeting agendas and coordinating the executive’s annual performance review.Practical TipsThe chair’s role is usually defined in the bylaws, but a separate job description should be created to outline the duties in more detail.The official title of the chief volunteer officer varies from organization to organization. The terms “chair” and “president” are one in the same, and the organization’s bylaws should dictate which is used. The most common — and least confusing — title is that of “chair.” This prevents confusion with the chief staff officer, who may have a title of president and chief executive officer. Also, a title of “chair” accommodates both men and women board leaders.If the expectations for the board chair become too demanding and the position too time-consuming, it will be difficult to recruit new chairs. Often, some of the responsibilities and tasks can be shared with other board officers to make the position more reasonable for a volunteer.Sample Board Chair Job DescriptionsThe seven job descriptions run the gamut from brief and broad to formal and focused.Sample #1 This bylaws clause broadly defines the role of the board chair.Applicable BylawsArticle __, Section __ Board Chair: The board chair shall preside at all meetings of the organization, and of the executive committee and board of the organization. The board chair shall exercise general supervision over the affairs of the organization and shall be an ex officio member of all committees of the board. He or she shall have the power to sign with the chief executive, in the name of the organization, all contracts authorized either generally or specifically by the board. The board chair shall appoint the chairs of all committees and task forces of the board and perform other duties as may be assigned by the board.In the absence of the board chair, the board chair-elect shall perform the duties of the board chair.Sample #2This short statement lists the main duties of the chair as they relate to the functions of the board.It shall be the duty of the board chair to preside at all meetings, to guide the board in the enforcement of all policies and regulations relating to XYZ, and to perform all other duties normally incumbent upon such an officer. The board chair shall appoint all members, including the chair of each standing committee and all other committees deemed necessary by the board. The board chair may serve as an ex officio member of each committee, except the nominating committee, but may not vote.Sample #3 This brief sample clarifies the authority of the chair as the leader of the board and the manager of board practices.Board Chair’s RoleThe responsibility of the board chair is, primarily, to ensure the integrity of the board’s process. The chair is the spokesperson for the board itself, other than in specifically authorized instances when others fill that role. The chair ensures that the board operates within its own rules and those legitimately imposed upon it from outside. Business meetings will focus on policy clearly belonging to the board, not the staff. The chair has no authority to make policy decisions for the board, but is expected to help the chief executive interpret board policy. Sample #4 This basic list outlines expectations for the chair of an organization that does not have a large staff.Responsibilities of the ChairBe directly responsible to the board for the administration of the association.Appoint committee chairs and members as necessary and delegate committee activities, with board approval.Appoint members to fill other positions, such as liaisons, editorial positions, section chairs, and focus group leaders, as appropriate with board approval.Preside at all board meetings.When appropriate, serve as the official representative and spokesperson of XYZ.Approve all contracts into which XYZ enters. Responsibility may be delegated to the chief executive.Serve on the executive, budget and finance, and other committees as appropriate.Provide a report at each board meeting of his or her activities since the previous board meeting.Perform any other duties that are necessary for the successful execution of XYZ’s mission.Sample #5 This brief job description elaborates on core board chair duties towards the organization, chief executive, board processes, and community.Board Chair Job DescriptionGeneral: Ensures the effective action of the board in governing and supporting the organization and oversees board affairs. Acts as the representative of the board as a whole, rather than as an individual supervisor to staff. Community: Speaks to the media and the community on behalf of the organization (as does the chief executive); represents the organization in the community.Meetings: Develops agendas for meetings in concert with the chief executive. Presides at board meetings. Committees: Recommends to the board which committees are to be established. Works with committee chairs in seeking volunteers for committees and coordinating individual board member assignments. Makes sure each committee has a chair and stays in touch with committee chairs to be sure that their work is carried out; identifies committee recommendations that should be presented to the full board. Determines whether executive committee meetings are necessary and convenes the committee accordingly. Chief Executive: Establishes search and selection committee (usually acts as chair) for hiring a chief executive. Convenes board discussions on evaluating the chief executive and negotiating compensation and benefits package; conveys information to the chief executive. Board Affairs: Ensures that board matters are handled properly, including preparation of pre-meeting materials, committee functioning, and recruitment and orientation of new board members.Sample #6 This more comprehensive job description outlines the various functions of the board chair position in relation to overall board responsibility categories.The Board ChairPosition SummaryThe board chair is the senior volunteer leader of XYZ and presides at all meetings of the board, the executive committee, and other meetings as required. Key ResponsibilitiesPolicy and Planning: Works with the chief executive and the board to establish the guiding principles, policies, and mission for the organization — for example, by initiating a regular review of the organization’s strategic plan and mission to keep them fresh and relevant, and by establishing metrics to measure success. Budget and Finances: Works with the appropriate board members to oversee the budget of the organization and assumes ultimate responsibility for the integrity of its finances — for example, by overseeing independent outside audits and, as appropriate, internal audits as well. Board Meetings: Leads and facilitates board meetings by making sure that the agenda is closely followed, every board member has the opportunity to participate in discussions, and the board uses proper decision-making procedures. Board Committees: Serves as an ex-officio member of all board committees and works to structure a committee system that contributes to the board’s overall effectiveness. Board Development: Oversees efforts to build and maintain a strong board by setting goals and expectations for the board, cultivating leadership among individual board members, and working with the nominating committee to make board development a priority. Board Recruitment and Orientation: Works with the nominating committee to identify and recruit new board members who bring important skills and knowledge to the board. Board Evaluation: Works to make sure the board has opportunities to reflect regularly on how well it is meeting its responsibilities to the organization — in part by overseeing a board self-assessment every __ years. Staff Oversight, Compensation, and Evaluation: Oversees the hiring, evaluation, and compensation of the chief executive; and works to develop a succession plan for the chief executive’s position — for example, by making sure that other staff members have the capabilities they need to lead the organization. Fundraising: Guides the work of the board to secure funds for the organization by overseeing the development of fundraising policies, encouraging and supporting the fundraising efforts of the development committee and individual board members, soliciting contributions from board members and selected outside contributors, and setting an example by contributing his or her own funds to the organization. Public Relations and Communications. Speaks for the board in the event of a controversy or crisis; oversees the development of communications policies; and works to promote the work of the organization in conversations, speeches, interviews, and other day-to-day activities. Sample #7 This detailed job description addresses all aspects of the board chair’s position, from purpose to qualifications.Title: Chair of the BoardPurposeThe chair is the senior volunteer leader of XYZ who presides at all meetings of the board, the executive committee, and other meetings as required. The chair is an ex officio member of all committees of the organization. The board chair oversees implementation of organizational policies and ensures that appropriate administrative systems are established and maintained. Key ResponsibilitiesWorks with the chief executive, board officers, and committee chairs to develop the agendas for board meetings, and presides at these meetings.Appoints volunteers to key leadership positions, including positions as chair of board committees and service committees.Supports annual fundraising with his or her own financial contributions. Recognizes his or her responsibility to set the example for other board members. Thanks and solicits other board members.Works with the board and paid and volunteer leadership, in accordance with XYZ bylaws, to establish and maintain systems forPlanning the organization’s human and financial resources and setting priorities for future developmentReviewing operational and service effectiveness and setting priorities for future developmentControlling fiscal affairsAcquiring, maintaining, and disposing of propertyMaintaining a public relations program to ensure community involvementEnsuring the ethical standardElected By: BoardLength of Term: __ year(s)Time Commitment: Negotiable to meet the requirements of the organizationReports To: BoardSupport: Chief executive QualificationsA commitment to XYZ and its values; an understanding of XYZ’s objectives, organization, and services; and the responsibilities and relationship of paid and volunteer staffKnowledge of and influence in the communityAbility to understand concepts and articulate ideasBudget SupportTravel and maintenance, work space, telephone, postage, and computer equipment, as appropriate, and costs of conferences and conventions.Suggested ResourcesBoardSource. The Source: Twelve Principles of Governance That Power Exceptional Boards. Washington, DC: BoardSource, 2005.Wertheimer, Mindy R. The Board Chair Handbook, Third Edition. Washington, DC: BoardSource, 2013.Ingram, Richard T. Ten Basic Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.“Ten Essential Responsibilities of Foundation Board Chairs,” BoardSource Learning Center Member Resource. Sample Board Officer Job Descriptions IntroductionThe most common board officers, beyond the chair, are vice chair, secretary, and treasurer. These positions are most frequently defined by state laws. The law may also indicate whether one individual can hold more than one officer position. In addition, some organizations have a chair-elect, which is one way to secure future leadership for the organization. Specific officer duties may vary greatly from board to board. Particularly as the organization hires new and different staff, it is important to review and update officer job descriptions to reflect any changes in their focus. The objective is not to turn board officers into staff supervisors or duplicate any management functions.Key ElementsVice Chair: The office of vice chair provides the board with additional and substitute leadership. The vice chair generally fills in for the chair when the chair is absent and/or must leave the position permanently and without warning. The vice chair often takes on special projects, and some boards may divide various duties among two or more vice chairs.Chair-Elect: In some cases, a board may determine a candidate to succeed the board chair before the chair’s term in office has concluded. The chair-elect may be given specific tasks, such as heading up the strategic planning task force. This position may provide a useful leadership development training ground and help to ensure a smoother transition when he or she assumes the role of board chair. In many professional associations, the chair-elect may be elected or appointed by the membership at large.Treasurer: The key volunteer financial management role in nonprofit organizations is the treasurer. The treasurer is responsible for overseeing financial operations to make certain that things are done in an appropriate fashion. In staffed organizations, the financial records are kept by the chief financial officer, comptroller, or accountant. In smaller organizations the treasurer may have hands-on responsibilities. Secretary: Depending upon the organization’s size and staff, the job of recording minutes can fall to either a board member or a staff member. In the event that a staff member fills the position, the board’s official secretary should review the minutes prior to distribution. In addition, the board secretary acts as the custodian of the board’s records, although in most circumstances the board’s important documents are kept in the organization’s offices.Practical TipsAs in the case for the chair, the primary roles for these positions are generally defined in the bylaws; however, consider creating separate job descriptions to describe the specific responsibilities of the officers.On some boards, the individual serving as vice-chair may naturally assume the role of chair. In order for this assumption to be automatic, it must be defined that way in the board’s policies.It is possible, and increasingly common, to combine the secretary and treasurer into one officer position. However, separate individuals should hold the chair and treasurer positions.Particularly for reasons of accountability and balance, and increasingly to meet the requirements of the nonprofit corporation laws of some states, consider appointing an audit committee to act as the main liaison to the outside auditor, electing someone other than the treasurer to serve as chair of the finance committee.As the organization grows and financial staff is added, the role of the treasurer will change. Make sure the bylaws reflect this change.Sample Job Descriptions for Other Board OfficersThe sample job descriptions include variations on common themes, with the first in each category capturing the basic responsibilities of that position. Sample #1 This very brief job description defines the purpose of the vice chair simply as presiding over the board in the chair’s absence.Title: Vice ChairPurpose: To preside in board chair’s absenceKey ResponsibilitiesIn board chair’s absence:Presides at meetings of the boardServes as chair of executive committeeServes as member of standing committeesSample #2 This short job description defines the role of the vice chair as supporting the chair.Vice Chair Job DescriptionAttend all board meetings.Serve on the executive committee.Carry out special assignments as requested by the board chair. Understand the responsibilities of the board chair and be able to perform these duties in the chair’s absence. Participate as a vital part of the board leadership.Sample #3 This sample delegates specific responsibilities to the chair-elect, including acting as liaison to the organization’s chapters, if applicable. Chair-Elect Job DescriptionResponsibilitiesPrepares to assume the office of the board chairFills the office of board chair should that office become vacant, and subsequently fills the office of chair for a regular term as is entitled to the chair-electAssists the board chair in the execution of his or her dutiesCoordinates the liaison activities between the board and chapters Serves on the executive committee.Provides a report at each board meeting of his or her activities since the previous board meetingPerforms any other duties as assigned by the board chairSample #4 This brief job description outlines responsibilities commonly assigned to the treasurer and includes chair duties for the finance committee.Board Treasurer JOB DESCRIPTIONRequirementsKnowledge of the organization and personal commitment to its goals and objectivesUnderstanding of financial accounting for nonprofit organizationsResponsibilitiesServes as financial officer of the organization and as chair of the finance committeeManages, with the finance committee, the board’s review of and action related to the board’s financial responsibilitiesWorks with the chief executive and chief financial officer to ensure that appropriate financial reports are made available to the board on a timely basisAssists the chief executive or the chief financial officer in preparing the annual budget and presenting the budget to the board for approvalReviews the annual audit and answers board members’ questions about the auditSample #5 This sample provides a detailed list of tasks for the treasurer, including working with the organization’s regional chapters, if any. Board Treasurer job descriptionResponsibilitiesReview the monthly financial report, compare expenses with budgets and income, identify and anticipate problem areas, and work with committee chairs and/or board members to correct those problems.Assist board members and committee chairs with appropriate financial matters.Assist with the development of a balanced budget.Prepare and present appropriate reports.Answer correspondence related to XYZ financial matters, as municate financial information to organization’s chapters and individual members. Assist with the process of chapter audits. Conduct the annual chapter treasurer’s meeting. Oversee the financial aspects of board decisions.Work to maintain a strong financial position.Work with the organization and the corporate accountant to develop a long-term financial strategy.Work with the auditor and organization in assessing the annual financial condition of the organization.Serve as a member of the strategic planning committee.Annually review and revise, as needed, budget preparation materials.Annually review and revise, as needed, the chapter treasurer’s manual. Chair the treasurer’s advisory committee and oversee activities of the regional representatives. Sample #6 This document is a full-fledged job description for a board treasurer, complete with qualifications and a recommendation for providing opportunities for leadership development.BOARD TREASURER JOB DESCRIPTIONTitle: Board TreasurerPurpose: The treasurer, jointly with the board chair and finance committee chair if other than the treasurer, ensures that current records are maintained, reflecting the financial condition of XYZ. These records will include cash, outstanding advances, investments, accounts receivable and other assets, accounts payable, and fund balances (net assets).Key ResponsibilitiesControl all XYZ funds.Participate in the preparation of the budget.Serve as the chair of the finance committee.Ensure that accurate books and records on financial condition are maintained.Ensure that the assets are protected and invested according to organization policy.Ensure that XYZ complies with organization and statutory reporting requirements.Ensure that comprehensive financial reports to the board are prepared in a timely and accurate manner.Ensure that the complete records of the organization are available to the individual or individuals preparing the annual financial statements.Perform all duties incident to the office of the treasurer.Reporting: The treasurer reports to the board chair and to the board.Support: The treasurer is supported by the finance committee and the chief financial officer (or the equivalent).Time Commitment: As required to accomplish major duties.Requisite Qualifications: The treasurer must display a commitment to XYZ and an understanding of XYZ and its principles, mission, goals, services, and the responsibilities and relationships of governance and management of paid and volunteer staff.The Treasurer Must Also Display the Following:An understanding of needs for XYZ services, as well as the financial and human resourcesAn understanding of the record keeping, accounting systems, and financial reportsAn ability to work with the chief financial officer, controller, accountant or bookkeeper, and auditors as necessaryLeadership Development Opportunities: The treasurer should have the opportunity to attend and participate in training courses, conferences, and seminars, as appropriate.Sample #7 This job description outlines fiscal duties assigned to the treasurer in an all-volunteer organization. BOARD TREASURER JOB DESCRIPTIONThe treasurer duties consist of the following:Subject to the direction and control of the board, have general charge of the financial affairs of the organization.Collect and receive all money due or belonging to the organization and give receipts.Disburse or cause to be disbursed the funds of the organization as may be directed by the board, taking proper vouchers for such disbursements.Keep and maintain adequate and correct accounts of the organization’s properties and business transactions, including accounts of its assets, liabilities, receipts, and disbursements.Exhibit at all reasonable times the books of account and financial records to any director or officer of the organization or to his or her agent or attorney, upon request of the same.Obtain services of a competent professional (if needed) to perform filing of both state(s) and federal annual tax returns.Render to the chair and directors, at each monthly board meeting or whenever requested, and at each annual meeting, an account of any or all of his or her transactions as treasurer and of the financial condition of the organization. Sample #8This short sample assigns the treasurer role to the chief staff financial officer. This position is a nonvoting board position.The treasurer (a nonvoting member) shall have general responsibility for the organization’s funds and accounts, subject to the order of the board. He or she shall cause proper books of accounts to be kept, which at all reasonable times shall be open to the examination of any member of the board, and reports therefrom shall be rendered at such times as the board shall direct. The organization’s chief staff financial officer will fill the treasurer position. Sample #9 This job description focuses on the secretary’s responsibility for documenting board meetings.BOARD SECRETARY JOB DESCRIPTIONTitle: Secretary of the BoardPurpose: To ensure that actions of the board are documentedKey ResponsibilitiesIn advance of meetings, provide written agendas of the sessions of the full board and the meetings of the standing committees.In advance of meetings, distribute to board members appropriate background information on subjects to be discussed.Prepare and provide written minutes to board members in the specified time.File the approved minutes and maintain the official list of board members in accordance with procedure.Sample #10 This job description frames the duties of the secretary as the custodian of organizational documents. BOARD SECRETARY JOB DESCRIPTIONThe secretary shallcertify and keep at the principal office of the organization the original or a copy of the bylaws as amended or otherwise altered to datekeep at the principal office of the organization, or at such a place as the board may determine, a book of minutes of all meetings of the directors and meetings of committees. Minutes shall record time and place of meeting, whether regular or special, how called, how notice was given, the names of those present or represented at the meeting, and the proceedings thereof.ensure that all notices are duly given in accordance with the provisions of the bylaws or as required by law be custodian of the records and of the seal of the organization and affix the seal, as authorized by law or the provisions of the bylaws, to duly executed documents of the organizationin general, perform all duties incident to the office of the secretary and such other duties as may be required by law, by the articles of incorporation, or by the bylaws, or which may be assigned to him or her from time to time by the boardSample #11 This sample delegates certain secretarial responsibilities to a staff member who serves as a nonvoting member of the board.The secretary (a nonvoting member) shall sign the board meeting minutes after ratification by the board at the next meeting of the board. Further, the secretary will execute official documents as required on behalf of the organization. The secretary will be an organization staff member as elected by the board. Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Part III: Board PracticesBoard TermsSize of the BoardCompensation of Board MembersBoard Member Expense ReimbursementBoard Self-AssessmentElection of OfficersBoard Member RemovalSabbaticalsVacancy FillingCEO on BoardQuorum for Board MeetingsSpecial MeetingsVirtual Meetings and E-VotingNotice of MeetingsExecutive SessionsImdemnificationDissolutionBoard TermsIntroductionRenewal is essential to the productivity and wellness of a board. Implementing term limits prevents stagnation and allows for the Introduction of new ideas; even the best of boards require new ideas to encourage creativity and innovation.According to the recent BoardSource Nonprofit Governance Index, the most common length of a full term is two to three years, renewed once or twice. This provides adequate time for a member to learn the ropes and get fully engaged.Often it is difficult to let a particularly committed board member go, but there are numerous ways a former member can remain connected. For example, you can form special advisory groups for board members whose advice and assistance you want to rely on or invite these individuals to serve on committees or take leadership roles in your events or other outreach activities.Key ElementsEnsure that you do not lose all or a majority of board members at one time. This can be avoided by installing staggered terms. For example, renew one-third of the board annually.Differentiate between term length and number of terms a board member can serve. Consider different terms for officers and board members to provide more opportunities for leadership positions.Practical TipsNever renew a term without evaluating the board member’s prior performance. Otherwise, you risk nullifying the entire effect of term limits.Use a spreadsheet or form to keep track of your board members’ terms.Determine how to keep valuable retiring board members involved with the organization. Use term limits as a graceful way to remove board members who are less productive.Sample Board Term PoliciesThe samples emphasize a staggered system to ensure that organizational memory is retained on a regular basis.Sample #1The first sample initiates a staggered term structure.The members of the board of directors shall be elected by the directors at the annual meeting of the board. At the time of his or her election, each director shall be assigned to Class A, Class B or Class C, and an effort shall be made to keep each class of directors of approximately equal size. Each director shall hold office for a term of three years, except that for the initial board elected at the organizational meeting in 2012.Directors in Class A shall have their term expire in 2013 (and every three years thereafter). Directors in Class B shall have their term expire in 2014 (and every three years thereafter). Directors in Class C shall have their term expire in 2015 (and every three years thereafter). Sample #2This sample provides the opportunity for trustees to return to the board after a break in service. This model allows for new blood, but also for extended service by particularly dedicated people.Trustees shall be elected to the Board of Trustees for an initial term of 3 years. No trustee can serve more than two full terms without at least one year off before serving another term. Terms run from January 1 to December 31 each year.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Size of the BoardIntroductionThe size of your board is less important than the composition of your board and how well each member accepts the responsibilities of board service and is fully engaged in that work. When building your board, ensure that you define diversity in the broadest sense possible. Do you have the right mix of backgrounds, skills, expertise, attitudes, and perspectives? By drafting and maintaining a board profile matrix, you can be strategic about your recruitment efforts and focus on securing the attributes that your board needs the most in its members at any given time. Key ElementsQuality is more important than quantity. Assess the needs of your board before settling on the number of board members required. Every state has a statute limiting the minimum size for the board. This number varies from one to three. Remember that this is a legal reference and not necessarily a good practice. Few boards manage to reach their potential with so few members.Sometimes board size is influenced by mandates. The board may need to fill specific quotas or an outside authority may have the right to nominate board members. Reflect on these requirements periodically to determine if they need tweaking.Practical TipsIf your state laws do not prevent it, set a range for the size of your board in your bylaws. This allows you to address a sudden loss of members or take advantage of unexpected promising candidates.Periodically discuss your board’s optimal size. Try to justify decreasing or increasing the number of board members.Sample Board Size PoliciesThese sample policies state the minimum and/or the maximum size for the board.Sample #1This is a short, straightforward policy. The board shall have up to _________ and not fewer than __________ members.Sample #2Sometimes a board qualifies membership by age, regional representation, organization membership, or other characteristics. This policy does not mention a minimum size.The Board of Trustees for XYZ shall consist of up to fifteen (15) members all of whom must be eighteen (18) years of age or older. No decreases in the number of trustees shall have the effect of shortening the term of office of any incumbent trustee.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.“Does Board Size Really Matter?” BoardSource Learning Center Member Resource. Compensation of Board MembersIntroductionUnlike individuals who serve on boards of for-profit corporations, nonprofit board members are volunteers who are not usually compensated for their time. However, many boards have policies authorizing reimbursement of certain expenses. And, in some organizations, the full board or senior board officers may receive compensation for their services.The full board should discuss at length any decision related to board member compensation. This information appears in the Form 990.Key ElementsA compensation policy either states clearly that compensation is not provided or outlines acceptable fees for board service. Separate policies address reimbursement for expenses (see the next section) or how to handle potential payment for additional professional services.According to BoardSource’s research, only three percent of nonprofit board members are compensated for their board service. But, even if board members are not compensated, a statement to that effect is recommended. This can avoid future misunderstandings and be used during the recruitment process to manage expectations.If any board members are compensated, the policy should state that this compensation is approved by the board. Practical TipsCompensating board members may result in a loss of protection from personal liability available only to volunteer directors. Check your state laws before pensation is not illegal, but if the board decides to compensate its members, the pay must be reasonable and due diligence must be followed. Do the research to determine what other, similar organizations pay their board members.Payment for non-governance services and financial transactions for business purposes between a board member and the organization is treated differently than compensation for board service. Board members may be paid for performing a professional service for the organization that is outside of general board responsibilities. For those situations, establish a separate policy to address these kinds of potential conflict-of-interest situations and provide guidance on how they be handled (e.g., sending out RFPs for bids). (See Part I: Ethics and Accountability: Conflict of Interest.)Remind board members that fees for service (not reimbursement for expenses) are taxable income and must be reported by each individual in his or her own tax returns.Sample Board Member Compensation PoliciesPolicies related to board member compensation tend to be brief and explicit. The first three sample policies are for boards that do not compensate members for board service; the last two are for boards that do.Sample #1 This is a short, straightforward, no-compensation statement.Board members shall serve without compensation. Board members shall be allowed reasonable reimbursement of expenses incurred in the performance of their duties, including attendance at board-authorized meetings and conferences.Sample #2This statement, excerpted from the bylaws, allows payment to directors who perform professional services, such as accounting or legal services. Compensation: No compensation of any kind shall be paid to any director for the performance of his or her duties as director. Subject to Article _ (Conflict of Interest), this shall not in any way limit reasonable compensation for payment for services provided to XYZ by the director in any capacity separate from his or her responsibilities as a director, provided that there is full disclosure of the terms of such compensation and the arrangement has been approved by the board. The provisions of this section shall not in any way limit reimbursement of or payment for services provided to XYZ by any organization with which a director is affiliated. Sample #3This sample statement defines procedures for hiring and compensating board members for their professional pensation of Board Members PolicyTo avoid a conflict-of-interest situation between an individual board member and XYZ, the following procedure will be observed:If the board member is asked or volunteers to perform a service in his or her capacity as a board member, the board member will not charge or be reimbursed for the service. Example: A board-member attorney is requested by the board to research and/or give an opinion regarding director liability. That task will be done by the attorney as a volunteer board member at no charge.If the board member is requested by the organization to perform a service or provide a product to the organization, competitive bids will be sought and/or comparable valuation determined. If the contract is awarded by a vote of the disinterested directors, the board member will be paid accordingly for the service or product.Sample #4 This statement provides for board member compensation based on attendance at meetings and events related to board service.Board Member CompensationEach board member may receive compensation of $__ per day, or portion thereof, for attending board meetings and for performing other services on behalf of the organization, not to exceed __ dollars per year. Any board member may waive all or any portion of his or her compensation for any month or months during his or her term of office, by a written waiver filed with XYZ. The waiver may be filed any time after the director’s election and before the date on which the compensation would otherwise be paid. The waiver shall specify the month or period of months for which it is made.Policy and ProceduresA board member is eligible to receive compensation at the rate of $__ per day, or for a portion of a day, for the following activities:Attending regular or special meeting of the board.Serving as a designated representative of the board, including, but not limited to, such activities as committees, community development and/or betterment committees, collective bargaining, etc.Attending board-approved training and/or development activities, including, but not limited to, regional, state, or national association conferences; board in-service meetings; etc. This may also include time involved in traveling to and from the activity.Attending special board-related activities when approved by the board in advance, including, but not limited to, building dedications, staff retirements, and other such ceremonies.Total compensation for a calendar year shall not exceed $__, plus reasonable expenses incurred for travel, meals, and lodging.A board member shall submit a monthly claim that verifies the nature and amount of approved activities for which compensation is claimed during the month. A board member is only eligible to make one compensation claim for a given day.Sample #5 This sample provides for board member compensation based solely on meeting attendance. Members of the board who attend all official board meetings shall receive a stipend of $__ per month for attendance at board meetings and travel to such meetings. A member of the board who does not attend all meetings held by the board in any month shall receive, as compensation, an amount not greater than the pro rata share of the number of meetings actually attended.A member of the board may be paid for a meeting when absent if the board, by resolution, finds that at the time of the meeting the member is performing services outside the meeting for the organization, is ill, is on jury duty, or the absence is due to a hardship deemed acceptable to the board.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book. San Francisco: Jossey-Bass, 2012. Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Panel on the Nonprofit Sector. Strengthening Transparency, Governance, Accountability of Charitable Organizations. A Supplement to the Final Report to Congress and the Nonprofit Sector. Independent Sector, 2006.Board Member Expense ReimbursementIntroductionExpense reimbursement policies specify who can be reimbursed for what expenses. Board members need guidelines for acceptable expenses, particularly when required to travel to meetings or annual conferences. Different organizations take different approaches to reimbursing board members. Some organizations expect board members to cover their own expenses; others provide reimbursement upon request, but only up to a specified amount; still others provide per diems to all board members.Key ElementsWhen a board member pays for supplies and materials for additional work as a volunteer for the organization (i.e., apart from the traditional role of board member), the nonprofit often reimburses him or her for actual expenses approved, incurred, requested, and documented.Some nonprofits rely on government reimbursement policies.In general, it is inappropriate to cover any expenses related to travel to board meetings and events for a board member spouse. Attendance of a board member spouse at a nonprofit function is not considered necessary (unless the spouse is representing the organization on official business and has bona fide duties to perform). Otherwise, this becomes an issue of compensation. Practical TipsThe reimbursement policy should clarify the acceptable parameters for reimbursement, such as class of airfare, level of accommodations, gas mileage rates, etc.Sample Board Member Expense Reimbursement PoliciesThe various policies are arranged in order of general to specific and short to long.Sample #1 This brief policy is a clear, generic policy that lets the board member decide whether he or she requests reimbursement.Reasonable travel expenses of board members who reside at least __ miles from the site of the board meeting may be reimbursed for attending regularly scheduled board, executive, and finance committee meetings.A voucher will be placed in board members’ folders at each meeting. The voucher should be filled out and returned to the organization secretary at the meeting. A receipt or ticket stub must accompany the voucher. A check will be sent to reimburse the board member.Sample #2 This brief policy recognizes that travel expenses may be an exceptional burden for some board members and provides a discreet method for requesting reimbursement.Whenever possible, board members are expected to bear all travel-related costs associated with attending board meetings, committee meetings, or discharging any other governance responsibilities assigned by the board chair. When a board member is unable to bear such costs, in whole or in part, appropriate receipts should be submitted to the chief executive of XYZ for reimbursement by the organization.Sample #3 This basic policy addresses government regulations and provides some parameters for reimbursement, such as per diems and official events.Expense Reimbursement PolicyXYZ’s board reimbursement policy shall be reviewed annually by the secretary/treasurer and the board. The organization’s travel mileage reimbursement shall be equal to the current IRS reimbursement amount.So that the amount of the reimbursement is not considered taxable income to the recipient, XYZ will reimburse lodging expense on an actual basis provided that the amount is reasonable and receipts are attached.The organization will reimburse members traveling on official organization business the cost of round-trip coach-class travel, housing cost, and meals up to a maximum of $__ per day. Guest travel, housing, and meals are generally not reimbursable. Annual meeting reimbursement will include the following:Travel: Round-trip airfare for XYZ’s board member up to a maximum of economy coach class, and local transportation to and from the airport.Per Diem: Actual expenses up to a maximum of $__ a day for __ days only (one extra day will be allowed if necessitated by committee/board meeting attendance).Reimbursement is allowed for reasonable, ordinary, and necessary expenses incurred in connection with approved expenses or travel on behalf of XYZ. Any exception to this policy must be approved by the XYZ board chair.Sample #4 This more detailed sample policy defines what constitutes acceptable expenses for reimbursement.XYZ Business ExpensesTravelTravel of the board will be reimbursed under the following circumstances and according to these provisions:Board MeetingsThe board meets annually to transact the business of XYZ.XYZ will pay round-trip air travel from the board member’s home to the site of the meeting. It is expected that board members will procure the most reasonable fares possible. In the event that a board member wishes to travel by personal automobile, the member will be reimbursed at the rate of __ cents per mile, or the round-trip airfare, whichever is less.XYZ will pay hotel and meals (when not provided at meetings) for __ nights, double occupancy, for board meeting in conjunction with annual meeting.XYZ will pay hotel and meals for __ nights, double occupancy, at other board meetings, unless the meeting call specifies a shorter or longer period. All expenses incurred in attending XYZ meetings must be presented in voucher form with original receipts.XYZ BusinessTravel and other authorized expenses incurred in carrying out XYZ business may be reimbursed via properly executed voucher. Travel made at XYZ expense should be authorized by the board, for a specific travel purpose, or in an approved budget of XYZ.Sample #5This comprehensive policy provides considerable details about whom and what may be covered, and procedures for getting reimbursed.Who Is ReimbursedMembers of the board, committees, special committees, staff, and authorized representatives of XYZ shall be reimbursed for expenses incurred while on XYZ business.Reimbursement ProcedureThe XYZ Expense Statement is to be used for requesting reimbursement and should be submitted within __ weeks of completion of the trip, explained in full for all unusual items or amounts. Receipts are required for all expenditures billed directly to the organization, including credit card charges, airfare purchased through the organization, travel agent, and applicable hotel charges. Receipts are required for all expenditures paid by the traveler that exceed $__. Allow at least __ weeks after receipt at XYZ for reimbursement.Reimbursable Transportation ExpensesAirfare: The least expensive direct, nonstop commercial airfare in coach class will be reimbursable from the airport nearest the traveler’s home or office to the airport nearest the destination. Airline reservations should be made at least __ days in advance of travel. Detailed reservation reports should be sent to the XYZ business office. Any additional expense related to companion travel is the responsibility of the traveler. Preferred carriers may be utilized if the airfare is equivalent to the lowest fare available. Mileage earned and compensation for denied boarding awarded to the traveler while on XYZ business is the property of the traveler and may be used at the traveler’s discretion.Automobile, train, or bus: Total reimbursable expenses, including expenses incurred en route, shall not exceed the cost of airfare. Automobile expenses shall be reimbursed at XYZ’s thencurrent mileage reimbursement rate. Shuttle, taxi, personal automobile, or other similar cost means to and from the airport at the points of origin and destination, and taxi fare if essential for business purposes.Parking at the airport of origin if personal automobile is used. Parking at the meeting site if travel by automobile is required.LodgingLodging at the single-room rate for days of meetings, including night before and after if flight schedules make necessary such stays.MealsThe reasonable cost of meals while attending meetings and while in transit to and from the meeting site. If, in addition, meals are purchased for others, the individuals must be identified as those for whom XYZ has responsibility for such expenses; otherwise such expenses will not be reimbursed.Other ExpensesReasonable telephone and fax charges due to absence of traveler from the individual’s place of business. Reasonable and necessary gratuities that are not covered under meals:Airline Skycap$__ per bagCab Driver__% of fareShuttle Van Driver$__Hotel Bellman$__ per bagRestaurant Wait Staff__% of total billRoom ServiceGratuity is usually included in the billHotel Maid$__ per nightHotel staff who delivers a special request$__Note: These are only standard guidelines. All tipping should be based on service and is at the discretion of the traveler.Emergency administrative work and/or postage charges incurred by committee chairs and officers in carrying out the responsibilities authorized by the boardNon-Reimbursable ExpendituresTravel insurance: XYZ provides insurance coverage for volunteers and staff traveling on XYZ business.First-class upgrades in air travel.When lodging accommodations have been arranged by XYZ and the traveler elects to stay elsewhere, reimbursement is made at an amount no higher than the rate negotiated by XYZ, and reimbursement is not made for transportation between the alternate lodging and meeting site.If an individual accompanies the traveler, it is the responsibility of the traveler to determine the added cost for double occupancy and related expenses and to make the appropriate adjustment in the reimbursement request.Entertainment costs including movies, liquor, or bar costs.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Panel on the Nonprofit Sector. Strengthening Transparency, Governance, Accountability of Charitable Organizations. A Supplement to the Final Report to Congress and the Nonprofit Sector. Independent Sector, 2006.The Principles Workbook: Steering Your Board Toward Good Governance and Ethical Practice. BoardSource and Independent Sector, 2009. Self-AssessmentIntroductionThe objective of board self-assessment is to help the board improve its own work. It allows board members to better understand their own roles and responsibilities and how they can more effectively fulfill their obligations. The self-assessment process can develop the board’s team-building skills, provide structure for problem solving, and increase accountability within the organization.Simply going through the process is not enough. The board needs to analyze and learn from the results, and incorporate improvements in its future behavior and structure.The board’s policies on self-assessment may clarify whether and/or how individual board member performance evaluation is incorporated. Equally, the board may have policies on meeting and committee evaluations.Key ElementsSelf-assessment does not need to be an annual event, but the policy should state the objectives of regular performance evaluation.The policy needs to clarify that the assessment is necessary for reappointment before terms are renewed. This applies to board members and officers.The assessment can be carried out by the governance committee; the policy may provide an option to hire an outside facilitator to help with the discussions and aid in the administration of the self-assessment process.Practical TipsGet each board member’s buy-in in order to make this a true group effort. Without consensus, the board simply won’t participate. Members should be assured that their answers to the questionnaire will remain confidential and that the objective of the exercise is not to be punitive but to improve the board’s future performance.If this is the board’s first self-assessment effort, a task force should be formed to explore how others have done it and what tools they have used. Board members should determine together which tool is acceptable and fine-tune it to address issues and questions that are important to the board. In addition, the board should determine how individual board member evaluation is included for the purpose of self-reflection. In any event, the board needs to address its general resistance to change. Change does not have to mean that everything from the past will be judged as unacceptable.Adequate time should be devoted to planning — starting well ahead of time in order to ensure that board members may have the proper time set aside to complete the assessment. A date should also be agreed upon for a board retreat to discuss the results. The board should ensure that the final recommendations that come from the board retreat discussions will be implemented by creating proper follow-up procedures. Board members should be provided with possibilities for self-improvement and clarified duties and expectations. Lastly, the board should commit to repeat the process at least every 3–4 years.Sample Board Self-Assessment PoliciesThe brief sample statements do not set forth the process and expansive procedures for board self-assessment, but concentrate on the simple importance of this practice.Sample #1 This very simple statement commits the board to a regular self-assessment.The board shall conduct a selfappraisal at least every __ years to identify areas and actions for improvement. Sample #2 This brief policy provides guidelines on what and who will be evaluated, including individual board members.Boards have responsibility to assess periodically and comprehensively the performance of individual board members eligible for reelection or reappointment and the overall board’s effectiveness. This process should include evaluation of the board’s composition, process of identifying and recruiting prospective board members, committee structure, meetings, relationships with key constituencies, and overall performance. The XYZ board has established an annual evaluation process.Sample #3 This policy ties board self-assessment to the assessment of the organization.The board of XYZ will conduct a self-assessment every __ years at a time determined by the board chair after consultation with the chief executive. The board should review the most recent organizational strategic plan for the organization adopted by the board. After reviewing the goals achieved, the goals unmet, and the goals that need modification, the board will conduct a self-assessment. A review of these plans should provide the framework for the assessment. The board should also review its previous self-assessment summaries and may find the use of a consultant especially helpful. The board chair shall submit a summary report to the chief executive and the board at the conclusion of the assessment. This report will provide a basis for improving the biennial board member orientation, the board member conference held in the fall of odd-numbered years, and other programs of continuing education for board members.Sample #4 This sample sets the process for an annual self-assessment of the board as a group. It is not an assessment of the individual members.RationaleThe board is committed to assessing its own performance as a board in order to identify its strengths and areas in which it may improve its functioning.While the board sees its role of assessing its performance as ongoing, it sets aside time at its annual retreat to conduct a self-evaluation among its members. Purpose and ProcessThe purpose of the board self-evaluation is to identify those areas of board functions that are working well and those that may need improvement. The board self-evaluation speaks to the board as a whole, not to individual members. It is the evaluation process of the overall effectiveness of the board as a decision-making group.The following process will be used:A self-evaluation form will be distributed to all board members annually.The completed self-evaluation forms shall be submitted to the chancellor’s office at least __ week(s) prior to the regularly scheduled board retreat at which the self-evaluation will be discussed.The self-evaluation results shall be included as an agenda item for review at a regularly scheduled board retreat.The board will develop a remediation plan during a future board retreat within __ year(s) from the date of the initial approval of this administrative procedure.Suggested ResourcesLakey, Berit M. and George Hofheimer. Credit Union Board Self-Assessment: A Research Study. Madison, WI and Washington, DC: CUES and BoardSource, 2004.Board Self-Assessment. Online Tool. Washington, DC: BoardSource, 2009. Election of OfficersIntroductionState laws stipulate that a nonprofit must have at least one annual meeting per year. Officers and new board members are usually elected at this meeting.The most common officer positions — and required by most state laws — are chair, vice chair, treasurer, and secretary. Many boards combine secretary and treasurer into one position. To encourage interest in these positions, you should highlight the leadership qualities required. Key ElementsThe full board needs to participate in the officer election unless the organization has a formal membership structure that delegates that right to the membership.Officers do not have additional powers but do have supplementary responsibilities and should serve as role models for all board members. Involve the governance committee in developing, vetting, and negotiating with candidates for these positions.Practical TipsWhen possible, elect board members who are familiar with the organization and the role of the board. Use board service and committee leadership as the training ground for officer positions.Eliminate the sense of winners and losers for these positions by presenting only one strong candidate for each position to the board. Detailed job descriptions for each officer position do not need to be included in your bylaws but should exist and should be followed. Use the terms chair and vice chair rather than president and vice president. This eliminates confusion between the chief volunteer officer and the chief staff officer. Sample Officer Election Policies These officer election samples provide options for both self-perpetuating and member-elected boards.Sample #1This simple policy states that the board elects its own officers.The officers of the board of directors shall be elected by the directors at the annual meeting of the board. Officers of the board of directors shall serve for a term of [one year]. Sample #2This sample gives the responsibility for identifying final candidates to the governance committee.The governance committee creates the slate of candidates and manages the process in order to present the best candidates for the final board voting. Sample #3This basic sample is for member-elected boards.All officers and directors, except those who serve ex-officio, shall be elected by a plurality of voters at the annual meeting. Members may vote through their representative or a duly authorized proxy. Mail ballots may be authorized by the board in a manner determined by the board.Sample #4This sample provides more details for member-elected officers, beginning with the nomination process.A nominating committee appointed by the chair shall select candidates for office. The committee will present the slate of candidates to the board at least two months prior to the annual meeting. The recommended slate will be distributed to the membership at least one month prior to the annual meeting and election.Nominations may be made by any member of the association at any time prior to the election.A candidate for office must be a member of the association or represent a member institution. Ex-officio board members may not hold elective office.Each member or institutional representative shall have one vote.Sample #5This sample for member-elected boards introduces the role of the chair-elect.Elected Officers. The elected officers of the corporation shall be a chairman of the board, a chairman-elect, a secretary and a treasurer. All officers are elected by the membership of the coalition and serve until their successors have been duly elected and assume office. The chairman-elect shall automatically succeed to the chairmanship.Qualifications for Office. The representative from any regular member corporation in good standing shall be eligible for nomination and election to any elective office of this coalition, provided the member shall have served at least one (1) year as a member of the board of directors at any time prior to an elective term of office.Nomination and Election of Officers. In accordance with Article VIII, Section 3, the nominating committee shall prepare and submit to the members a nomination for chairman-elect, a secretary and a treasurer of the coalition. Any person so nominated shall have given prior consent to nomination and election as an officer.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Wertheimer, Mindy R. The Board Chair Handbook, Third Edition. Washington, DC: BoardSource, 2013.Board Member Removals IntroductionEven with a thorough vetting process, there are times when board members do not fulfill their responsibilities as expected and agreed upon. It therefore is crucial to have a process in place for removing board members. Without an established process, you may be forced to tolerate an apathetic or disruptive board member and miss the opportunity to fill the position with someone who has the potential to be an asset to the board. Key ElementsIn most cases, the body that elects the board can also remove board members.Clarify the reasons why a board member may be removed, such as criminal or unethical activity, breach of confidentiality, major conflict of interest, absenteeism, and on-going disruptive behavior. Simply having different opinions is not a reason to move a board member.Discuss with your lawyer the pros and cons of using the term “with or without cause.”Practical TipsBefore making removal official, the chair should discuss the issue with the board member to ensure that removal does not come as a surprise or, if appropriate, to provide the member with an opportunity to make the required changes. Sample Board Member Removal Policies Most of these sample policies use meeting attendance as an appropriate measure for good service. The number of absences determines the strictness of the policy.Sample #1This basic policy uses the term “with or without cause.”Any director may be removed from such office, with or without cause, by a [majority] [two-thirds] [three-fourths] vote of the directors at any regular or special meeting of the board called expressly for that purpose. Sample #2This straightforward policy focuses on unexcused absence.Unexcused absence from three consecutive regular meetings of the board shall constitute cause for removal of any trustee.Sample #3This policy is slightly more lenient than Policy #2.Board members who miss ___ (fill in number) consecutive meetings without a reasonable excuse may be asked to resign.Sample #4This policy enables a majority of the board to “save” an otherwise removed board member.Absence Any elected officer or director who shall have been absent from two (2) consecutive regular meetings of the board of directors during a single administrative year shall automatically vacate the seat on the board of directors and the vacancy shall be filled as provided by the bylaws; however, the board of directors shall consider each absence of an elected officer or director as a separate circumstance and may expressly waive such absence by affirmative vote of a majority of its members.Sample #5This policy states who can recommend removal.RemovalRemoval of members from the board of directors may be recommended to the representative agency in case of ex-officio members, and to the association board of directors in case of elected officers, regional directors and directors at-large, for absence from three consecutive board meetings. The board of directors shall take action upon such recommendations at its next regularly scheduled meeting.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Sabbaticals IntroductionIt is a common practice in higher education for presidents and other senior staff and faculty members to take sabbaticals, which provide opportunities to rest from the demands of a challenging, long-term position and rejuvenate. Sabbaticals for board members is a less common practice. Board membership is for a limited time period; the expectation is that a member’s term will not be interrupted with a sabbatical.Some bylaws use the term “sabbatical” to refer to a hiatus in board service between terms. Key ElementsA policy for short-term sabbaticals — time-outs — for board members should address what is expected of the board member during the absence, the time period, and the liabilities that remain or do not apply during the absence.If you do not offer sabbaticals, develop a process by which board members can resign from their positions. Indicate whether it is possible to re-apply for membership at a later date.When using the term “sabbatical” to refer to a hiatus in board service between terms, be sure to address the conditions for re-election to the board. Practical TipsWhen recruiting board members, stress the need for them to commit to serving a full term. If this becomes impossible mid-term because of illness, travel, or another temporary change in a board member’s personal situation, you may need to discuss resignation — with the possibility of being re-elected to the board, if desirable, at a later date. Sample Board Sabbatical Policies Neither one of the sample policies condones sabbaticals for board members.Sample #1This board policy does not accept sabbaticals for board members.The board does not accept requests for leaves of absence from board service during a board member’s term.Sample #2This policy requires a year’s absence from the board before a member can rejoin.A person elected or appointed to the board for the remainder of an unexpired term may be reappointed or re-elected upon the expiry of the term that he or she was elected or appointed to complete, but is eligible for further reappointment or re-election only after one year's absence from the board.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Vacancy FillingIntroductionEven with a well-conceived term-limit schedule, a board may experience sudden vacancies. A board member may resign in the middle of the term due to changes in personal circumstances or be removed from the board. Every board needs a policy to handle these unexpected vacancies. Although a vacancy may not immediately affect a board’s efficiency, your board may be in violation of its bylaws or mandate regulations by being short a board member. In these cases, you must fill the vacancy as soon as possible. If your board size meets the legal limits, however, it is sometimes better to wait until the next regular election to fill the position.Key ElementsYour policy should cover who has the right to fill vacancies, how the term of the newly elected board member is calculated, and how this affects his or her term limits.Address board member and officer vacancies separately. Both need attention, however.Practical TipsMake sure your board has a continuous pool of candidates at different phases of cultivation that you can tap into if you need to fill a position immediately.If an officer vacancy is short term, you may want to divide the duties among other officers and fill the position during the regular election meeting.Sample Board Vacancy Policies The sample policies discuss how to handle unexpected vacancies on the board. Sample #1This short policy states how to handle a mid-term vacancy.Vacancies shall be filled by majority vote of the remaining members of the board of directors for the unexpired term.Sample #2This sample is simply a lengthier version of Sample #1.A vacancy in any office arising from any cause shall be filled for the unexpired portion of the term, the manner prescribed in these by-laws for regular appointment to such office. Director vacancies occurring from time to time because of resignation, removal, death, or enlargement of the board may be filled by action of the board, with such replacement director to be designated to complete the term of the trustee being replaced.Sample #3This sample gives the power to designate a nominee for a vacant position to the chair.When a vacancy occurs, the chair shall designate a nominee, and the board shall, by simple majority vote (provided that a quorum is present), confirm the nominee to serve the balance of the unexpired term; however, any director may nominate an additional candidate.Vacancies may be filled either at a regular board meeting or at a special meeting called for this purpose by the chair. The new directors shall assume office immediately.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.CEO on BoardIntroductionThe board delegates the management of the organization to the chief executive, who works closely with the board and particularly the chair in a constructive partnership.As an active partner, the chief executive should be present at all board meeting, normally in an ex officio (part of it by virtue of holding another office), nonvoting capacity. Serving as a nonvoting member of the board heightens the organization’s accountability, lessens many inherent conflicts of interest, and allows for a separation between oversight and implementation.Key ElementsTo avoid misunderstandings, bylaws should have a clause that defines the chief executive’s role as an ex officio, nonvoting position.No other staff members should serve on the board. It is inappropriate for the chief executive to be supervised by individuals whom he or she supervises.A nonvoting position alleviates numerous conflicts of interest, maintains a clear line between oversight and implementation, and helps increase accountability.Practical TipsTo avoid misunderstanding, clarify what “ex officio” means before writing your policy. Some individuals assume the chief executive position comes with voting rights, but that decision must be made separately. Sample Chief Executive on the Board Policies The role of the chief executive can be defined in one of two ways: as either a voting member of the board or as a nonvoting member of the board.Sample #1This policy does not confer voting rights to the chief executive.The chief executive serves as an ex officio, nonvoting member of the board.Sample #2This policy confers voting rights to the chief executive.The chief executive serves as a voting member of the board.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Moyers, Rick. The Nonprofit Chief Executive’s Ten Basic Responsibilities, Second Edition. Washington, DC: BoardSource, 2012.Quorum for Board Meetings IntroductionA quorum defines the minimum number of board members who must be present before a board meeting can take place. No board can conduct business if there is not a quorum in the boardroom. If there is no quorum, the chair must set a new date for the meeting and release those members who are present.Most state laws declare the majority of voting members as the minimum requirement for a quorum. If you do not have your own quorum policy, the state law will prevail.Key ElementsCheck your state laws; they provide the default should you not define a quorum for your board. Be realistic when setting a quorum. If you are too lax, you risk allowing a few members to decide the fate of the organization. If you are too strict, you risk never meeting a quorum. Don’t confuse member meeting quorums with board meeting quorums. Member meetings, by necessity, tend to have smaller quorums and can generally accept proxies.Practical TipsWhen defining a quorum, always approach it from the fiduciary point of view. Meeting attendance is an expectation designed to make it difficult for small groups of members to control the board and its decision making. Discuss the impact of properly setting a quorum. If you state that a majority of those present can carry a vote, you risk a situation where, when five members are present out of ten, three have the right to make decisions. Sample Board Meeting Quorum Policies Both sample policies follow the state minimum requirements.Sample #1This policy, which reflects common practice, defines quorum as the presence of the majority of voting board members.A majority of the directors then in office shall constitute a quorum for the transaction of business at any meeting of the board of directors.Except as otherwise expressly required by law, the Articles of Incorporation of the corporation, or these bylaws, the affirmative vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors. Each director shall have one vote. Voting by proxy shall not be permitted.Sample #2This sample states that teleconference presence counts as part of the board quorum.The majority of the board members shall constitute a quorum for transacting official business of the corporation.?When members are unable to be physically present, they may fully participate by teleconference. The speakerphone connection must enable board members to hear the other member(s) not physically present and enable the member(s) not physically present to hear the board discussion.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012. Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Flynn, Outi. Meeting, and Exceeding Expectations, Second Edition. Washington, DC: BoardSource, 2009.Special MeetingsIntroductionDue to unexpected circumstances, most boards occasionally need to meet or communicate outside of the fixed meeting schedule. Situations that require a special meeting might include emergencies (the sudden departure of the chief executive or the chair, natural or inflicted disasters affecting the office, or even a scandal), special time-sensitive opportunities or threats (exceptional offer to collaborate or to acquire a new location), or any other urgent issue that must be addressed by the board rather than management. Key ElementsSpecify what constitutes a special meeting, who can summon a special meeting, how to notify board members, and in what format the meeting can take place.In most circumstances, the chair is the logical person to serve as the contact person when requesting a special meeting. Practical TipsMany special or urgent meetings might be easiest to arrange as conference calls.Sample Special Meeting Policies These special meeting policies state who can call a special meeting. Organizations following state open meeting laws must address special meetings in more detail. Sample #1This simple policy allows the board to hold special meetings outside of the regularly scheduled meetings.Special meetings may be called by the chair or the executive committee.Sample #2This sample gives the chair or the majority of the board the right to call special meetings.Special meetings of the board of directors may be called at the direction of the chair or by a majority of the voting directors then in office, to be held at such time, day, and place as shall be designated in the notice of the meeting.Sample #3This policy is for boards that must hold open meetings.Special Board MeetingsThe chair may call a special or emergency meeting when necessary or if at least two board members recommend it. Every board member must receive a notice of the place and time of the meeting.If a special meeting is scheduled, public notice shall be given and the meeting will follow the state-regulated open meeting guidelines. If an emergency meeting is needed and the normal public notice cannot be followed, the chair will notify of the meeting as soon as reasonable and possible. The minutes will explain why a normal notice process has not been possible. Only the stated issues for the purpose of the meeting shall be discussed.Sample #4This policy for organizations following the open meeting laws calls for posting the meeting and notifying the media 24 hours prior to the meeting.Special and Emergency Board Meetings Special meetings may be convened by order of the chair, upon request of three board members or by common consent of the board members. The XYZ board secretary shall post notice at least 24 hours before such a meeting is to be convened.The purpose of special meetings is to give the board an opportunity to gather information and to discuss and fully explore various aspects of an issue.Local news media shall receive notice of the meeting at least 24 hours in advance.Emergency meetings may be called only in the event of an actual emergency. Notice shall be given to the public and the press. The minutes of the meeting shall describe the nature of the emergency. No business other than that related to the emergency shall be discussed at these meetings.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Flynn, Outi. Meeting, and Exceeding Expectations, Second Edition. Washington, DC: BoardSource, 2009.Virtual Meetings and e-VotingIntroductionIt can be difficult to find board members who can commit to attending all board and committee meetings in person. Busy individuals may need to forego board service unless the board is flexible about physical meeting attendance. Fortunately, some issues can be handled via a conference call or shared via e-mail. How your board relies on these methods of communication and tools for discussion and decision making needs to be codified and enforced diligently.Few states accept online meetings (boards voting electronically and simultaneously) but several address acceptable conditions for teleconferences. Sharing documents and informal communication is best done via e-mail as long as every board or committee member is included in the communication.Key ElementsDo not draft policies that contradict state laws. Clarify the difference between a virtual meeting and communicating (sharing information) via e-mail. Also clarify when synchronous and asynchronous communication is acceptable or necessary.If you allow online or telecommunication meetings, ensure that every member can hear and speak with each other. Practical TipsCreate group e-mail addresses and/or a board portal for communicating with the full board and committees. Chairing a teleconference meeting requires more vigilance than face-to-face meetings. To facilitate, draft clear rules asking participants to always identify themselves before speaking, to not speak at the same time, to use the mute button to keep background noise minimal, and to disconnect when they have a conflict of interest and need to recuse themselves.Remember to update your bylaws if you allow virtual meetings.Sample Virtual Meeting Policies These virtual meeting policies stress the importance of everyone being able to participate simultaneously and equally.Sample #1This sample addresses teleconferences only.Telephone Meeting: Any one or more directors may participate in a meeting of the board of directors by means of a conference telephone or similar telecommunications device that allows all persons participating in the meeting to hear each other. Participation by telephone shall be equivalent to presence in person at the meeting for purposes of determining if a quorum is present.Sample #2This example emphasizes this core issue: Participants must be able to hear and speak to each other. The board of directors or a committee of the board may participate in a meeting of the board or such committee, by means of telephone conference call or any other means of communication by which all persons participating in the meeting are able to hear and speak to each other.Sample #3This policy directs the board to determine in advance the technical and administrative issues of meeting virtually.The directors of the Corporation may meet by other electronic means that permit each director to communicate adequately with each other, provided that: (a) the board of directors of the Corporation has passed a resolution addressing the mechanics of holding such a meeting and dealing specifically with how security issues should be handled, the procedure for establishing a quorum and recording votes; (b) each director has equal access to the specific means of communication to be used; and (c) each director has consented in advance to meeting by electronic means using the specific means of communication proposed for the meeting.Sample #4This policy discusses when virtual presence is permitted.Virtual attendance at meetings A member of the board may attend a meeting via interactive telephone, Internet, satellite audio, or video conferencing or any other technology that enables all participants to be clearly audible to one another.Remote participation is allowed for the following reasons:1. Personal illness2. Personal disability3. Emergency4. Military service5. Geographic distanceThe board member attending remotely participates in the entire discussion item prior to voting on an issue.A member participating remotely may participate in an executive session, but must state for the record that he or she is alone and cannot be overheard. Alternatively, another person may be present with the member participating remotely if the board votes to authorize it.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. San Francisco: Jossey-Bass, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Flynn, Outi. Meeting, and Exceeding Expectations, Second Edition. Washington, DC: BoardSource, 2009.Notice of Meetings IntroductionAlthough notice of meeting and waiver of meeting notices are the remnants of an older, more procedural way of handling board meetings, some boards — including those serving membership organizations with large membership meetings and those who must abide by state laws requiring notices — include a clause regarding notice of meetings in their bylaws. All boards should set and approve their meeting schedules well ahead of time, and, under normal circumstances, board approval serves as a notice of meeting. If your state laws require meeting notices, your board may decide to create a process that accommodates those board members who do not want to receive official notices. This will prevent these board members from contesting a decision made in a meeting they did not attend and for which they did not receive a meeting notice.Key ElementsIf you do not want to make an official notice compulsory for your board meetings, make that clear in the bylaws. Specify how notices should be delivered — mail, fax, e-mail.A waiver generally works to avoid disputes about notices.Practical TipsDo not set specific dates for meetings in your bylaws. Simply state how often the board meets per year. Take weekends, holidays, and time for the mail to arrive in distant locations into account to keep the notice timeframe reasonable.Sample Meeting Notice Policies These short samples provide a waiver for notices and state how to reschedule meetings.Sample #1This statement mentions the essential requirements for a notice but also specifies that a waiver of the notice is possible.Notice of the time, day, and place of any meeting of the board of directors shall be given at least ____ days previous to the meeting and in the manner set forth in Section [2] of Article [VII.] The purpose for which a special meeting is called shall be stated in the notice. Any director may waive notice of any meeting by a written statement executed either before or after the meeting. Attendance and participation at a meeting without objection to notice shall also constitute a waiver of notice.Sample #2This sample addresses notices for rescheduled meetings.The board shall hold regular meetings at a time and place designated by the board. The chair shall have the power to reschedule any regular meeting upon giving three (3) days written, electronic, or verbal notice to all members of the board. Notice of any rescheduled meeting need not be given to any trustee who signs a waiver of notice, whether before or after a meeting. The attendance of any trustee at a meeting shall constitute a waiver of notice by her/him.Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. Washington, DC: BoardSource, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Flynn, Outi. Meeting, and Exceeding Expectations, Second Edition. Washington, DC: BoardSource, 2009. Sample Executive Session PoliciesIntroductionThe board has a need and a right to meet in total privacy when it chooses.Executive sessions are special meetings of the board that take place when the board wants to assure confidentiality of its discussions, create a mechanism to manage its own affairs, and develop solid working relationships among board members and with the chief executive. These sessions may take place before, in the middle of, or at the end of a regular board meeting. They are, by definition, exclusive to board members, but others, such as the chief executive or professional advisors, may be invited to join for part or all of the session. The board should keep minutes — or at least notes — of its executive sessions, which should be shared with everyone who was present. The board meeting minutes should indicate when the board held an executive session and for what purpose, but the details of the discussions should not be included. Any decision made during an executive session should be included in the board meeting minutes as a record of the decision.Key ElementsIn the bylaws, give the board the authority to conduct executive sessions.Prior to meeting in an executive session, the board must adopt a motion to go into executive session. The motion should include specific reference to the session’s subject matter.If your organization must follow a state’s open meeting laws, familiarize yourself with the legal requirements for conducting executive sessions. Practical TipsIncluding a clause for executive sessions in your bylaws allows them to become a standard part of your board meetings, eliminating any sense of secrecy.Debrief the chief executive after the meeting on issues that were discussed or the decisions that were made. This builds trust between the chief executive and the board.Have regular KPAWN sessions in executive session with the chief executive to discuss what Keeps the President Awake at Night. This practice provides him or her with the opportunity to bring up issues that do not belong in a normal board meeting.Share BoardSource’s Learning Center member resource, “Executive Sessions: How to Use Them Regularly and Wisely,” with your board members and chief executive to better understand all the nuances of these sessions. Sample Executive Session Policies These policies grow in complexity from simple statements into more detailed guidelines on conducting executive sessions.Sample #1This short policy makes it a standard practice for the board to have executive sessions.The board of directors will hold an executive session, without the chief executive, in conjunction with each regularly scheduled board meeting. Sample #2This sample defines the circumstances that necessitate an executive session.The XYZ board may call for an executive session to discuss issues that may compromise the legitimate privacy interests of a public officer, appointee or employee, or compromise the attorney client privilege. During an executive session, only individuals whose presence is reasonably necessary in order for the public body to carry out its executive session responsibilities may attend. Final votes or decisions to take legal action can only occur after reconvening in an open meeting.Sample #3This sample stresses the confidential nature of executive sessions.An executive session of the board may be called by the chair under the following circumstances: (a) on the advice of counsel, (b) to discuss current pending legal matters, (c) to consult with the auditors and compensation consultants, (d) to acquire or dispose of property, (e) to discuss or act on personnel issues, or (f) to address such other matters as the board deems appropriate. At the option of the chair, or upon majority vote of the directors, an executive session of the board may be called. While in executive session, only board members and individuals invited by the chair may be present. At the option of the chair, the chief executive may be excused. Board members may discuss the business conducted in an executive session only with other board members including or not including the chief executive as directed by the chair, persons present in the executive session by invitation of the chair, and others upon advice of counsel. Those present will be reminded that the executive session deliberations and minutes are confidential. Sample #4This sample specifies under what circumstances an executive session is called.The board may meet in executive session to discuss subjects allowed by statute but may not take final action, except for specific instances pertaining to student matters.?Executive sessions may be held during regular, special or emergency meetings for any reason permitted by law. Content discussed in executive sessions is confidential. A board may be called to meet in executive session or decide to go into executive session at any time during a regular, special or emergency meeting to discuss certain matters. By State law, the chair may call a board into executive session without a vote of the board; however, in some districts, local policy may require such a vote.Sample #5This sample is specifically geared towards government agencies and has a heavy legal tone.This executive session policy is intended to:Guide the board in meeting its obligations under applicable statutes and code provisions associated with open public meetings and executive sessions.Supplement but not replace any applicable state laws governing open public meetings and executive sessions, including but not limited to the Act and the Legislation.Take prudent measures to fully preserve the attorney-client privilege and attorney work product privilege held by or related to XYZ as well as deal with potential conflicts of interest. The board hereby adopts, as a policy of the board, a preference that the chair of the board take into account the legal and practical considerations set forth in the recitals and this policy. The chair must also consult with the Executive Director/Chief Executive Officer of XYZ and with XYZ legal counsel prior to her/his decision on exclusion of the nonvoting member from any executive session, other than as required by the Legislation, of the board or board committees. The board hereby requests that the chair of the board (including all acting chairs) and chairs of board committees (including all acting chairs) implement this preference in her/his decision regarding exclusion of the nonvoting member from any executive session, other than as required by the Legislation, of the board or board committees. Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. Washington, DC: BoardSource, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.Flynn, Outi. Meeting, and Exceeding Expectations, Second Edition. Washington, DC: BoardSource, 2009.“Executive Sessions: How to Use Them Regularly and Wisely.” BoardSource Learning Center Member Resource. ImdemnificationIntroductionIndemnification allows the organization to reimburse any legal expenses a board member incurs if he or she is sued while acting on behalf of the organization. Most states allow nonprofits to provide indemnification protection for their volunteers.Indemnification can be a double-edged sword for the nonprofit and the affected board member. If expenses end up being immense, the organization may not be able to keep the promise — or at least will suffer seriously from the liability — and the board member is without protection.Key ElementsCheck your state laws to learn whether you are allowed to provide indemnification protection, whether you must have a clause in the bylaws, and what types of activities can be covered. This immunity usually is not valid if the board member acts in bad faith, breaches his or her fiduciary duty, or commits criminal acts.Practical TipsInclude all details regarding the scope (who is covered, timing of payments, and other constraints) of indemnification in your written policy.If you provide indemnification, you should consider obtaining insurance to cover the organization for the loss of funds.Indemnification loses effect if the organization is not financially able to honor the commitment.Have your legal counsel review your policy. Sample Indemnification Policies Both policies provide the organization with the authority to indemnify board members.Sample #1This is a straightforward, non-legalese sample.Unless otherwise prohibited by law, the Corporation may indemnify any director or officer or any former director or officer, and may by resolution of the board of directors indemnify any employee, against any and all expenses and liabilities incurred by him or her in connection with any claim, action, suit, or proceeding to which he or she is made a party by reason of being a director, officer, or employee. However, there shall be no indemnification in relation to matters as to which he or she shall be adjudged to be guilty of a criminal offense or liable to the Corporation for damages arising out of his own gross negligence in the performance of a duty to the corporation.Amounts paid in indemnification of expenses and liabilities may include, but shall not be limited to, counsel fees and other fees; costs and disbursements; and judgments, fines, and penalties against, and amounts paid in settlement by, such director, officer, or employee. The Corporation may advance expenses or where appropriate may itself undertake the defense of any director, officer, or employee. However, such director, officer, or employee shall repay such expenses if it should be ultimately determined that he or she is not entitled to indemnification under this Article.The board of directors may also authorize the purchase of insurance on behalf of any director, officer, employee, or other agent against any liability incurred by him/her which arises out of such person's status as a director, officer, employee, or agent, whether or not the Corporation would have the power to indemnify the person against that liability under law.Sample #2This sample is stated as a legal contract between the organization and those indemnified.The corporation shall, to the extent legally permissible, indemnify each person who may serve or who has served at any time as an officer, director, or employee of the corporation against all expenses and liabilities, including, without limitation, counsel fees, judgments, fines, excise taxes, penalties and settlement payments, reasonably incurred by or imposed upon such person in connection with any threatened, pending or completed action, suit or proceeding in which he or she may become involved by reason of his or her service in such capacity; provided that no indemnification shall be provided for any such person with respect to any matter as to which he or she shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that such action was in the best interests of the corporation; and further provided that any compromise or settlement payment shall be approved by a majority vote of a quorum of directors who are not at that time parties to the proceeding.The indemnification provided hereunder shall inure to the benefit of the heirs, executors, and administrators of persons entitled to indemnification hereunder. The right of indemnification under this Article shall be in addition to and not exclusive of all other rights to which any person may be entitled.No amendment or repeal of the provisions of this Article which adversely affects the right of an indemnified person under this Article shall apply to such person with respect to those acts or omissions which occurred at any time prior to such amendment or repeal, unless such amendment or repeal was voted by or was made with the written consent of such indemnified person.This Article constitutes a contract between the corporation and the indemnified officers, directors, and employees. No amendment or repeal of the provisions of this Article which adversely affects the right of an indemnified officer, director, or employee under this Article shall apply to such officer, director, or employee with respect to those acts or omissions which occurred at any time prior to such amendment or repeal. Suggested ResourcesDambach, Charles, Melissa Davis, and Robert L. Gale. Structures and Practices of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.BoardSource. The Nonprofit Board Answer Book, Third Edition. Washington, DC: BoardSource, 2012.Tesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.DissolutionIntroductionThe articles of incorporation require that a nonprofit includes a statement indicating how the assets are dispersed if the organization is dissolved. The purpose of this statement is to inform staff, board members, and other individuals associated with the organization that any remaining assets may not be distributed to those affiliated with the organization but must be given to another charity. This is one of the Key Elements of private inurement. As a founder, staff member, or a board member, you have no right to the assets of the organization beyond an appropriate compensation you may receive for the work you do.Key ElementsEven though the articles address potential dissolution of the organization, it is good practice to also include a clause in the bylaws. It is possible to designate a specific charity as the recipient of the assets in case of dissolution, but it is common to simply state that the assets will go to another charity.Practical TipsIf you name a specific organization as the recipient of the assets, keep in mind that it is possible that this organization will no longer exist at the time of the distribution of assets. In some cases, the courts will then make the decision.Sample Dissolution Policies These samples elaborate on the basic clause in the articles of incorporation.Sample #1This sample does not name a specific recipient of the assets.Upon the dissolution of the organization, any assets remaining after the payment of debts and other liabilities shall be distributed to other charitable organizations that are exempt under the provisions of section 501(c)(3) of the IRS Code.Sample #2This sample confirms that the assets must go to a qualified organization.At the time of dissolution of the corporation, the board of directors shall, after paying or making provisions for the payment of all debts, obligations, liabilities, costs and expenses of the corporation, dispose of all of the assets of the corporation. In no case shall a disposition be made which would not qualify as a charitable contribution under Section 170(c)(1) or (2) of the Internal Revenue Code, as now enacted or hereafter amended, in such manner as the board of directors shall determine.Sample #3This sample names the Superior Court of the county as the distributor of the potential remaining assets after the initial distribution.Section 1. Provision for Assets. Upon dissolution of XYZ the Board of Trustees shall, after paying or making provision for the payment of all of the liabilities for XYZ, dispose of all the assets of XYZ in such manner, or to such organization(s) operated exclusively for charitable purposes that qualifies as an exempt organization under Section 5O1(c)(3) of the Internal Revenue Code of 1954 (or the corresponding provision of any future United States Internal Revenue Law), as the Board of Trustees shall determine. Any such assets not so disposed of shall be disposed of by the Superior Court of the county in which the principal office of XYZ is then located, exclusively for such purposes or to such organization as said Court shall determine, which are organized and operated exclusively for such purposes.Suggested ResourcesTesdahl, D. Benson, Esq. Better Bylaws: Creating Effective Rules for Your Nonprofit Board, Second Edition. Washington, DC: BoardSource, 2010.“10 Things Nonprofits Should Consider Before Electing to Dissolve.” Nonprofit Law Blog “From the IRS - Facts about Terminating or Merging Your Nonprofit.” Don Griesmann blog post. Part IV: Chief ExecutiveChief Executive Job DescriptionsChief Executive Performance EvaluationExecutive CompensationExecutive TransitionChief Executive Job DescriptionsIntroductionWhile the board is ultimately responsible for the organization’s mission and strategy, the chief executive is the executor — and often the main architect — of that strategy. The chief executive is responsible for the day-to-day leadership of the organization and for its effective management. Many people feel that the most important duty of a nonprofit board is to hire the right chief executive and supervise him or her well. Before hiring a chief executive, the board needs to clarify the responsibilities of the position and the qualifications of the person who will fill it. Chief executive job descriptions vary a great deal depending on the type of organization, field of service, staff size, and other factors. While the chief executive is responsible for running the organization’s daily affairs, he or she also has a major leadership role in helping the board do its job in the best possible manner. Board development is important and it often falls on the chief executive’s shoulders, as he or she has the easiest access to necessary information and governance-related resources. Working closely with the governance committee and the board chair, the chief executive can help the board meet its potential.Key ElementsImplicitly, if not explicitly, the board delegates daily management to the chief executive through the job description. The job description outlines the leadership framework for the chief executive to manage the daily operations of the organization. It defines the board’s expectations and guidelines within which the chief executive must accomplish his or her duties.The chief executive’s job description usually defines overall responsibility for functional areas within the organization, such as strategic direction, financial performance, personnel, and communications.Job descriptions should clarify the lines of authority so that board and chief executive are clear on the chain of command. More specifically, they often articulate the role of the chief executive as the board’s sole employee. Practical TipsWhile this publication uses the term “chief executive,” other organizations may choose to refer to the chief staff officer as the executive director, president, chief executive officer, or director.A clear job description lays the groundwork for annual goals and performance reviews. Review and update the job description regularly as part of the chief executive’s performance evaluation. As the organization evolves, the chief executive’s responsibilities may also need to be adjusted. Always have a current job description available in the event of an unexpected change in leadership.As long as the state law does not invalidate the intention, a written employment contract (or memorandum of agreement) provides security to the chief executive, the board, and the organization. Clarify the job description and compensation terms in writing to ensure that mutual expectations are clear from the outset of the relationship.The job description should mention the chief executive’s role as the governance partner with the board and provide specifics about this responsibility. To stress the importance of board development, indicate clearly how the chief executive is involved in recruitment of board members, orientation, continuous education, and shaping productive board meetings. Sample Chief Executive Job DescriptionsThe six job descriptions, presented from shortest to longest, cover the chief executive’s duties in relationship with the board, staff, and overall organizational success.Sample #1This short, general job description emphasizes the chief executive’s authority in managing staff and operations.Nature of PositionServes as the organization’s chief executive officer. Reports directly to the board and is ultimately responsible for the operation of all programs, the management of all fiscal resources, the supervision of all staff, and the provision of quality services to the community.Relationship to Other Administrative StaffDirectly supervises the activities of the staff (list of positions as determined by the board’s approved table of organization). The board’s legal counsel and consultants also report directly to the chief executive. Final approval for employment, promotion, or termination of XYZ staff is the responsibility of the chief executive within the guidelines/policies set by the board.Position DutiesPlans, develops, and supervises programs.Evaluates program improvements and recommends policy to the board.Undertakes and oversees all employment actions for XYZ staff within guidelines/policies set by the board.Serves as the primary organization planner, setting goals and objectives and developing projections of needs and funding. Seeks funding and/or resources from a broad range of sources.Develops and maintains records and reports on programs and services provided by the organization.Formulates budgets and maintains an accounting system that meets all federal, state, and local compliance standards.Prepares and submits regular budget and expenditure reports to the board.Establishes and maintains a personnel records system.Acts as primary liaison with various governmental entities and community organizations.Serves as the chief spokesperson for XYZ and is responsible for all public relations.Performs other duties as directed by the XYZ board.Sample #2 This concise job description delegates overall responsibility to the chief executive and calls attention to expectations of the board.FunctionServe as chief executive officer of the organization; report to the board of trustees; responsible for leading the organization’s success. With the chair of the board, enable the board to fulfill its governance function and facilitate the optimum interaction between management and the board.Direct and formulate the plan for achieving the agency’s philosophy, mission, strategy, annual goals, and objectives.Responsibilities to the BoardWith the chair of the board, develop meeting agendas to ensure the opportunity for the board to fulfill all responsibilities effectively. Develop an annual calendar to include all critical issues in a timely manner.Keep the board and board chair fully informed on the condition of the organization and all important factors.Involve each board member at an optimum level. Stimulate each to reach the highest potential as a board member.Work with the board chair to ensure effective and efficient board committee structure.With the board chair, recommend the composition and commission of board committees.Responsibilities to the Organization’s Personnel and ProgramsAssume responsibility for the organization’s consistent achievement of its mission and financial objectives.Ensure the organization’s philosophy and mission are pertinent and practiced throughout the organization.Ensure that a long-range strategy is adopted and that it achieves its mission in an appropriate and timely manner.Oversee the flow of funds to ensure steady progress toward goals, achievement of the mission, and that proper allocation reflects present and future potential.Hire and administer an effective management team with provision for succession.Implement appropriate personnel training and development that ensures qualified human resources necessary for the achievement of the organization’s mission, goals, and objectives.Maintain a climate that attracts, keeps, and motivates top-quality people — both professional and volunteer.Formulate and administer all major policies and procedures.Serve as the chief spokesperson for the organization and ensure proper representation to its various constituencies.Sample #3 This simple job description articulates the basic responsibilities of the chief executive, both as the manager of the organization and a partner to the board.Nonprofit Chief Executive Job DescriptionThe chief executive works in partnership with the board and the staff to provide leadership, vision, and direction for the organization and to develop organizational strategy. The chief executive implements policies approved by the board, manages the organization’s programs and operations, and represents the organization in the community. Specific responsibilities includeOverseeing the development, implementation, and evaluation of programs and services that support the missionLeading the staff and board in developing a realistic annual budget, and making financial decisions consistent with the budget as approved by the boardDeveloping a staffing structure that supports the efficient delivery of programs and services, accomplishment of major goals identified in the strategic plan, and effective overall managementHiring and managing the staff, including the implementation and ongoing revision of personnel policies approved by the board and managing the staff performance review processLeading fundraising efforts, including supporting the board’s involvement in fundraising, personally cultivating and soliciting donors, and supervising development staff and implementation of fundraising plans and policies approved by the boardProviding regular, timely internal financial statements to the board that compare performance to budget and to the previous year or other benchmarkPlanning for adequate cash flow to cover operational needsConducting multiyear financial analysis, analyzing trends, and engaging the board in strategic discussions about financial stability and sustainability, including the development of adequate operating reservesComplying with all local, state, and federal legal requirementsBuilding positive relationships with partner organizations, policymakers, media, and othersRepresenting the organization by participating in key associations and organizations, serving on committees and advisory groups, and speaking in public settingsSample #4 This sample assigns responsibilities to the chief executive in specific functional areas.Reports To: BoardClassification: ExemptPosition SummaryThe chief executive is responsible for the overall administration and management of XYZ, including service programs, fundraising, and business operations. Areas of responsibility include planning and evaluation, policy development and administration, personnel and fiscal management, and public relations. This is a full-time position, hired by and directly accountable to the board through its elected board chair.ResponsibilitiesManagement and AdministrationDevelop and facilitate an active planning process.Develop organizational goals and objectives consistent with the mission and vision of XYZ.Develop and administer operational policies.Oversee all programs, services, and activities to ensure that program objectives are met.Oversee business development.Ensure compliance with funding sources and regulatory requirements.Provide information for evaluation of the organization’s activities.FiscalDevelop, recommend, and monitor annual and other budgets.Ensure effective audit trails.Approve expenditures.Provide for proper fiscal record keeping and reporting.Submit monthly financial statements to the board.Prepare and submit grant applications and funding proposals as appropriate.PersonnelAdminister board-approved personnel policies.Ensure proper (legal) hiring and termination procedures.Oversee any and all disciplinary actions.Provide for adequate supervision and evaluation of all staff and volunteers.Board RelationsAssist the board chair in planning the agenda and materials for board meetings.Initiate and assist in developing policy recommendations and in setting priorities.Facilitate the orientation of new board members.Work with the board to raise funds from the community.Staff board committees as appropriate.Public RelationsServe as chief liaison with specific community groups.Ensure appropriate representation of XYZ by all employees.Coordinate representation of XYZ to legislative bodies and other groups.Sample #5 This job description frames the chief executive’s authority and responsibilities in relationship to the board, operations, staff, and the community.Summary of ResponsibilitiesThe chief executive of XYZ is the chief executive leader of the staff and is responsible for providing support to the board, managing the programs and operations of the organization, leading and managing staff resources, and coordinating professional relations. The chief executive of XYZ reports directly to the board chair and is accountable to the board through the board chair. The chief executive shall work in partnership with the board chair of XYZ and board committee chairs to guide and develop the services and projects of XYZ. It is understood that all aspects of this position description are to be carried out with the approval of the board and aligned with board policies and procedures.Key DutiesChief Executive–Board Partnership (30 percent)Work with the board chair to develop annual goals for the board subject to board review and approvalidentify key issues for board deliberationsdevelop agendas for board meetingsoversee administration of board meetings and actionsoversee preparation of board agenda books to facilitate the work of the boardensure materials that facilitate board analysis of issues and decision making are provided for board meetings in a complete and timely mannerarrange for documentation of the deliberations at all board meetingstrack all recommended board actions and maintain a reporting process to the boardensure that all agenda items have appropriate and adequate input from the relevant oversight committees and are likely to result in approved recommendationsSupport the development of individual directors as board members.Leadership and Management of XYZ Programs and Operations (30 percent)Ensure that the actions of the board are implemented and the results of the actions are reported to the board in timely, concise reports. Develop, implement, and monitor policies determined by the board; provide regular, clear, and concise reports on the impact of policies.Ensure that appropriate services and support are developed and provided to members. Develop an annual plan of work for XYZ to be approved by the board.The plan will describe how XYZ will achieve its mission during the time period of the plan.The plan will include operational goals, implementation activities, performance measures, and a supporting budget.Provide clear, concise reports to the board at each regularly scheduled board meeting that assess the accomplishment of the plan.Ensure that the financial affairs of XYZ are conducted in accordance with policies and guidelines established by the board and generally accepted accounting principles.Ensure that an optimal level of communication exists to promote the smooth development and implementation of XYZ projects and services.Ensure that sound risk management policies are in place.Demonstrate substantive knowledge of XYZ’s programs and services. Guide revenue-generating activities in order to provide adequate income to the organization.XYZ Staff Management (25 percent)Ensure that effective mechanisms are in place to determine professional and nonprofessional staffing needs. Select, develop, and maintain a satisfied and qualified staff.Ensure appropriate personnel policies and procedures are developed and maintained.Ensure adequate staff support for all XYZ programs, operations, and committees.Supervise XYZ staff and evaluate performance.Professional/Community Relationships (15 percent)Work with the board and the board chair to identify, establish, and maintain relationships with other professional/community organizations involved in ______. Work with the board and the board chair to identify, establish, and maintain liaison with professional organizations community groups as they become important for the future of XYZgovernment agencies as they become important for the future of XYZRepresent XYZ at national meetings as directed by the board and/or board chair.Qualifications and ExpectationsThe chief executive should be comfortable working with a board of diverse individuals and taking direction from the boardbe comfortable working in a team environment, with the board chair and the executive committee of the boardbe able to exercise situational leadership skills ranging from task management to strategic leadershipbe able to write clearly and concisely.be experienced at overseeing administrative tasks in a timely and organized mannerhave more than [10] years’ experience in nonprofit management, with at least [three] years at an executive staff levelpossess significant knowledge of the field of relevant subjects and the issues that currently affect XYZbe able to design programs and develop ways to measure outcomes.possess excellent interpersonal skills that are reflected in an ability to interact professionally with all levels of XYZ members as well as executives from professional organizations and people in the communitypossess the ability to work through systems to accomplish goalspossess organizational skills that will permit managing work efficiently as well as working on several projects simultaneously, each at a different level of developmenthave excellent oral presentation skillsbe able to handle changes and challenges in a positive and graceful mannerbe familiar with the role of technology (donor relationship systems, Web and social media, current technology)be able to effectively provide ongoing support and direction to staff and programs at XYZ headquarters while on official business at out-of-town locationsSample #6 This more specific sample defines expectations related not only to performance but also to experience and credentials.Job Description: PresidentOverviewThis position contributes to the growth and development of XYZ through the development of people, program, and the management of resources. The responsibility of the position is to achieve the purpose of the organization as reflected in the mission and vision statements adopted by the board.Vision[Insert vision statement.]Mission[Insert mission statement.]Position General Description/Major ResponsibilitiesThe chief executive of XYZ serves as the chief executive officer of the organization and reports to the board. Responsibilities include the management of the organization and its staff; leadership for the fund development effort of the organization, including the capital campaign; oversight of all fiscal operations including the development of capital and operational budgets; implementation of board decisions regarding organizational policies and procedures, long-range planning, XYZ outcome evaluation, and XYZ activities and educational programs; and, oversight for the day-to-day operation.Nature and ScopeThe major challenge of the position is to manage the overall operations of the organization and to ensure ongoing funding to meet current obligations and future growth of programs, facilities, and relevant mission-related work. The chief executive is responsible for hiring, management, evaluation, release, and/or retention of volunteers and employed staff, and for developing supervisory systems to accomplish this role.The chief executive is also a nonvoting member of the XYZ board.A representational list of the chief executive’s responsibilities includes, but is not limited to the following:Ensuring compliance with all federal/state/local laws and regulations advising the board on matters of policy and providing information and reports to the board on operation of the organizationPreparing budget documents as needed, including effective administration of the organization’s budget and for the establishment of controls to safeguard the organization’s assetsProviding assistance and support to volunteer standing and ad hoc committeesOverseeing property maintenance and developmentInitiating and directing new and ongoing programsAnalyzing pertinent statistical informationEstablishing office services to support all operations of the organizationPromoting the visibility of XYZ to the general public and to act as the spokespersonMaintaining continuous relationships with similar and other community organizationsAccountabilities (The following does not constitute an all-inclusive list.)To direct the planning process by guiding the formulation of goals and the tactical plan and by directing the budgetTo contribute to effective management by developing, organizing, and motivating a staff capable of achieving goalsTo provide support to the board’s fund development responsibilities by ensuring staff support to the organization’s financial development plansTo ensure that the organization’s assets are safeguarded by employing sound fiscal controls and managementTo ensure that the corporate/legal responsibilities of the organization are fulfilled and that the board is kept informed of current and upcoming legislationTo provide visibility for XYZ and to maintain good community relationsQualifications and CompetenciesEducationBachelor’s degree in [relevant subjects]; experience may be considered in lieu of education. Advanced degree preferred.ExperienceMinimum __ years of management experience in [relevant organization]. Minimum __ years’ experience in nonprofit or corporate management, to include __ years of supervisory experience (all or any part thereof may be volunteer).Knowledge/SkillsAbility to work with volunteersUnderstanding of the role and responsibilities of a volunteer boardKnowledge of fund development processes and procedures as well as proven ability to plan and implement a fund development program, including annual appeals and capital campaignsProficiency in writing and administration of grants, especially in the governmental sectorAbility to develop and administer budgetsUnderstanding of property and site developmentKnowledge of educational/training programming for [relevant client base]Knowledge of [relevant subject areas]Computer literacy including word processing, data base management, and fundraising softwareOtherMust have a valid driver’s license and reliable transportation.Suggested ResourcesTebbe, Don. Chief Executive Transitions: How to Hire and Support a Nonprofit CEO. Washington, DC: BoardSource, 2008.BoardSource. The Source: Twelve Principles of Governance That Power Exceptional Boards. Washington, DC: BoardSource, 2005.Moyers, Rick. The Nonprofit Chief Executive’s Ten Basic Responsibilities, Second Edition. Washington, DC: BoardSource, 2012.McGinnis, Kathleen A. and Sherrill K. Williams. Building the Governance Partnership: The Chief Executive’s Guide to Getting the Best from the Board, Second Edition. Washington, DC: BoardSource, 2011.Chief Executive Performance Evaluation PoliciesIntroductionAlthough the board delegates management and administrative duties to the chief executive, this does not excuse the board from overall responsibility for overseeing the organization. This oversight includes ensuring that the right person is running the organization at the right time and in the right way. An annual performance review is one of the most effective ways for the board to carry out this duty.A properly administered chief executive performance evaluation can benefit the chief executive, the board, and the entire organization. Out of this important process, the chief executive gains constructive feedback on his or her performance; the board has the opportunity to measure the organization’s progress towards its objectives and previously set annual goals; and the entire organization is able to ensure that the right hands are guiding the organization in the right direction. The evaluation process helps to enhance the communication between the board and the chief executive. It facilitates the board’s oversight function while providing the board with a concrete opportunity to support the chief executive.Key ElementsAn effective performance evaluation begins with a mutually understood process. The board needs to determine the appropriate role for the board chair, individual board members, and any committee. It should also address how the chief executive will participate in the process and what kind of evaluation tool to use.The performance evaluation should take into account the chief executive’s job description, annual goals and objectives, and any other relevant factors identified by the board. The executive’s annual goals and objectives should be closely tied to the organization’s annual goals and objectives.The evaluation should include the chief executive’s own self-assessment as well as the board’s evaluation of his or her performance.The evaluation should be conducted annually and documented in writing, particularly where the outcome is adverse and/or could lead to dismissal. In all cases, the assessment will provide a permanent record that can be referred to by both the chief executive and the board, greatly increasing clarity and certainty.The assessment process should be separated from compensation even if performance is a key element in setting or reviewing the compensation level of the chief executive. Compensation should not drive evaluation; it should be discussed independently after coming to a mutual agreement on evaluation results.Practical TipsConsider conducting the evaluation towards (or shortly after) the end of the fiscal year in order to tie annual goals to organizational performance.The board should provide the chief executive with frequent and constructive feedback. Even if a formal review process takes place annually, both the board and the chief executive should communicate throughout the year to highlight early warning signs and interim accomplishments.In theory, the chief executive’s annual goals should be developed in collaboration with the board. In some cases it may be more efficient for the chief executive to present the board with proposed goals for consideration. Sample Chief Executive Performance Evaluation PoliciesThe sample policies discuss various aspects of the process, from how to set expectations to who should be involved.Sample #1This brief statement outlines specific steps in the annual review process, as well as the role of officers, the full board, and the chief executive in the process.Annual Performance Review In addition to ongoing monitoring, the officers will provide a specific opportunity for the chief executive to present a written self-evaluation and for board members to organize their evaluation of the chief executive’s performance and have it presented in a face-to-face debriefing with the chief executive. At this time, the board and the chief executive will agree on any specific personal performance goals for the year ahead. The chief executive’s compensation package will be reviewed soon after this process and approved by a disinterested committee of the board using appropriate salary comparison data. Sample #2This policy stresses the purpose of the performance review and delegates the process to the executive committee.The board monitors the chief executive to ensure that he or she is competent and effective, including conducting an annual review and appraisal of the chief executive’s performance.The annual goals and objectives should be mutually discussed and agreed upon, and should serve as the basis for performance evaluations. The executive committee and chief executive should mutually agree on the process of formal performance reviews. The primary purpose of performance evaluations is to help the chief executive perform more effectively. Compensation increases and contract renewal decisions should not be the primary purpose for conducting the evaluation. The executive committee also makes recommendations for compensation increases and contract renewal to the board. Sample #3This policy statement defines the chief executive’s goals as the organization’s goals and provides general guidelines for the performance review.Monitoring Chief Executive PerformanceSystematic and rigorous monitoring of the chief executive’s performance will be measured against achievement of organizational goals and organizational operations.Monitoring is used to determine the degree to which organizational performance goals are being met. Data that do not do this will not be considered to be monitoring data.The board will acquire monitoring data by using one or more of the following methods:By internal report, in which the chief executive discloses compliance information to the boardBy external report, in which an external, disinterested third party selected by the board assesses compliance with organizational performance goalsBy direct board inspection, in which a designated member or members of the board assess compliance with the appropriate goalMonitoring will occur at a frequency and by a method chosen by the board. The board can monitor any organizational goal at any time by any method, but will ordinarily depend on a routine schedule that is negotiated annually with the chief executive.The chief executive will give top priority to ensuring timely and accurate reporting to the board for use in monitoring. Suggested ResourcesAssessing and Supporting Your Chief Executive – A BoardSource Toolkit. Washington, DC: BoardSource, 2010. Grace, Kay Sprinkel, Amy McClellan, and John A. Yankey. The Nonprofit Board’s Role in Mission, Planning, and Evaluation, Second Edition. Washington, DC: BoardSource, 2009. Executive Compensation PoliciesIntroductionThe chief executive’s compensation package is an important component of a board’s responsibility for managing the executive, and putting together a compensation package is a complex activity. It is tied to who the chief executive is expected to be as a professional and to what the chief executive is expected to do for the organization. While very personal for those involved, it is also very public; all compensation sources must be disclosed on the IRS Form 990 and it must comply with stringent legal requirements.Key ElementsCompensation includes salary and benefits. When developing a compensation policy, the board should list all components of the package. Often, the original employment contract (if any) establishes the chief executive’s base compensation, and the board determines annual raises and bonuses each year. All compensation and benefits should be shown in the employment contract; there should be no non-listed, “off-agreement” benefits. Compensation is linked to experience, performance, and industry. A compensation policy might list those factors that the board feels are most important, such as prior experience and education level. It should also establish performance goals and compensation adjustments based on accomplishments. Lastly, it should take into account the complexity of the organization, requirements of the job, and market rates.A compensation policy should also address the process for determining the chief executive’s compensation, such as who communicates with the chief executive, how adjustments will be determined (e.g., cost of living, merit increases, bonus rewards), researching compensation in comparable organizations, and use of external consultants. Fair and reasonable compensation is one of the key elements to attract and retain the most qualified chief executive for the organization. While the full board is responsible for determining appropriate compensation, it may delegate certain tasks — such as negotiating with the chief executive (during the hiring process) and reviewing comparable salaries — to a committee or an independent consultant. The full board or a committee of the board must approve the final compensation package.The policy should be developed to satisfy the IRS Intermediate Sanctions safe harbor requirements of independent decision making, reliance on comparables, and documentation. (See Internal Revenue Code section 4958 and the regulations thereunder.) The Intermediate Sanctions safe harbor requirements provide that there is a rebuttable presumption of reasonableness that applies to a financial arrangement with any person with substantial influence over an organization if the financial arrangement was approved by an independent board (or an independent committee comprised of board members) that:Was composed entirely of individuals unrelated to and not subject to the control of the disqualified person(s) involved in the arrangement. Obtained and relied upon “appropriate data” as to comparability.For compensation, data might include compensation levels paid by similarly situated organizations (both tax-exempt and taxable) for functionally comparable positions; the location of the organization, including the availability of similar specialties in the geographic area; current compensation surveys compiled by independent firms; or actual written offers from similar organizations competing for the services of the disqualified person. For property transactions, relevant information includes current independent appraisals and offers received as part of an open and competitive bidding process. Adequately documented the basis for its decision when the actual decision was made. For example, the board minutes should include the terms of the transaction and date of approval, the members present and voting, the comparability data relied upon and how it was obtained, and any actions taken regarding consideration of the matter by anyone on the board or committee who had a conflict of interest.Practical TipsIn addition to paying close attention to the legal requirements for setting appropriate compensation, be sensitive to the public’s perception of what is acceptable or reasonable. Do your homework: There are numerous national and local nonprofit compensation surveys available.For smaller nonprofits that can’t afford costly consultants or published national surveys, do local research and investigate compensation packages in similar organizations. Contact the organizations directly or rely on GuideStar for posted Form 990s. However, realize that Form 990s are not directly applicable for the coming year. Adjust figures accordingly.Equally, when financial benefits must be limited, there are many other ways the board can compensate and support the chief executive. Consider a more flexible working environment, opportunities for professional development, and sabbaticals.Many of the above-mentioned guidelines should be considered when reviewing compensation of other executive staff, particular the president, chief operating officer, chief financial officer, and anyone else with substantial influence over the organization or a major section of the organization.Sample Chief Executive Compensation PoliciesThe three policies range from very simple to very specific. Generally speaking, the more complex the organization and the more money at stake, the more explicit the compensation policy should be.Sample #1 This simple policy delegates responsibility for managing the performance review and compensation determination process to a committee that will work with an external consultant.The bylaws of XYZ establish a compensation committee that has general oversight of the organization’s human resource plan. Specific duties include yearly evaluation of the chief executive of the organization.A competent salary survey is used to benchmark compensation for the position utilizing [industry-specific reports] and other studies. The committee meets independent of the chief executive to discuss performance relative to the position description. During these deliberations, the committee also considers input obtained from other board members, staff, professional advisors, grant recipients, and other informed community leaders.Once a consensus is reached regarding performance, a similar discussion is held concerning compensation relative to annual benchmark and established objectives.The committee presents its findings and recommendations, in an executive session without the chief executive present, to the full board for review and approval. The committee and/or the board chair (a member of the committee) then meet with the chief executive to discuss and document strengths, weaknesses, and goals for the upcoming year. Compensation for the upcoming year is also discussed and documented.Sample #2This comprehensive policy, most suited to larger, more complex institutions (in this case, a university), delegates authority, specifies responsibilities, and outlines a process for determining executive compensation. COMPENSATION1. ?Authority1.1The board has the authority to hire, employ, and compensate such personnel as are needed to provide a well-coordinated system of higher education.1.2Compensation Policy. The board retains the authority to establish compensation guidelines for annual increases and the principles and standards for distribution except as noted below. The personnel committee of the board shall be responsible for making a recommendation regarding distribution of salary increase funds. The financial affairs committee of the board shall be responsible for making a recommendation about funding of the annual increase.1.2.1Role. The executive committee is a permanent committee of the board. Among the responsibilities and authority of the executive committee is that relating to executive compensation. This committee is responsible for the hiring and evaluation of the principal administrators of the university. The committee reviews compensation practices and programs for principal administrators, provides leadership in this area, and upholds the tax-exempt status of the university. The executive committee reports its determinations to the full board.1.2.2Composition. Executive committee membership is appointed as specified in the bylaws.1.2.3Duties and Responsibilities1.2.3.1Review and approve cash and noncash compensation policies and programs applicable to principal administrators. For purposes of this policy, the university considers all employees who fit the IRS definition of “disqualified person” to be included in the principal administrator category.1.2.3.2Take all reasonable and prudent steps to comply with tax-exempt status to ensure that no part of the university’s net earnings inures to the private benefit of any individual or group of individuals.1.2.3.3Establish and periodically review the university’s executive compensation philosophy to ensure that the policy appropriately supports the university’s purpose and mission, attracts and retains key executives at a reasonable cost, and enhances the mission and purpose of the university.1.2.3.4Act on behalf of the board in setting executive compensation policy and making decisions with respect to the compensation of principal administrators by reviewing the annual base salary levels and performance evaluations.1.2.3.5Establish reasonable compensation levels on a position-by-position basis byAssessing the nature and scope of each principal administrator positionAssessing the basis for which compensation is paid to individuals holding such positions including unique background, experience, personal skills, exceptional performance, additional duties and abilities, and challenges facing the organization that require the use of such attributes or skillsObtaining appropriate and comparable compensation market data including data from the following:Similarly situated organizations, both for-profit and tax-exempt, for functionally comparable positionsThe availability of similar specialties in the geographic areaIndependent compensation surveys by nationally recognized independent firms1.2.3.6Document the basis for the determination of the reasonable compensation, including performance evaluations and market data.1.3The board retains the authority to approve compensation agreements contained in collective bargaining agreements.1.3.1The board delegates to the employee relations committee the responsibility to recommend compensation proposals for faculty or staff engaged in certified collective bargaining.2. Delegation of Authority to President2.1The board authorizes the president, in consultation with the administrative board, to establish a job evaluation system and compensation policies. These shall comply with state and federal legislation, and shall be established and implemented to promote the goals of internal equity, reward for meritorious performance, effective recruitment, and retention of faculty and staff.2.2Pay Ranges. The board authorizes the president to establish a set of pay ranges and classification assignments for PATs (professional, academic, and technical), academic administrators, extension educators, and operating staff. The university’s human resource director shall be responsible for establishment and maintenance of the pay program. Pay levels and ranges if applicable for faculty salaries shall be set by individual institutional authority, unless covered by collective bargaining obligations, subject to review by the president.2.3Supplemental Pay Policies. The board authorizes the president to establish compensation policies relating to hours of work, work in excess of a regularly classified and compensated work day, holiday pay, shift differentials, and policy for payment of hourly and other non-status employment.2.4The board authorizes the president to make administrative adjustments as defined below. Such responsibility shall be delegated for administrative purposes to the university’s director of human resources.2.4.1Definition. An administrative adjustment is a salary increase that may be granted by the university’s director of human resources, upon the recommendation of the chief campus personnel/human resources officer, when such an adjustment is necessary:To compensate for an administrative error,To conform to other provisions of the compensation program, orBecause it has been otherwise demonstrated to be in the best interest of the university.2.5The board authorizes the president to establish compensation policies for personnel actions including promotion, transfer, demotion, and reclassification.3. ?Executive Compensation PolicyThe executive committee of the board shall review and approve the compensation policies and programs of principal administrators.3.1The policy of the university is to provide direct compensation programs that reflect the relative size and type of education curriculum of the university in the segment of higher education institutions of which it is a part and which accomplish the university’s mission and tax-exempt purpose without causing any part of the university’s net earnings to inure to the private benefit of an individual or group of individuals.3.2The committee will accomplish this policy in the following manner:3.2.1Determine the relevant market data for the principal administrator position it reviews by obtaining reliable and comparable data from published surveys of both tax-exempt and for-profit organizations focusing on data from comparably organized institutions with similarly sized budgets.3.2.2Develop a target base pay range built off the median of the market data.3.2.3Set base salary by considering both market data and each individual’s background experiences, skills, and meritorious contribution.3.2.4Set salary increase reassessments based on external equity, internal equity, and/or merit.4. ?Procedures4.1The committee shall execute the policy as follows:4.1.1In order to be eligible for any general or merit increase, a principal administrator must have at least [six] months of service in the position as of the effective date of the increase.4.1.2A principal administrator, who has more than [six] months of service, but less than [12] months, will be eligible for prorated general or merit increases. Equity increases may be awarded as appropriate.4.1.3The appointment letter for new principal administrators should include the foregoing information regarding eligibility for salary increases.4.1.4Actual base salary for an individual relative to the target pay will be determined upon recommendation of the president. These recommendations shall be consistent with the above principles.4.2The committee may also reference other published surveys on occasion and shall document the reason and purpose of consulting such other surveys.4.3Appointment Information. The committee shall review and recommend all principal administrator appointments, changes in title, acting, or interim appointments. The written confirmations of employment, which are considered notices of appointment rather than contracts, shall be reviewed and approved by the board chair and the university general counsel prior to issuance. Sample #3 This sample outlines the organization’s compensation philosophy and acceptable sources for comparable pay. EXECUTIVE COMPENSATION POLICYProgram Philosophy and ObjectivesXYZ’s primary objective is to provide a reasonable and competitive executive total compensation opportunity consistent with market-based compensation practices for individuals possessing the experience and skills needed to improve the overall performance of the organization.The organization’s executive compensation program is designed toEncourage the attraction and retention of high-caliber executives.Provide a competitive total compensation package, including benefits.Strongly support and further transition to a “pay for performance” culture through the use of incentives for key employees.Reinforce the goals of the organization by supporting teamwork and collaboration.Ensure that pay is perceived to be fair and equitable.Be flexible to reward individual accomplishments as well as organizational success.Ensure that the program is easy to explain, understand, and administer.Balance the need to be competitive with the limits of available financial resources.Ensure that the program complies with state and federal legislation.Program Market PositionWhile XYZ focuses on comparable nonprofit organizations in our area to benchmark pay, we also understand that the market for executive talent may be broader than this group. Market information from two additional market segments, private foundations, and published not-for-profit compensation surveys may be used as a supplement.In addition, XYZ may also collect other published survey data, when appropriate, for for-profit organizations for specific functional competencies such as finance and human resources.Together with data from the comparable local organizations, data from these market segments are used to form a “market composite” to assess the competitiveness of compensation.In general, XYZ positions total compensation, including benefits, at the median of the market. Programs are designed to be flexible so that compensation can be above or below the median based on experience, performance, and business need to attract and retain specific talent. Governance and ProceduresXYZ’s executive compensation program is administered by the compensation committee of the board. The compensation committee is responsible for establishing and maintaining a competitive compensation program for the key executives of the organization. The committee meets as needed to review the compensation program and make recommendations for any changes to the board, as appropriate.The compensation committee commissions an annual review by an independent consulting firm to evaluate the organization’s executive compensation program against the competitive market. The evaluation is reviewed in the spring of each year and is intended to ensure that the compensation program falls within a reasonable range of competitive practices for comparable positions among similarly situated organizations.Following this review, the committee reviews and approves, for selected key executives, base salaries and annual incentive opportunity adjustments, and objectives and goals for the upcoming year’s annual incentive plan. The committee reviews and recommends to the board salary approval and incentive awards for the chief executive.Suggested ResourcesVogel, Brian H. and Charles W. Quatt. Nonprofit Executive Compensation: Planning, Performance, and Pay. Washington, DC: BoardSource, 2010.“Nonprofit Excess Benefit Transactions: A Position Paper Submitted to the Commission on Accountability and Policy for Religious Organizations.” BoardSource Learning Center Research Report, 2012. Chasteen, Christopher S. and Linda M. Lampkin. ”Improved Transparency for Charity Executive Pay: A Review of Form 990 Data.” Economic Research Institute 2012.Executive Transition PoliciesIntroductionThe search for a new chief executive is an extraordinary opportunity for a board to have a lasting impact on the growth and success of the organization it governs. One of the most concrete performance indicators for a governing board is the quality of the chief executive recruited and retained by the board. All too often, however, board members under-plan and under-invest in this critical task. While it is often impossible to plan every step of an executive transition in advance, a board with an established policy and a routine succession planning process will be better prepared to handle the task when it arises. Key ElementsExecutive transitions are normal and inevitable, so the real test is in how they are handled. Chief executives may leave unexpectedly or after a duly announced resignation, or they may be let go before the previously agreed tenure is over. Without any succession planning, the board is in the precarious position of having to manage the transition with limited information.The board needs an emergency transition plan to help it move forward quickly when an unexpected loss of a chief executive takes place. This does not mean that a successor is named ahead of time but that the process for handling the transition period is clear and in place. Long-term succession plan ingredients include: organizational evaluation, the need to define the qualifications and special skills for a new chief executive, and an adjustment of the job description accordingly.Practical TipsInvolve the current chief executive in succession planning, which will help take the secrecy out of the situation. Work with the chief executive to ensure that the organization has up-to-date operating manuals and appropriate archives. When possible, engage the chief executive in creating resources and plans to help with transition. One important aspect of preparing for succession is for the chief executive to keep the board informed about his or her own future plans.Develop a public relations plan for notifying key constituencies and the public about the transition.Sample Executive Transition PoliciesThe sample policies address preparedness for the eventual loss of the chief executive and assign transition teams to carry on the activities. Sample #1 This simple policy serves as a reminder to the board of its responsibility for executive succession planning.Selection of the Chief ExecutiveThe board has the responsibility to undertake a carefully planned search process when the position of chief executive is vacant. The responsibility of choosing the chief executive has the single greatest impact on the organization’s development and effectiveness.The board must establish clear objectives and clarify expectations for at least the first year of the new chief executive’s service, delineate board functions as distinct from those of the chief executive and staff, and provide an adequate compensation package and other employment terms.Sample #2 This brief sample gives the board chair the power to form a search committee.Chief Executive TransitionsIn order to provide for orderly and effective succession planning and transitions, the board chair may at any time appoint a task force to anticipate and recommend any policies or actions. Whenever a vacancy is known or imminent, the board chair shall appoint a search committee and a committee chair to conduct the search for a new chief executive.Sample #3 This policy requires the chief executive to identify other executives who are capable of carrying out critical duties in the event of an emergency.Emergency Chief Executive SuccessionIn order to protect the board from sudden loss of chief executive services, the chief executive shall have at least one other executive familiar with board and chief executive issues and processes.The following processes cannot go uncovered due to the absence of the chief executive for extended periods of time:Payroll processingTimely bill approval and paymentContract renewalStaffing of board meetingsEmergency personnel actions Sample #4 This sample incorporates succession planning into the annual performance review and assigns responsibility to both the executive committee and the chief executive.PreambleThere are two types of chief executive transitions and, although they share some key elements, they differ in the challenges they present to the board and in how they are implemented. One is the planned transition in which the chief executive notifies the board of intent to leave, enough in advance to allow the board and the organization to prepare. The second is a sudden departure, whether by sudden change in circumstances, illness, death, or termination by the board.In either case, the organization needs to be prepared. Selecting a new chief executive may well be the most important task ever undertaken by the board. It is a pivotal opportunity.StatementAnnually, as part of the chief executive performance review, the chief executive discusses his or her succession plan with the executive committee. The chief executive, through this discussion, advises the executive committee what they should do in the event of a sudden departure in order to ensure organizational stability until a new chief executive is appointed.In addition, the chief executive and executive committee ensure the organization always has in placean up-to-date chief executive position descriptiona current strategic and operating planan operating budget that includes adequate salary and benefits to attract a competent successorknowledge of best practices in executive recruitmentSuggested ResourcesAxelrod, Nancy R. Chief Executive Succession Planning: Essential Guidance for Board and CEOs, Second Edition. Washington, DC: BoardSource, 2010. \Tebbe, Don. Chief Executive Transitions: How to Hire and Support a Nonprofit CEO. Washington, DC: BoardSource, 2008.Cornelius, Marla, Rick Moyers, and Jeanne Bell. “Daring to Lead 2011: A National Study of Nonprofit Executive Leadership.” CompassPoint and The Meyer Foundation, 2011. . Part V: Finance and Investments BudgetingUnrelated Business IncomeCapital ExpendituresFinancial ControlsInvestmentsReserves and EndwomentsFinancial AuditsLoansIRS Forms 990Risk ManagementBudgeting Policies IntroductionEvery responsible organization needs a budget. A budget is a planning document that forecasts expected revenue and expenses for the coming year. The master budget reflects financial activities for the entire organization, and it is a compilation of individual department and project budgets. A budget policy recognizes the importance of this annual process and ensures that the staff and the board remain accountable for their roles in financial planning and oversight. Key ElementsPreparing the budget is a staff responsibility, but the board needs to approve the final document. The board or finance committee should also monitor how well the budget has been implemented by tracking performance (e.g., financial reports) on a regular basis and reviewing and approving any mid-year adjustments.A budget policy should outline the timeline and review process for budgeting, ensuring that the appropriate staff and board committees are involved before the final board approval.A budget policy may specify additional details for expected percentage of cost increases, assumptions for calculating revenue and expenses, or desired surplus levels.Your annual operational plan gets incorporated into the budget; in a way it is the “monetizing” the planned activities for the year.Practical TipsThe budget policy outlines the responsibilities for different parts of the budgeting process. Use it as a reminder to recruit board members and staff with the necessary financial skills and business planning acumen.Review the budget policy regularly. As the financial situation and maturity of the organization evolves, so does the complexity of the budgeting process.A budget is not a public document; it is an internal planning document. Consider stating in the policy whether the budget can be shared with outsiders. Financial reports show what actually happened and how well the budget was followed.Sample Budgeting PoliciesThe sample budgeting policies included vary from outlining respective responsibilities during the budgeting process to providing more detail to guide staff in fund allocation.Sample #1 This policy clarifies that once the budget is approved, it is the chief executive’s responsibility to manage within those terms.Budget Process and ImplementationThe board of XYZ shall approve an annual operating budget for each calendar/fiscal year that will project income and expenses and will provide for programs and support services as outlined in the work plan for the year. The board will approve the annual budget prior to the start of the fiscal/calendar year.The board authorizes the chief executive to manage the organization in accordance with the approved annual operating budget. Programmatic or operational changes that may have a significant impact on the annual budget shall be reviewed by the board between budget cycles and may lead to a budget revision.Sample #2 This sample provides parameters within which the chief executive must work when developing the budget.Financial PlanningBudgeting for any fiscal period shall not deviate materially from the mission, goals, and strategies; risk fiscal jeopardy; nor fail to show a generally acceptable level of foresight. Accordingly, the chief executive shall develop a budget thatcontains enough detail to enable accurate projection of revenues and expenses, separation of capital and operational items, cash flow and subsequent audit trails, and disclosure of planning assumptionsplans the expenditure in any fiscal year of no more funds than are available or conservatively projected to be received in that periodmaintains current assets (cash, accounts receivable, prepaid expenses, etc.) at any time to no less than 100 percent of current liabilities (accounts payable, debt due in 12 months, etc.)does not deviate materially from board-stated priorities and board-approved budgets (except for grant revenues received during a fiscal year and their related expenditures) without seeking board approvalSample #3 This policy states the purpose of the budgeting process and addresses preparation, approval, and review.Budget Process and ReviewThe budget process is designed to providea means by which spending limits are set based on expected revenue levels a system to allow for procedures to compare actual results to the set spending limitsa means for setting program priorities and allocating resources to those prioritiesa means for comparison of actual financial results to budgeted amounts and analysis of differences from those budgeted amountsPreparation of BudgetPrior to the end of the fiscal year, the chief executive and treasurer shall review the financial activity for each of the prior two fiscal years, including actual results of operations for those two fiscal years, mission of the organization, goals, short-term plans, and any other relevant information deemed appropriate.Approval of BudgetAfter preparation of the budget for the next fiscal (calendar) year, copies of the budget, proposals for cost reductions (if necessary), and proposals for cost increases (if necessary) shall be sent to all board members. At the fall in-person board meeting or the in-person board meeting closest to the end of the year, the board shall meet to discuss and approve or reject the budget. If the budget is rejected, the board shall direct the chief executive and treasurer to amend the budget for changes as directed by the board.Review of BudgetOnce the budget has been set for the fiscal year, the budget shall be included in the accounting system of XYZ. As monthly financial statements are prepared, a comparison of actual monthly results of operations to budget figures shall also be prepared. The financial statements and budget variances (with detailed explanations) shall be reviewed by the board. When deemed necessary, the board shall revise the budget to fund additional services or make allowances for other unbudgeted revenues or expenses.Suggested ResourcesLang, Andrew S. Financial Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Berger, Steven. Understanding Nonprofit Financial Statements, Third Edition. Washington, DC: BoardSource, 2008.Nonprofit Accounting Basics Unrelated Business Income (UBI) PoliciesIntroductionA nonprofit organization plans its activities and establishes new programs within the scope of its mission. However, to enhance its income flow, an organization may undertake business activities that are not substantially related to its core purpose. Engaging in unrelated business is legal as long as the organization follows IRS guidelines. If your unrelated business income (UBI) exceeds $1,000, you must file Form 990-T and may be required to pay unrelated business income tax (UBIT). The tax rate for unrelated business income is the standard commercial income rate.Key ElementsThe IRS definition of UBI has three components. If all three pertain to your activity, you may be required to pay UBIT. The activity mustbe regularly carried on constitute a generally recognized trade or businessbe substantially unrelated to the organization’s tax-exempt purpose‘Regularly carried on’ means that the business activity is constant, frequent, or carried on like any normal commercial activity. If a nonprofit sells T-shirts or mugs in its catalog or accepts advertisements in its newsletter, that is business that is regularly carried on. Even if the actual activity takes place only once a year, the IRS can levy a tax if the preparation time for the activity is substantial throughout the year. The fragmentation rule, as defined by the IRS, requires that you segment each revenue-generating activity into related (nontaxable) and unrelated (taxable) categories. An unrelated business activity that is a fragment of a related business activity is taxable. For example, a museum selling various products in a gift shop must separate all products according to how they relate to the organization’s purpose. Art posters in a museum shop are related and therefore not taxable, whereas mugs would be taxable.Even if all of a nonprofit’s revenue is directed to tax-exempt purposes, its origin is the determining factor for the IRS. The origin determines whether income is unrelated or related, not how the income is used. General accounting rules apply to UBIT. However, special care is needed when dealing with cost allocations, deductions, and depreciation. Only directly connected expenses can be subtracted from unrelated income.A nonprofit must be careful about engaging in many unrelated activities because of the risk of losing its tax-exempt status. For the IRS, a substantial amount of UBI is approximately 20 to 25 percent of total revenue. Creating a separate subsidiary, controlled by the nonprofit, to house an unrelated business is a possible option.Practical TipsTo avoid complications with IRS regulations, be prudent when engaging in unrelated activities and carefully evaluate potential commercial endeavors. There can be a fine line between related and unrelated activities. Sometimes, however, it makes sense to pay the tax rather than forgo an unrelated business activity. Consult an attorney. To avoid tax, consider the following features for your activity.Engage volunteers to do the work (parent volunteers in a kindergarten)Use donated products or services (thrift shop).Specifically provide these products and services for your members (cafeteria in a hospital/museum)Arrange only legal games (weekly bingo games).Rely on royalties, affinity programs, renting of your facilities, etc. Under most circumstances, the IRS accepts them as non-taxable activities.Sample UBI PoliciesThese samples include a short as well as a more elaborate policy. Sample #1This sample ensures that all UBI activity is verified and reported.XYZ must identify and report unrelated business income on its annual tax return, and remit any tax due in compliance with federal, state, and local tax laws and regulations. Departments, schools, divisions, or other XYZ units generating income that does not directly further XYZ’s tax exempt purpose must contact the Tax Department to determine if such income is subject to unrelated business income tax.Sample #2This sample for a university clarifies what is considered unrelated business activity.Educational institutions are typically nonprofit entities that are given tax-exempt status by the Internal Revenue Service. As a result of the tax-exempt status, most revenue generating projects are tax-exempt because they are within the educational mission of providing direct and substantial benefits to students. On the other hand, the University may have some revenue-generating projects which may be subject to taxation because the revenue is derived from "unrelated business income" as opposed to "related function income."Unrelated business income is the revenue derived from year-round activities that have been undertaken solely for the purpose of generating income and are not educationally based. Deciding an activity's status as related or unrelated is of great financial concern since unrelated business income is taxed at a flat rate of approximately 30 percent while related function income is non-taxable.What Determines Unrelated Business Income?Income is considered unrelated and taxed at the rate of approximately 30 percent when all three of the following conditions are met: Revenue is generated from a trade or business. "Trade" or "business" generally includes any activity that generates income from selling goods to the performing of services.The activity of the trade or business is carried on regularly and is unrelated to the mission of the organization. This is evaluated by comparing the program to similar private sector non-exempt sector organizations. This condition is met if the activity is reasonably similar in frequency, continuity, and manner to the private sector non-exempt organization but is substantially unrelated to the mission of the organization. For educational institutions, periodic or sporadic income producing activities are considered dissimilar to year-round commercial projects.GuidelinesFiscal agents are to notify the Comptroller's Office of any revenue received in return for services rendered, rental of property, or activities. Although revenue may not be unrelated income, the University must be prepared to demonstrate to the IRS that it has examined each activity that generates revenue and made a valid determination that the activity is or is not "unrelated business income." The Comptroller's Office in conjunction with the fiscal agents shall make the final decision as to whether or not the income is related or unrelated.The use of revenue generated from the activity for the purpose of improving the quality of instruction or activity congruent with the educational mission makes no difference on reporting requirements. It is the source of income that is the IRS' concern.All revenue information submitted by the fiscal agents will be reviewed by the Comptroller's Office. Fiscal agents may subsequently be asked to complete a financial statement/worksheet. This information will then be used by the Comptroller's Office to prepare the University's consolidated tax ptroller's Office will exclude the following from IRS reporting, any activity thatexists primarily for the convenience of the University's students, faculty, or staffis infrequent, i.e., the activity is not regularly scheduled and infrequently carried onis "substantially related to the University's exempt purpose" provided the activity is not carried on to an extent greater than necessaryis not a "trade or business"has XX percent or more of the income from the activity generated from the sale of donated goodsis derived from labor which is at least XX percent volunteerThe revenue reports from the fiscal agents to the Comptroller's Office are due after the close of business each June 30 and no later than September 30 each year.Suggested Resources“Unrelated Business Income Defined,” IRS Hurwit&Associates. “Taxation and Unrelated Business Income.” Capital Expenditures PoliciesIntroductionA capital expenditure is money spent on acquiring or upgrading physical assets of the organization, such as buildings, real estate, furniture, and equipment. Accounting rules define how such expenses may be depreciated. Some small nonprofits prepare their financial statement on the cash basis. In these cases, fixed assets are neither capitalized nor depreciated. However, procedures should still be in place pertaining to financial controls and approvals of capital items. Because many capital expenditures represent a significant investment and considerable cash outlay, nonprofit boards often establish financial limits beyond which a chief executive cannot go without board approval.Key ElementsThe board should define the level of spending that constitutes a capital expenditure and any approval processes. These should govern routine expenses, such as office equipment, computer upgrades, and building maintenance.Expenditure policies should define the useful life of different types of assets and whether depreciation is budgeted or not budgeted from the funds used for capital expenditures.Certain states have legal requirements within their nonprofit law pertaining to real estate transactions.Practical TipsWhen creating a capital expenditure policy, clarify the difference between supply and capital assets.When an organization undertakes a major, planned investment, such as a building a new facility, the board should consider establishing special policies to guide these out-of-the-ordinary capital expenditures.Because capital expenditures are generally large investments, the board and staff should work together on creating a multi-year capital financial forecast. This will help plan ahead for major cash outlays, such as Web designs, accounting software, and office expansions.Consider establishing a separate sinking fund or capital improvement fund savings account for physical assets; the policy should clarify how and when it can be used.Sample Capital Expenditure PoliciesThe samples provide guidelines for boards in their oversight of capital expenditures. Sample #1 This policy defines capital expenditures and provides guidelines related to budgeting and purchasing procedures.Capital Expenditures PolicyDefinitionA capital acquisition is an individual asset and/or class of assets that has a useful life of more than one year and a cost of $__ or more.BudgetAnticipated capital acquisitions shall be included in the normal budgetary process, and when necessary, as part of the separate capital acquisitions budget. The annual budget shall include purchase requests for all new and replacement acquisitions. PurchasingAny equipment with an estimated value of $__ or more shall be purchased through competitive bidding or comparative pricing by at least three vendors whenever possible. Comparative pricing or competitive bidding should also be used periodically for regularly purchased materials, supplies, services, and insurance. Executive AuthorityThe chief executive shall have the authority to make purchases that are part of the approved annual budget without additional approval from the board. Such acquisitions shall be reported to the board and finance committee at their next regular meeting.Long-Range PlanThe organization should consider adopting a five-year long-range plan for capital additions and replacements.Discretionary FundThe chief executive shall have the authority to spend up to $__ from the discretionary fund on any single acquisition without prior approval from the board. Such acquisitions shall be reported to the board and finance committee at their next regular meeting.PropertyThe finance committee must approve the purchase or disposition of any capital asset with a value of $__ or more. The purchase or sale of any capital asset of higher value shall be approved by the board. Purchase or sale of any real estate must be approved by the board.Sample #2 This policy emphasizes different approval authority depending on the nature of the capital expenditure.To the extent practical, capital expenditures for XYZ will be incorporated into the annual budget. The following guidelines will govern the acquisition of all capital expenditures:All capital expenditures are acquired pursuant to a purchase order.The board chair or an appointed board representative must sign all purchase orders over $__.The chief executive may acquire capital expenditures specifically identified in the annual budget approved by the board. The annual budget may have some nominal allocation for smaller capital expenditures.Items of a capital nature over $__ will be capitalized.A fixed-asset inventory of office equipment, computers, and printers will be maintained and adequate insurance will be maintained.Suggested Resources Lang, Andrew S. Financial Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Berger, Steven. Understanding Nonprofit Financial Statements, Third Edition. Washington, DC: BoardSource, 2008.Nonprofit Accounting Basics Financial Controls PoliciesIntroductionAs part of its financial oversight of the organization, the board is responsible for ensuring that appropriate internal controls are in place — and adhered to — to protect the organization. These internal controls ensure that the organization is using generally accepted accounting principles, complying with applicable laws and regulations, providing reliable financial information, and operating efficiently. More specifically, financial controls are designed to segregate financial duties, protect against asset loss, protect cash receipts, require second signatures on large checks, keep track of inventory, require an efficient bidding process, produce timely reports, and maintain accurate recordkeeping.Key ElementsGood financial practice requires boards to have policies for the handling of money by staff and board alike. Such policies include controls put on check-signing authority, transfer of funds, cash disbursement, and other financial transactions.Financial controls provide broad guidelines for significant financial transactions, but the board should not get involved in determining (or monitoring) how the staff handles daily transactions.An area of financial concern is the approval of capital expenditures, such as for equipment and other tangible assets, made by the staff. Nonprofit organizations often have financial limits beyond which a chief executive cannot go without board approval.Practical TipsDepending on the scope of the organization’s other financial policies, consider ensuring that certain internal management controls are established and requiring that they be reviewed annually.In managing funds, the board generally delegates day-to-day control to staff; however, the board should keep control of borrowing money. Excessive borrowing is not in the interest of the organization and may signal a lack of sufficient financial controls on the part of staff and board.Review the organization’s financial policies and procedures regularly. This task can be delegated to the audit or finance committee.If the board approves the establishment of credit card accounts for the organization, the chief executive must set clear processes to ensure proper use of the cards for business purposes only.Sample Financial Control PoliciesIf the organization does not have a single, all-encompassing financial policy, the board should ensure that some specific polices are instituted. The samples address a variety of different issues, and they are offered as examples of common internal control policies.Sample #1This brief policy establishes general guidelines for financial controls and clarifies what requires board approval.Authorization for signatures necessary on contracts, checks, and orders for payment, receipt or deposit or withdrawal of money, and access to securities of XYZ shall be provided by resolution of the board.Any individual authorized to purchase goods and/or services for the organization shall follow the procedures set forth in these policies and the Internal Control Procedures Manual.The finance committee shall be responsible for reviewing and recommending an annual operating and a capital budget to the board for approval.The board shall be responsible for adopting the annual operating and capital budgets.No expense shall be incurred in excess of the total budgetary appropriations without prior approval of the board.Sample #2This short and simple policy provides basic requirements for check signing and cash disbursements.Check-Signing AuthorityThe board chair, treasurer, chief executive, and one senior staff member other than the director of finance, as designated by the chief executive, are authorized to sign checks. Checks up to $__ require one signature.Check over $__ and up to $__ require the signature of the board chair, treasurer, chief executive, or other senior staff member as designated above.All checks over $__ require two signatures, one of which is an officer.Cash DisbursementsAn authorized check signer will make disbursements only upon review and approval of the transaction. This will include review for the existence of proper supporting documentation, such as a purchase order and evidence of the receipts of the goods and services.Any disbursement check requires the signatures of any two persons authorized by the board.Sample #3This short policy covers check signing, withdrawal of funds, and deposits, and requires the check signers to be bonded.AccountsXYZ shall maintain its accounts in financial institutions that are federally insured. All funds received by XYZ shall be deposited daily. All nonproductive funds shall be invested in accordance with the investment policy established by the board.Authority To SignOrders of withdrawal shall bear the signature of one of the following officers or staff members:Board chairTreasurerChief executiveTwo staff members, as designated by the board In addition, any checks issued over $__ shall require two signatures, and any checks payable to any one of the above-named persons shall be signed by someone other than the payee.BondingEach officer or designated signatory with authority to withdraw funds shall be bonded. The cost associated to secure the aforementioned coverage shall be that of XYZ. The amount of insurance coverage will be reviewed annually by the finance committee.Quarterly ReviewThe finance committee shall, on a quarterly basis, review all disbursements in the amount of $__ or more.Sample #4This sample provides criteria and guidelines should the organization need to borrow funds or establish a line of credit.From time to time it will be necessary for XYZ to borrow funds from outside sources to fund operations and expansion. This will be necessary because of the seasonality of income from fees, donations, and sales, and due to major expansions or revisions of XYZ programs.Funds are to be borrowed only as required to meet these needs, and borrowing is to be consistent with sound fiscal and management practices. Borrowings are not intended to make up for inadequate planning or spending above budgeted levels.Borrowing funds should be done within the following guidelines:Borrowing should be within appropriate limits approved by the board prior to the time of borrowing.Amounts should be borrowed at the lowest available interest rates. Where borrowing from individuals can be done at lower than current commercial rates, this may be done.Most borrowing will be done at short-term conditions due to the seasonal nature of income. Long-term borrowing will be done only if rates are favorable and amounts for short-term would be at the same minimum level.Sample #5Generally, nonprofits do not make loans to board or staff members because they are usually prohibited by state nonprofit corporation statutes and because they may cause “excess benefit transactions.” This policy provides stringent guidelines for those rare instances when they are allowed and appropriate.No loan may be made to any officer, director, or employee of the organization, except in accordance with applicable [State] law. Any such loan may be made only pursuant to a written agreement approved by the board and reviewed and approved by legal counsel. All such loans to an employee shall be repaid through payroll withholding and shall be callable by the organization upon termination of employment or, in the case of a relocation loan secured by a residence, upon the sale of the residence. Staff shall ensure that all such loans are properly reported for employment and income tax purposes.Sample #6Through this policy, the board authorizes the chief executive to define processes for credit cards for business use. However, the board should retain the authority to set appropriate credit limits.The board has the authority to approve the establishment of a charge account in XYZ’s name, including the credit limit.The chief executive has the responsibility to establish and enforce written procedures for the use of all open charge accounts and credit cards. The finance committee will review all credit card procedures on an annual basis.Sample #7Because corporate credit cards can complicate accounting procedures and are ripe for abuse, some organizations choose not to use them. This policy allows for a single corporate card to be used only in emergency situations.XYZ shall not issue corporate credit cards to employees. Employees shall follow the expense reimbursement policy whereby employees submit legitimate business expenses charged to their personal credit cards and XYZ shall reimburse them within 30 days of receipt. For emergency situations, XYZ shall maintain one corporate credit card under the supervision of the chief executive.Sample #8This brief statement connects the organization’s purchasing activities to its values related to diversity and community service.XYZ will make a good-faith effort to identify and solicit minority and women vendors. It will strive to utilize, whenever possible, vendors that have a presence within the organization’s service area.Suggested ResourcesLang, Andrew S. Financial Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Berger, Steven. Understanding Nonprofit Financial Statements, Third Edition. Washington, DC: BoardSource, 2008. Kurtz, Daniel L. and Sarah E. Paul. Managing Conflicts of Interest: The Board’s Guide to Unbiased Decision Making, Third Edition. Washington, DC: BoardSource, 2013.Investment PoliciesIntroductionWise investing provides an opportunity to increase revenues and decrease pressure on fundraising and other sources of revenue. Any organization that has assets to invest should also have appropriate policies to safeguard those investments. Such policies can range from simple introductory statements to complex details useful only to the most sophisticated investment committees. Key ElementsA basic investment policy identifies the assets available for investing, defines general investment objectives, sets asset allocation parameters (e.g., diversification), and clarifies the organization’s tolerance for risk (by defining required ratings).Investment policies are not only for large organizations with considerable endowments. A responsible board makes sure that policies exist to get the best return from any cash surplus. Likewise, investment policies are reviewed and revised as the organization grows.An investment policy often defines the role of an investment manager in day-to-day management of the funds, specifies his or her accountability (e.g., risk in transactions, reporting requirements, and coverage of cash flow needs), and designates a board committee or the full board to monitor the manager’s performance and that of the portfolio.The investment policy offers some protection from liability. By faithfully adhering to the requirements of the investment policy, the board may reduce the chances of arbitrary or inappropriate investments, and thus limit the viability of any charges that it breached fiduciary duties.In 2006 the Uniform Prudent Management of Institutional Funds Act (UPMIFA) replaced the Uniform Management of Institutional Funds Act (UMIFA). UPMIFA provides guidance and authority to charitable organizations concerning the management and investment of funds. It also modernized the rules governing expenditures from endowment funds, both to provide stricter guidelines on spending from endowment funds and to give institutions the ability to cope more easily with fluctuations in the value of the endowment.Practical TipsWhen determining investment goals, take short-term and long-term goals into consideration. The purpose of the specific fund can help determine the priorities — growth, liquidity or security — and the level of acceptable risk.When diversifying the portfolio, consider different types of investments (e.g., stocks, bonds, alternative and cash equivalents) in different classes (e.g., corporate vs. U.S. Treasury bonds, and large, medium, or small company stocks) in different industries.Consider adopting socially responsible investment guidelines, restricting investment activity in liquor, tobacco, arms, and other potentially controversial investments.Sample Investment PoliciesInvestment policies provide direction for the nonprofit’s board about how accumulated funds should be invested. Some organizations simply need a statement to clarify how any cash surplus is treated, and others require a comprehensive policy defining the purpose and use of a substantial endowment. The sample policies included are arranged in order of increasing specificity.Sample #1 This general policy establishes an investment committee, authorizes retention of an investment consultant, and then addresses all of the standard investment policy issues.Investment Policies of XYZPreambleIt is the policy of the board to treat all assets of XYZ, including funds that are legally unrestricted, as if held by XYZ in a fiduciary capacity for the sake of accomplishing its mission and purposes. The following investment objectives and directions are to be judged and understood in light of that overall sense of stewardship. In that regard, the basic investment standards shall be those of a prudent investor as articulated in applicable state laws.Investment AssetsFor purposes of these policies, investment assets are those assets of XYZ that are available for investment in the public securities markets as stocks, bonds, cash, or cash equivalents, either directly or through intermediate structures. Illiquid assets are described in XYZ’s gift acceptance policies, and are governed by those rules and not by these investment policies. Supervision and DelegationThe board of XYZ has adopted these policies and has formed an investment committee, described below, to whom it has delegated authority to supervise XYZ investments. The board reserves to itself the exclusive right to amend or revise these policies.Investment Committee The investment committee is comprised of the chief financial officer, [X # of] board members, and [X # of] non–board member(s), who serve at the pleasure of the board. It shall be the responsibility of the committee to supervise the overall implementation of XYZ’s investment policies by XYZ’s executive staff and outside advisorsmonitor and evaluate the investment performance of XYZ’s fundsreport regularly on XYZ investment matters to the boardgrant exceptions as permitted in these policies and recommend changes in approved policy, guidelines, and objectives as neededexecute such other duties as may be delegated by the boardWhenever these policies assign specific tasks to the committee, the policies assume that the actual work will (or may) be performed by XYZ’s chief financial officer or other designated staff members, subject only to the committee’s overall supervision.Investment Consultant, Advisors, and AgentsThe committee is specifically authorized to retain one or more investment advisors (advisors) as well as any administrators, custodians, or other investment service providers required for the proper management of XYZ’s funds. The committee may utilize an advisor as an investment consultant (consultant) to advise and assist the committee in the discharge of its duties and responsibilities. In that regard, a consultant may help the committee todevelop and maintain investment policy, asset allocation strategies, risk-based fund objectives, and appropriate investment management structuresselect, monitor, and evaluate investment advisors and/or investment entitiesprovide and/or review quarterly performance measurement reports and assist the committee in interpreting the resultsreview portfolios and recommend actions, as needed, to maintain proper asset allocations and investment strategies for the objectives of each fundexecute such other duties as may be mutually agreedIn discharging this authority, the committee can act in the place and stead of the board and may receive reports from, pay compensation to, enter into agreements with, and delegate discretionary investment authority to such advisors. When delegating discretionary investment authority to one or more advisors, the committee will establish and follow appropriate procedures for selecting such advisors and for conveying to each the scope of their authority, the organization’s expectations, and the requirement of full compliance with these policies.ObjectivesXYZ’s primary investment objective is to preserve and protect its assets by earning a total return for each category of assets (a “fund”), which is appropriate for each fund’s time horizon, distribution requirements, and risk tolerance. XYZ currently maintains [list funds here, e.g., operating reserves, endowments, charitable trust funds, annuity reserves] and may add other funds in the future. These policies apply to all XYZ funds, although the specific objectives, risk parameters, and asset allocation will vary, as appropriate, from fund to fund. Asset AllocationsActual asset allocations for each fund will be established and maintained by XYZ on the advice of its consultant and/or advisors, within the ranges provided in the following table: (Sample Only)Investment FundAsset ClassEquitiesFixed-IncomeCash and Cash EquivalentsOperating Reserves0%0–50%50–100%Annuity Reserves30–60%35–75%5–35%Charitable Trusts30–60%35–75%5–35%Endowments50–80%15–50%5–20%When appropriate, specific objectives for each fund, including specific asset allocation parameters and performance standards, may be reflected in an appendix attached to these policies. Such specific objectives shall nonetheless be within the foregoing ranges, which can only be modified by the committee with the approval of the board.Rebalancing ProceduresThe committee will monitor the asset allocation of each fund based on reports provided by XYZ’s consultant and/or investment advisors. The committee may establish any reasonable rebalancing procedure based on either periodic reviews or departures from a range and may use its discretion to determine the timing of rebalancing actions. To achieve rebalancing, XYZ may either move money from one asset class to another or may direct future contributions and expenditures from particular classes as is most convenient.Investment GuidelinesTo accomplish its investment objectives, XYZ is authorized to utilize any legal investment structure including separately managed portfolios, mutual funds, exchange traded funds, limited partnerships, and other commingled investment entities. This authority is subject to the requirements and restrictions contained in these policies.When utilizing mutual funds or other commingled entities, the committee shall see that XYZ’s staff, consultant, and/or investment advisors have selected the investment entity appropriately based on the strategies and provisions contained in the entity’s prospectus. In that event, the terms and conditions of the prospectus are deemed to control the entity’s internal asset allocation, asset quality, diversification, and other requirements. For separately managed portfolios, the following additional requirements shall apply:Asset QualityCommon stocks — The advisor may invest in any unrestricted, publicly traded common stock that is listed on a major exchange or a national, over-the-counter market, and that is appropriate for the portfolio objectives, asset class, and/or investment style of the fund that is to hold such shares. Convertible preferred stock and convertible bonds — The advisor may use convertible preferred stocks and bonds as equity investments. The quality rating of convertible preferred stock and convertible bonds must be BBB or better, as rated by Standard & Poor’s; or BAA or better, as rated by Moody’s. The common stock into which both may be converted must satisfy the standard of Section 1, above.Fixed-income securities — The quality rating of bonds and notes must be A or better, as rated by Standard & Poor’s or Moody’s. The portfolio may consist of only traditional principal and interest obligations with maturities of __ (e.g., seven) years or less. The advisor may not utilize derivatives without the prior permission of the committee.Short-term reserves — The quality rating of commercial paper must be A+1, as rated by Standard & Poor’s; P+1, as rated by Moody’s; or better. The assets of any money market mutual funds must comply with the quality provisions for fixed-income securities or short-term reserves.Other securities — The advisor may invest in real estate investment securities (REITs), international securities traded in the United States directly or as depositary shares, international securities traded on recognized foreign exchanges, and any other publicly traded investments that the committee determines to be appropriate.Asset DiversificationThe advisor will maintain reasonable diversification at all times. The equity securities of any one company should not exceed __ percent of the portfolio at the time of purchase and the combined debt and equity securities should not exceed __ percent of the portfolio at any time. The advisor shall also maintain reasonable sector allocations. In that regard, the maximum allocation to any one economic sector shall be __ percent of the sector’s weighting, as defined in the published index used for measuring the portfolio’s performance (e.g., S&P500, Russell 1000, etc.). These restrictions do not apply to U.S. government securities.Proxy VotingSubject to any specific instructions received from XYZ or contained in XYZ’s mission guidelines (see Mission-Based Investment Criteria below), each advisor shall vote proxies according to their firm’s established procedures and shall provide a copy of such procedures to the committee upon request.Custody and Securities BrokerageThe committee will establish such custodial and brokerage relationships as are necessary for the efficient management of XYZ’s funds. Whenever the committee has not designated a brokerage relationship, then XYZ investment advisors may execute transactions wherever they can obtain best price and execution.Cash Flow RequirementsXYZ will be responsible for advising the consultant and each advisor in a timely manner of XYZ’s cash distribution requirements from any managed portfolio or fund. Each advisor is responsible for providing adequate liquidity to meet such distribution requirements.Investment RestrictionsXYZ’s investment assets are to be managed with regard to the following restrictions for tax, risk, or mission purposes:Tax-Based RestrictionsXYZ is a charitable organization under § 501(c)(3) of the Internal Revenue Code. Consequently, its income is generally exempt from federal and state income tax with the exception of income that constitutes unrelated business income (UBI). Since UBI can be generated by leveraged investments (resulting in “debt-financed income”), XYZ will not utilize margin, short selling, or other leveraged investment strategies unless the investment committee grants a specific exception as described below.Risk-Based RestrictionsXYZ will not engage in commodities transactions or option strategies (puts, calls, straddles) nor will it invest in any non–publicly traded securities including but not limited to managed futures funds, hedge funds, private equity funds, or other alternative investments unless approved by the committee as provided below.Mission-Based Investment CriteriaXYZ desires to invest in companies whose business conduct is consistent with XYZ’s goals and beliefs. Therefore, XYZ’s consultant and/or investment advisors will use their best efforts to avoid holding securities of any company known to participate in businesses the board deems to be socially or morally inconsistent with XYZ objectives. The committee will provide advisors with a statement of XYZ’s mission guidelines and restrictions.Exceptions to the Investment RestrictionsThe board recognizes the evolving nature of the investment world and that, under some circumstances, XYZ may wish to utilize newer or more complex investment strategies. Therefore, the investment committee is authorized to grant exceptions to the foregoing restrictions. For tax-based restrictions, the committee is to determine if a particular strategy or investment will generate UBTI, for which it may rely on advice of counsel. When granting exceptions, the committee must determine that the potential rewards outweigh the incremental risks. All such exceptions shall be made in writing and shall be communicated to the board as part of the next regular investment committee report.Reporting RequirementsMonthly — The committee will obtain written monthly custodial statements. Such statements should contain all pertinent transaction details for each account that holds all or a portion of any XYZ investment funds. Each monthly statement should include the name and quantity of each security purchased or sold, with the price and transaction datea description of each security holding as of month-end, including its percentage of the total portfolio, purchase date, quantity, average cost basis, current market value, unrealized gain or loss, and indicated annual income (yield) at marketIn addition, if not included in the custodial reports, the consultant and/or the investment advisor(s) should provide a report for each fund or portfolio showing the month-end allocation of assets between equities, fixed-income securities, and cash. The monthly review of custodial statements may be delegated to XYZ accounting staff.Quarterly — The committee should obtain from its investment consultant and/or investment advisors, a detailed review of XYZ’s investment performance for the preceding quarter and for longer trailing periods as appropriate. Such reports should be provided as to each fund and as to XYZ investment assets in the aggregate. As to each fund, the committee should establish with its investment consultant and/or investment advisors the specific criteria for monitoring each fund’s performance including the index or blend of indices that are appropriate for the objectives of each fund and for the investment style or asset class of each portfolio within a fund. The committee shall meet with the consultant to conduct such reviews to the extent it deems necessary.Periodically — The committee should meet with its investment consultant at least annually to review all aspects of XYZ’s investment assets. Such a review should include 1) strategic asset allocation, 2) manager and investment entity performance, 3) anticipated additions to or withdrawals from funds, 4) future investment strategies, and 5) any other matters of interest to the committee.Sample #2 Goals and responsibilities are thoroughly defined in this sample. It incorporates social investment as part of its investment goals.INVESTMENT POLICYPreambleAll funds of XYZ are held by the board as a fiduciary. Therefore, all restricted and unrestricted funds of the organization are held by the organization as a steward for the sake of carrying out XYZ’s mission and objectives. The following instructions are to be understood and employed with that sense of stewardship in mind. Further, this investment policy is set forth in order thatthere is a clear understanding of responsibilities and objectives of the board, its delegates, and chosen investment counselors (hereinafter “counselors”)the board will have a basis for evaluating the investment performance of each of the organization’s investment fundsXYZ ApprovalAny investment policy must be approved by the board.Delegation of ResponsibilitiesThe board of XYZ has delegated supervisory authority over its financial affairs to the finance committee (hereinafter “committee”) of the XYZ board, as provided in XYZ’s bylaws. The committee will report the status of XYZ investments quarterly to the board. In carrying out its responsibilities, the committee and its counselors will act in accord with this investment policy (hereinafter “policy”), and all applicable laws and state and federal regulations that apply to nonprofit agencies including, but not limited to, the Uniform Prudent Investors Act of 1994 and the Uniform Management of Institutional Funds Act.Specific duties of the board, as delegated, includeselecting counselors, custodians, and brokersdeveloping investment objectives, investment performance criteria, and implementing policies consistent with the financial needs of XYZdetermining asset allocation strategy and overall investment portfolio structure to meet XYZ’s objectivesproviding for the prompt investment of cash received by XYZreviewing and evaluating investment results based on performance goals enumerated herein and taking corrective action as neededThe board and committee are authorized to retain one or more counselors to assume the investment management of funds and assets owned or administered by XYZ. In discharging this authority, the committee may act in the place of the board and may pay compensation to, and enter into agreements with such counselors. The board may also grant (in written form only) exceptions to this investment policy when deemed appropriate.ObjectivesThe primary investment objective of XYZ is to preserve and protect its assets by earning a total return of each fund (e.g., operating reserve, charitable trust funds, annuity reserve, etc.) appropriate to each fund’s time horizon, liquidity needs, and risk tolerance, as herein below set forth under “Performance Goals.”Performance GoalsThe following performance goals are to be sought while at the same time preserving the principal or corpus of invested XYZ funds. The rates of return shown below are net of all expenses (management fees, commissions, etc.).Cash Equivalents defined as 90 days or less over time should exceed the average return on ninety (90)-day U.S. Treasury Bills.Fixed Income Assets over time should exceed the average return on the Barclays Capital Aggregate Bond Index.Equity Investments over time should exceed the average return of the [Standard & Poor's 500] Index or the [MS EAFE] Index, whichever is applicable.Asset MixTo accomplish XYZ’s investment objectives, its advisors are authorized to utilize equity, fixed income, and cash equivalent securities. The XYZ advisors are required to remain within the ranges outlined below, which ranges the committee may amend periodically to best achieve XYZ’s investment goals.Acceptable Range of InvestmentInvestment FundEquitiesFixed IncomeCash EquivalentsOperating Reserve*%%%Annuity Reserve%%%Charitable Trusts%%%*If operating reserve becomes lower than __ months normal operating expenses, all funds will be maintained as operating capital. Asset Quality — Permissible InvestmentsCommon stocks — Advisors may invest in any unrestricted, publicly traded common stock that is listed on a major exchange or a national, over-the-counter market that is appropriate for XYZ portfolio objectives, asset class, and/or investment style of the fund that is to hold such shares.Convertible preferred stock and convertible bonds — Convertible stock and bonds must have a BBB rating or better by S&P or BAA or better rating by Moody’s. If converted, these securities must satisfy the above standards for common stocks.Fixed income securities — Bonds and notes must be rated BAA 1 or better by Moody’s or BBB or better by S&P. Only traditional principal and interest obligations (no derivatives) with less than __ years to maturity from date of purchase are eligible.Cash equivalents — Commercial paper must be rated A-1 by S&P and/or P-1 by Moody’s. Banker’s Acceptances and Repurchase Agreements must be issued by banks that are rated BAA by Moody’s or rated BBB by S&P. U.S. Government Treasury Bills and Agency Discount Notes are also acceptable. Money Market Fund holdings must comply with the provisions. (Cash Equivalents defined as investments with maturities of 90 days or less.)Prohibited TransactionsNaked CallsNaked PutsCommoditiesUncovered Short PositionsAsset Diversification and MarketabilityAs a general policy, advisors will maintain reasonable diversification at all times. Advisors will not allow investments in equity or debt securities of any one company to exceed __ percent of the XYZ portfolio nor __ percent of XYZ’s total securities position in any one company. Advisors will invest no more than __ percent of the entire XYZ portfolio in the securities of any one sector. Further, all securities held by XYZ’s counselors will be “marketable” securities in that a quotation of bid and offer values must be readily available and any securities sold must settle within five (5) business days.Custody and Securities BrokerageThe committee will establish such custodial and brokerage relationships as are necessary for the efficient management of XYZ’s funds. Whenever the committee has not designated a brokerage relationship, then the counselors will execute Settlement of Transactions wherever it can obtain best price and execution.TransactionsAll purchases and sales of securities will be delivered to XYZ’s designated agent for payment with immediately available funds. Mission and Social Investing ConsiderationsXYZ desires to invest in/with companies whose business conduct is consistent with XYZ’s goals and beliefs. Therefore, XYZ’s counselors will use their best efforts to avoid investing directly in the securities of any company known to participate in businesses the board deems to be morally offensive. XYZ’s counselors must read and understand its Mission and Values Statements in order to invest XYZ’s funds appropriately. Further, XYZ and its advisors will make every attempt possible to invest at least __ percent of XYZ’s aggregate investment funds in minority-controlled firms provided counselors adhere to performance goals and asset quality considerations as set forth in this policy.Reporting RequirementsMonthly — the custodian and/or broker will provide the committee with a monthly written statement containing all pertinent transaction details for each separately managed portfolio including, but not limited toa transaction statement with the description and quantity of each security purchased or sold, with the price and date of each transactiona “portfolio holdings” report detailing each holding’s quantity, average cost basis, purchase date, current market value, unrealized gain or loss, annual income, and yield at cos.Further, this report should break down current asset allocation by category (equity, fixed income, etc.).Quarterly — XYZ’s advisors will provide the committee with detailed reports concerning asset allocation investment performance future investment strategies any other matters of interest to the committeeAnnually — XYZ’s counselors will provide to the committee an annual summary of all transactions in each fiscal year, together with a report of investment performance for each year of its management tenure.Process EvaluationEven though assets are monitored continuously, the committee will focus on the achievement of XYZ’s objectives as follows:Equities — three to five year time horizonFixed income — two to three year time horizonCash equivalents — one to two year time horizonIf any advisor or firm involved with the management of XYZ’s funds changes philosophy, personnel, ownership, or experiences excessive turnover, a review will be conducted to determine if the counselor continues to be appropriate for XYZ’s investment needs.Cash Distribution RequirementsXYZ’s finance department staff will be responsible for advising its advisors in a timely manner no less than five (5) business days of XYZ’s cash distribution needs. XYZ’s staff and counselors are responsible for advance planning that will ensure that the organization’s cash flow requirements are met in accord with board policy as stated herein and elsewhere.Donated SecuritiesIt is the policy of XYZ to sell all marketable securities received as donations to XYZ as soon as is practical, but in not more than thirty (30) days from their receipt, unless the donation meets the requirements of this policy for its particular fund (operating reserve, annuity reserve, etc.).Conflicts of InterestThe board and committee will not invest XYZ funds with any firm or in any vehicle that may, as a result of the transaction, monetarily benefit a member of the board or XYZ staff.Investment Policy DistributionThis policy, upon every revision hereof, must be distributed by the committee to the following individuals/entities:XYZ chief executive,XYZ finance department staff,XYZ finance committee,XYZ development staff, andAny and all counselors hired by XYZ’s committee.Procedures for Revising GuidelinesAll investment policies will be reviewed and, if necessary, revised at least annually or when deemed necessary by the committee. All revisions will be submitted to the XYZ board for review and approval.This investment policy has been reviewed and approved by:Board ChairFINANCE COMMITTEESample #3 This policy defines different categories of funds and their investment objectives, and distinguishes responsibilities between board and staff.Investment, Board-Designated Reserves, and Endowment PoliciesIt is the general policy of XYZ to invest funds to achieve growth in principal value over time sufficient to preserve or increase the purchasing power of the funds, thus protecting the funds against inflation. The funds include permanently restricted funds, temporarily restricted funds, and board-designated reserves. Notwithstanding this policy, all restrictions placed by donors on the interest and investment earnings on donated funds will be honored.?Investment PolicyFund Categories, Objectives and AuthorityTemporarily Restricted Funds?Description. These funds are restricted in time or purpose. They include donated funds that are restricted to program use or over time, and are expected to be used for operating expenses. They also include funds pledged as collateral to third parties.Investment Objective. Preservation of principal for designated uses, and maximization of earnings in a way that allows for immediate liquidity to meet ongoing operations and spending requirements.Authority.?Within the parameters of this investment policy, the chief executive and chief financial officer have authority to invest the funds, and to spend principal and interest to meet grant requirements and operational needs of XYZ.?Unrestricted Short-Term Operating FundsDescription. These funds are not restricted in their use. They include cash, surplus from current operations, unexpended portions of unrestricted grants, and other unrestricted funds received. Investment Objective. Preservation of principal to cover operating expenses, and maximization of earnings in a way that allows for immediate liquidity to meet ongoing operational requirements. Authority. Within the parameters of this investment policy, the chief executive and chief financial officer have authority to invest the funds, and to spend principal and interest to meet the operational needs of XYZ. ?Board-Designated Reserves Description. These funds have been designated by the board to be held in reserve to support future years’ operations, provide a resource for unexpected downturns, and provide a source of investment in the business. They may include accumulations from past years’ annual results of operations, investment income, and other funds designated by the board. Investment Objective. Preservation of real purchasing power of principal, and maximization of investment income. Authority. The finance and investment committee shall establish the appropriate ranges and types of investment for these funds, with prior approval of the board, and shall review investment performance of these funds on a quarterly basis in accordance with this policy. Within the parameters of this Investment Policy and with the advice of the finance and investment committee, the chief executive and chief financial officer shall have the authority to invest the funds. Endowment FundsDescription. Endowed funds are those that have been given in perpetuity, through which the principal of the fund remains intact and the income is paid out.Investment Objective. Preservation of principal to allow distribution of income for designated uses.Authority. These funds shall be overseen by the investment committee, invested on a long-term basis in accordance with the investment policy. Spending withdrawals will be made in accordance with the spending policy.Authorized InvestmentsThe following types of asset classes and investment products are permissible:Prohibitions Types of investments not specifically authorized by the board and included above are forbidden.?Chief Financial Officer Responsibilities The chief financial officer will maintain the permissible ranges of investment for each asset class. At least quarterly, the holdings of the asset classes shall be rebalanced or reallocated, if necessary. A portfolio valuation allowance of up to __ percent is authorized prior to rebalancing. The chief financial officer, in consultation with XYZ’s advisor, if utilized, will review the organization’s portfolio performance in comparison with appropriate economic benchmark data on a quarterly basis and establish targeted rates of return for the following quarter. The chief financial officer will provide the finance and investment committee with a quarterly statement containing the following investment performance information:The name and quantity of the securities purchased and sold, with the price and transaction dateAn analysis for each security including its description, percentage of total portfolio, quantity, market value, unrealized gain or loss, and annual income and yieldAn analysis for the entire portfolio of the current asset allocation by asset class (equity and fixed income funds)Quarterly, the chief financial officer will provide the finance and/or investment committee with information about 1) asset allocation, 2) investment performance, 3) future investment strategies, and 4) any other matters of interest to the committee. Additionally, an annual report will be provided to the finance and investment committee and to the board summarizing the previous year’s transactions and overall investment performance as compared to appropriate indices. Finance and Investment Committee ResponsibilitiesThe committee will reexamine the portfolio allocations on a quarterly basis for the purpose of evaluating the appropriateness of the allocation given existing market conditions, the economic needs of XYZ, and the size of the funds.?The committee will periodically review the distribution policy against actual returns in order to make adjustments necessary for the preservation of purchasing power of the funds.Sample #4 This simple policy establishes guidelines for short-term operating reserves and delegates responsibility to the chief executive.INVESTMENT POLICYApplicationAll XYZ employees and board membersPurposeThe chief executive shall invest XYZ’s short-term funds in such a way as to maximize return while protecting principal and will follow the guidelines listed below.PolicyThe finance or investment committee on a regular basis should review investment activity.When held in commercial bank, investment of XYZ funds should not exceed $__ in any one institution for federal insurance purposes, unless approved by the board.Accounts such as interest-bearing checking accounts, money market accounts, certificates of deposit, investment-grade commercial paper, and government securities are to be the primary investments. Investing in any other type of investment vehicle requires prior approval by the finance or investment committee.Investments should be limited in term. The committee must approve any investments with a term longer than __ years.A current list of financial institutions approved as depositories for investment will be kept on file and updated regularly by the committee. This list includes commercial banks, savings and loans, insurance companies, and brokerage houses insured by the Securities Protection Investment Corporation.Within guidelines, maximum interest rates shall be sought, with the maturity of the investments governed by expected cash needs.All securities are to be written in the name of XYZ.Sample #5 This sample addresses other investment assets, such as property and equipment, and clarifies priorities in each fund.Investment Policy (adopted [date])ObjectiveThe objective of the investment policy of XYZ is to provide as high a total rate of return on investments as is consistent with prudent investment risk while providing adequate liquidity to meet the organization’s requirements.Nature of Funds To InvestOperating RevenueOperating revenues consist of the revenues generated from fees, dues, sales, United Way, and fundraising events. The majority of this revenue is received during the year and is used to pay operating expenses throughout the year. As such this money should be invested to achieve the following objectives in the following prioritized order: Preservation of capitalLiquidityRate of returnLand, Building, and Equipment FundsLB&E funds represent money accumulated for the construction, expansion, maintenance, and upkeep of the organization’s properties. The monies from these funds should be invested to achieve the following objectives in the following prioritized order:Preservation of capitalRate of returnLiquidityOperating ReservesThe purpose of these funds is to provide funding that can be used for emergency needs, which can provide up to __ months of operating revenues and which will be able to provide current investment income to contribute to operating revenue reducing dependence on other sources of revenue. These monies should be invested with the following objectives in the following prioritized order: Longer-term capital appreciationPrudent investment riskFinance Committee RecommendationsFor Operating Revenues and LB&EInvestments should be staggered maturities coinciding with the cash requirements of the organization throughout the year. Investments should consist only of U.S. government and U.S. government agencies’ instruments, or money market funds that are comprised of 90 percent U.S. government agency-insured instruments. For Long-Term Investment FundsIn an aggressive performance scenario, funds should be diversified in different classes, __ percent equities; __ percent bonds and a maximum at any one time of __ percent in cash, with a 5- to 10-year time horizon to receive a return on investment objective of inflation plus __ percent.Sample #6This comprehensive investment policy addresses the unique needs of a foundation and includes signature lines for the foundation and investment manager.STATEMENT OF IN VESTMENT POLICY for XYZ FoundationDefinition and FunctionIn recognition of its fiduciary responsibilities, the board of XYZ foundation has adopted the following statement of investment policy. These guidelines relate to those gifts and donations in the form of endowments, with long-term benefit objectives; those moneys set aside and designated by the board as quasi-endowment, and to those contributions received for the current benefit of the organization.Investments will generally be limited to those firms and/or securities that adhere to the standards of these guidelines, and which meet prudent investment standards.Statement of PurposeThe purpose of the endowment is to support the foundation and its mission over the long term. Accordingly, the purpose of this statement is to establish a written procedure for the investment of this endowment fund’s assets, and to ensure that the future growth of the foundation is sufficient to offset normal inflation plus reasonable spending, thereby preserving the constant dollar value and purchasing power of the endowment for future generations. Additionally, this statement will outline the guidelines meant to preserve the principal of operating cash and reserves while producing market-level income. This statement will establish appropriate risk and return objectives in light of the fund’s risk tolerance and investment time horizon. These objectives, as well as asset allocation guidelines, suitable investments, and responsibilities of the investment manager(s), are outlined below.Objectives of the FundThe objectives of the endowment fund shall be defined as follows: Absolute, which shall be measured in real (i.e., net of inflation) rate-of-return terms and shall have the longest time horizon for measurement; relative, which shall be measured as time-weighted rates of return versus capital market indices; and comparative, which shall be measured as performance of the investment manager(s) as compared to a universe of similar investment funds.The absolute objective of the endowment fund is to seek an average total annual real return of __ percent, or CPI plus __ percent. This objective shall be measured over an annualized, rolling 5- and 10-year time period; the intent of this objective is to preserve, over time, the principal value of assets as measured in real, inflation adjusted terms.The relative objective of the endowment fund is to seek competitive investment performance versus appropriate capital market measures, such as securities indices. This objective shall be measured primarily by comparing investment results, over a moving annualized three- and five-year time period, toStandard and Poor’s 500 Index as a benchmark for the equity componentBarclays Capital Aggregate Bond Index as a benchmark for the fixed income component90-day Treasury Bill index as the benchmark for the cash and equivalent componentThe comparative performance objective of the endowment fund is to achieve a total rate of return that is above the median performance of universe of similarly managed funds.The endowment and quasi-endowment assets have a long-term, indefinite time horizon that runs concurrent with the endurance of the institution, in perpetuity. As such, these funds can assume a time horizon that extends well beyond a normal market cycle, and can assume an above-average level of risk as measured by the standard deviation of annual returns. It is expected, however, that both professional management and sufficient portfolio diversification will smooth volatility and help to ensure a reasonable consistency of return.Target Asset AllocationTo achieve its investment objectives, the endowment fund shall be allocated among a number of asset classes. These asset classes may include domestic equity, domestic fixed income, international equity, international fixed income, real estate, venture capital, private equity, and cash. The purpose of allocating among asset classes is to ensure the proper level of diversification within the endowment fund.The following target asset mix table defines the endowment fund’s target asset allocation, and the minimum and maximum allocation limits of each asset class:Target Asset Mix TableAsset ClassMin Wt.Target Wt.Max Wt.Representative IndexEquities%%%S&P 500/othersFixed Income%%%Barclays Aggrg. Alternative Investments%%%VariousCash and Equivalents%%%90-day T-billsOther Securities%%%Other indexThe investment returns achieved by the investment manager(s) will be compared to the investment returns achieved by a target portfolio. The target portfolio will consist of the weighted returns of the target asset mix: __ percent of the S&P 500 Index, __ percent of the Barclays Capital Aggregate Bond Index, __ percent of the 90-day T-bill Index, and __ percent of the other indices. The general policy shall be to diversify investments among both equity and fixed income securities so as to provide a balance that will enhance total return while avoiding undue risk concentration in any single asset class or investment category.Investment Policies, Guidelines, and RestrictionsThe investment polices guidelines and restrictions presented in this policy statement serve as a framework to help the endowment fund and its investment manager(s) achieve the investment objectives at an acceptable level of risk. The endowment fund will be diversified both by asset class and within asset classes. Within each asset class, securities will be diversified among economic sector, industry, quality, and size. The purpose of diversification is to provide reasonable assurance that no single security or class of securities will have a disproportionate impact on the performance of the total fund. As a result, the risk level associated with the portfolio investment is reduced. Within the equity and fixed income asset classes, managers with different investment styles will be employed. Diversification by investment style is also an important step in reducing the risk of the endowment fund portfolio. Equity SecuritiesThe purpose of equity investments, both domestic and international, in the endowment is to provide capital appreciation and growth of income with the recognition that this asset class carries with it the assumption of greater market volatility and increased risk of loss. The investment manager(s) should maintain the equity portion of the portfolio at a risk level roughly equivalent to that of the equity market as a whole, with an additional objective of exceeding its results as represented by the annualized returns of the S&P 500 Index, over an annualized moving three- and five-year time period.Investment styles within the equity asset class are defined as follows:Core Equity — equity securities whose portfolio characteristics are similar to that of the S&P 500 Index, with the objectives of adding value over and above the index, typically from sector or issue selectionGrowth — stocks of companies that are expected to have above-average prospects for long-term growth in earnings and profitabilityValue — stocks of companies believed to be undervalued or possessing lower than average price to earnings ratios, based on their potential for capital appreciationSmall Capitalization — stocks of companies from the above styles, with relatively small market value capitalization (The average market capitalization is expected to be approximately $500 million.)International — stocks of companies domiciled outside of the United StatesEquity holdings shall generally be restricted to high quality, readily marketable securities of corporations that are actively traded on the major stock exchanges, including Nasdaq. International equity investments of similar quality and marketability will be permitted up to __ percent of the total equity portfolio. Equity holdings must generally represent companies meeting a minimum market capitalization requirement of $__ million with reasonable market liquidity. Decisions as to individual security selection, number of industries and holdings, current income levels and turnover are left to broad manager discretion, subject to the standards of fiduciary prudence. However, no single major industry shall represent more than __ percent of the total market value of the endowment, and no single security shall represent more than __ percent of the total market value of the endowment.The investment manager(s) is prohibited from selling securities short, buying securities on margin, borrowing money or pledging assets, or trading uncovered options, commodities, or currencies without the advance written approval of the endowment fund. The manager(s) is also restricted from investing in private placements and restricted stock unless otherwise permitted in writing by the endowment. It is expected that no assets will be invested in securities whose issuers are or are reasonably expected to become insolvent, or who otherwise have filed a petition under any state or federal bankruptcy or similar statute.Within the above guidelines and restrictions, the manager(s) has complete discretion over the timing and selection of equity securities.Fixed Income SecuritiesInvestments in fixed income securities should be actively managed to pursue opportunities presented by changes in interest rates, sector allocations, and maturity premiums, with the objective of meeting or exceeding the results of the fixed income market as represented by the annualized returns of the Barclays Capital Aggregate Bond Index, over an annualized moving three- and five-year time period.The investment manager(s) may invest in obligations of the U.S. government and its agencies, corporate debt securities, mortgage-backed, and asset-backed securities. These investments will be subject to the following limitations:No issues may be purchased with more than __ years to maturity;Investments of a single issuer, with the exception of the U.S. government and its agencies (including GNMA, FNMA, and FHLMC), may not exceed __ percent of the total market value of the portfolio;No more than __ percent of the corporate debt securities in the fixed income portfolio may be rated below-investment grade.No more than __ percent of the fixed income portfolio may be invested in non–U.S.-dollar denominated securities.Within the fixed income component, the investment manager(s) is prohibited from investing in private placements, and fixed income or interest rate futures, without the prior written approval of the portfolio.Within the above guidelines and restrictions, the manager(s) has complete discretion over the timing and selection of fixed income securities.Alternative InvestmentsAlternative marketable investments are broadly defined to include hedge funds, absolute return and special situation funds, distressed debt, market neutral, and other nontraditional investment strategies whose underlying securities are traded on public exchanges or are otherwise readily marketable. Alternative marketable investments may be made by the endowment directly or through partnerships. Funds of funds may be utilized as long as the total fees paid are reasonable and within industry ranges. The breadth of hedge fund strategies is very broad, and the selection of appropriate investments in this area must be made with the help of knowledgeable and experienced people in the field. The committee should assess the risk and return guidelines of each strategy in light of the role of that strategy in the total portfolio of hedge funds. In no case should any one hedge fund account for more than __ percent of the market value of the total endowment.Alternative nonmarketable investments are expected to earn superior equity-type returns over extended periods in order to justify their illiquid (lockup) status. The advantages of nonmarketable investments include their ability to enhance long-term returns through investment in inefficient, complex markets. They offer reduced volatility of asset values by offering low correlation with listed securities and fixed income instruments. The disadvantage of the asset class is its illiquidity and more complex fee structures, and performance is frequently dependent on the quality of external managers. The endowment expects to control the risks of alternative nonmarketable investments through extensive due diligence and diversification. These investments may be held directly or through limited partnerships. Typically, they include venture capital, private equity, international venture capital, real estate, mezzanine debt, and energy and natural resources. Venture Capital and Other Private Equity Partnerships — Investments may also include venture capital and private equity investments, held in the form of professionally managed pooled limited partnership investments. Such investments shall not exceed __ percent of total endowment assets, and must be made through funds offered by professional investment managers with proven records of superior performance over time. Real Estate — Investments may also include equity real estate, held in the form of professionally managed, income-producing commercial and residential property. Such investments may not exceed __ percent of the total endowment fund. Such investment may be made only through professionally managed pooled real estate investment funds, as offered by leading real estate managers with proven records of superior performance over time.Gifts of income-producing real estate may be included temporarily in the endowment portfolio, and liquidated at the earliest convenient time, while donors of gift real estate intended for institutional use and occupancy on a permanent basis should be discouraged from making the contribution as endowment. To the extent any gifts of real estate would constitute a negative cash flow, or would be deemed by professional management counsel to constitute undue market risk, such gifts would be disposed at sale and the proceeds directed to the general endowment pool for the benefit of programs consistent with the donor’s interest.Derivatives and Derivative Securities — In general, the use of derivative securities by the investment manager shall be discouraged, unless such an opportunity presents itself that the use of these sophisticated securities would provide substantial opportunity to increase investment returns at an appropriately equivalent level of risk to the remainder of the total portfolio. The approval and use of derivative securities will not be allowed unless the endowment is confident that the investment manager(s) thoroughly understands the risks being taken, has demonstrated expertise in usage of such securities, and has guidelines in place for the use and monitoring of derivatives.Cash and EquivalentsThe investment manager may invest in the highest quality commercial paper, repurchase agreements, Treasury bills, certificates of deposit, and money market funds to provide income, liquidity for expense payments, and preservation of the endowment’s principal value. Commercial paper assets must be rated at least A1 or P-1 (by Moody’s or S&P). No more than __ percent of the total market value of the endowment’s assets may be invested in the obligations of a single issuer, with the exception of the U.S. government and its agencies. Uninvested cash reserves shall be kept to a minimum; short-term, cash equivalent securities are usually not considered an appropriate investment vehicle for endowment assets. However, such vehicles are appropriate as depository for income distributions from longer-term endowment investments, or as needed for temporary placement of funds directed for future investment to the longer-term capital markets. Also, such investments are the standard for contributions to the current fund or for current operating cash.Within the above guidelines and restrictions, the manager(s) has complete discretion over the timing and selection of cash equivalent securities.Other SecuritiesReal Estate — Investments may also include equity real estate, held in the form of professionally managed, income-producing commercial and residential property. Such investments may not exceed __ percent of the total endowment fund. Such investment may be made only through professionally managed pooled real estate investment funds, as offered by leading real estate managers with proven records of superior performance over time.Gifts of income-producing real estate may be included temporarily in the endowment portfolio, and liquidated at the earliest convenient time, while donors of gift real estate intended for institutional use and occupancy on a permanent basis should be discouraged from making the contribution as endowment. To the extent any gifts of real estate would constitute a negative cash flow, or would be deemed by professional management counsel to constitute undue market risk, such gifts would be disposed of at sale and the proceeds directed to the general endowment pool for the benefit of programs consistent with the donor’s interest.Venture Capital and Other Private Equity Partnerships — Investments may also include venture capital and private equity investments, held in the form of professionally managed pooled limited partnership investments. Such investments shall not exceed __ percent of total endowment assets, and must be made through funds offered by professional investment managers with proven records of superior performance over time.Derivatives and Derivative Securities — In general, the use of derivative securities by the investment manager shall be discouraged, unless such an opportunity presents itself that the use of these sophisticated securities would provide substantial opportunity to increase investment returns at an appropriately equivalent level of risk to the remainder of the total portfolio. The approval and use of derivative securities will not be allowed unless the endowment is confident that the investment manager(s) thoroughly understands the risks being taken, has demonstrated expertise in usage of such securities, and has guidelines in place for the use and monitoring of derivatives.RestrictionsThe investment committee is authorized to waive or modify any of the restrictions in these guidelines in appropriate circumstances. Any such waiver or modification will be made only after a thorough review of the manager(s) and the investment strategy involved. Documentation supporting all waivers and modifications will be maintained as part of the permanent records of the investment committee. All waivers and modifications will be reported to the board at the meeting immediately following the granting of the waiver or municationsThe investment manager(s) shall meet regularly, or as reasonably expected, with interested parties representing the endowment. Investment policy shall be reviewed during such meetings and no less than annually.Manager(s) Reporting and EvaluationIt is expected that the investment manager(s) responsible for the investment of foundation assets shall report quarterly on the performance of the portfolio, including comparative gross returns for the funds and their respective benchmarks; also included will be a complete accounting of all transactions involving the endowment during the quarter, together with a statement of beginning market value, fees, capital appreciation, income, and ending market value, for each account.The foundation recognizes that market conditions may greatly influence the ability of a manager to meet year-to-year investment goals and objectives. Further, the foundation realizes that significant cash flow may also affect the ability of a manager to meet a specific short-term objective. Accordingly, the foundation expects to monitor performance through absolute, relative, and comparative terms over annualized time periods. Absolute results will determine the rate of fund growth, while relative results will provide the foundation with a view of investment performance compared to the securities markets, and comparative results will present performance as compared to other investment managers.Review of portfolio results in absolute terms shall be made with consideration towards meeting and/or exceeding the expressed minimum real rate of return over a moving 5- and 10-year time period.Review of portfolio results in relative terms shall be accomplished primarily by comparing results, over a moving annualized 3- and 5-year time period, to assigned market indices.Review of portfolio results in comparative terms shall be accomplished primarily through universe comparisons over moving annualized 1-, 3-, and/or 5-year time periods.Spending PolicyIt is the institution’s policy to distribute annually __ percent of a trailing three- or five-year average of the endowment’s total asset value, with the understanding that this spending rate plus inflation will not normally exceed total return from investment. However, it is understood that this total return basis for calculating spending is sanctioned by the Uniform Management of Institutional Funds Act (UMIFA), under which guidelines the organization is permitted to spend an amount in excess of the current yield (interest and dividends earned), including realized or unrealized appreciation.Rebalance PolicyIt is the foundation’s policy to rebalance to its target asset allocation on a uniform basis so as not to cause undue expense to be allocated to the portfolio. It is the foundation’s policy to review rebalancing the portfolio at least annually or sooner if desired by the members of the committee charged with the oversight of the portfolio’s investments. The method of rebalancing will be based upon the “tolerance” rebalancing formula, which generally states that the portfolio will be rebalanced if the target asset allocation goes beyond the stated tolerance for any particular asset category. As an example, if the target asset allocation for equities is __ percent with a __ percent tolerance, than no rebalancing would be required under this investment policy if the range for equity investments remained within a __ to __ percent range; otherwise, management is required to direct investment advisors to rebalance once the limits are achieved. Further, at least annually (usually the date of the annual review with investment managers by the committee) the portfolio will be rebalanced regardless of its stated allocation to asset classes. AcknowledgmentThis statement of investment policy is accepted and entered into by the foundation and the investment manager(s). Any revisions or changes in policy shall be made in writing and accepted by both parties.Any changes within the management firm, i.e., ownership, principals, specific portfolio managers, or changes in investment philosophy, should be communicated as soon as possible to the foundation and its representatives.ACCEPTED:DateXYZ ACCEPTED:DateInvestment Manager(s)Reprinted with permission from the Commonfund Institute.Suggested ResourcesFry, Robert P. Who’s Minding the Money: An Investment Guide for Nonprofit Board Members, Second Edition. Washington, DC: BoardSource, 2009.Uniform Prudent Management of Institutional Funds Act (UPMIFA) Council of Michigan Foundations 2009 Reserve and Endowment PoliciesIntroductionFinancial reserves act as a safeguard for rainy days and permit an organization to adjust to seasonal variances in expenses and income. Market forces, economic downturns, natural disasters, or other unexpected expenses cannot be controlled by nonprofit managers, but expenses related to them can — and should — be managed. Reserve funds allow an organization to continue activity when income falls unexpectedly, such as when clients are unable to pay their bills on time, when contributions decline substantially, or when a significant grant is not realized. These funds also allow an organization to seize an unprecedented opportunity, such as financing a new venture, making an advantageous capital purchase, or expanding a program at an opportune time.Reserve funds usually come from the accumulated surpluses of the organization over time. The board, with input from staff, should establish a reserve policy that maintains an appropriate level for the organization, given its mission. Reserve funds are usually designated or allocated by the board as a way to ensure the long-term financial stability of the organization.Many nonprofit organizations — besides accumulating operational reserves — have established or wish to establish an endowment fund. Endowment funds are generally maintained so that the principal is continually invested and the withdrawals (usually a percentage of the endowment’s market value) are used by the organization for program expenses. However, there can be pressure on organizations to invade the principal or dissolve the fund in periods of financial stress. Policies are needed to guide the board in making decisions about the endowment — how it should be invested and how it should be used.Key ElementsThe distinction between reserves and endowment is significant. An endowment is a pool of money that is invested so that the income can be used to support the nonprofit. Often, donors have restricted these funds so that the principal cannot be used to cover day-to-day expenses. Reserve funds are more flexible. Reserves usually come from the accumulated surpluses of the organization over time, can be spent to expand programs and run the organization, and are usually designated or allocated by the board.Reserve policies will state the required reserve level in terms of months of operating cash, meaning that, should all sources of income stop, the organization would be able to keep running for that period of time.Board approval is usually required for any disbursements from the reserves fund. Establishing an endowment fund requires a special policy that defines its purpose, who manages the fund, the investment approach, and how the money will be disbursed.When created by donors, endowment funds are bound by legal agreements. The donors’ wishes need to be respected and the money can be used only for the assigned purpose. Even the board may not change the original restrictions on the fund, as it can with operating reserves.Generally speaking, endowments of private foundations must disburse 5 percent of the net assets annually. Many nonprofits traditionally use the same percentage when determining the disbursement rate for endowment funds.Practical TipsResponsibility for monitoring the board-designated reserve is often delegated to the finance and/or investment committee.When establishing the level of operating reserves, the board and executive staff need to balance the need for equity that generates future income against immediate operating and cash flow needs.Endowments may be created by special endowment campaigns, major gifts or planned gifts, or by pooling operational reserves into a specified endowment fund. When appropriate for the organization, one useful way to grow an endowment fund is to establish a planned giving program. Gift acceptance policies (see Part VI, Section III) complement endowment policies by providing guidelines for working with the donors. Likewise, consider including specific requirements for endowments in your investment policies (see Part V, Section IV).Sample Reserve and Endowment PoliciesWith a policy on operating reserves, the board ensures that the organization is ready to react to unexpected events. By drafting a policy on endowments, the board guarantees that the permanent fund is truly dedicated to the originally intended purpose. The three reserve policies are deceptively simple and require careful consideration by an organization’s leaders. The two endowment policies provide basic boundaries for endowments.Sample #1 This brief policy provides basic guidelines related to the reserve fund and board approval.Reserve Fund PolicyThe financial objective of XYZ is to establish a financial reserve to provide for __ months of operating income. The board needs to authorize any disbursements from this fund. The funds for the reserve fund will come from the surplus from operations, or the net operating excess for each fiscal year.Sample #2 This sample operating reserve objective provides a greater level of detail, which can be applied to specific fund objectives. It is for organizations with significant reserves relative to their regular cash flow requirements and illustrates one approach to increasing returns on these funds.Operating Reserve Objective The primary operating reserve investment objective is to optimize yield on XYZ’s short-term assets while maintaining adequate liquidity and without taking excessive principal risk. To achieve these objectives, XYZ operating reserves will be allocated into three tiers designed to meet the specific safety, liquidity, and yield criteria. Those categories are: operating funds, liquid assets, and fixed income assets, each of which is defined below.Tier 1 — Operating FundsThe purpose of this tier is to ensure adequate cash for operations. To achieve this goal, the committee (acting through its designated agents) will match Tier 1 investment maturities to the organization’s cash flow and draw-down requirements. In no event, however, will Tier 1 maturities exceed 180 days.Tier 2 — Liquid AssetsThe purpose of this tier is to provide a liquidity reserve above and beyond the cash for operations maintained in Tier 1. When investing liquid assets, the advisor will emphasize safety, liquidity, and yield, in that order, with staggered maturities to a maximum of [12/24] months. The weighted average duration of Tier 2 assets shall be less than [2/3] years. Tier 3 — Fixed Income AssetsThis portion of the operating reserve portfolio is designed to maximize return, consistent with safety of principal. Liquidity is a secondary objective. Maturities should be reasonably laddered out to a maximum of [36/48/60] months. The weighted average duration of Tier 3 assets shall be less than [3/4] years. It is acceptable for there to be some principal fluctuation and risk in this tier in an effort to earn a greater total return.Maintenance of Tiers The Committee will periodically determine the allocations to each tier based on prior years’ cash flow and reserve levels as well as anticipated future spending. In making these allocations, they may rely on the cash flow projections of the designated financial officer. The initial amounts to be maintained in each tier are as follows:OPERATING RESERVE TIERS (Sample Only)TierDescriptionPrimary PurposeAmount3Fixed Income AssetsIncremental total return with safety$1,000,0002Liquid AssetsIncremental yield with liquidity$1,000,0001Operating FundsReady cash for __ months of operations (e.g., 6)All $s in excess of Tiers 2 and 3, but never less than $__Cash Flow ManagementXYZ designated financial officer will be responsible for managing XYZ cash flow and for communicating anticipated distributions and liquidity requirements in a timely manner to XYZ consultant and/or investment advisors who are managing the tiers.Asset QualityWithin the three tiers described previously, investments shall be made exclusively with the following securities, each of which shall conform to the stated quality requirements:ASSET QUALITY AND DIVERSIFICATION GUIDELINES (Sample Only)InstrumentTier TargetsQuality and Diversification GuidelinesPermitted MaturitiesU.S. Treasury SecuritiesTiers 1, 2, and 3$500,000 per issue maximum;Treasuries and agencies should comprise at least 50% of portfolio60 months or less, subject to more restrictive Tier requirementsU.S. Government Agency SecuritiesTiers 1, 2, and 3$500,000 per issue maximum;Treasuries and agencies should comprise at least 50% of portfolio60 months or less, subject to more restrictive Tier requirements U.S. Corporate DebtTiers 1, 2, and 3Minimum A rating$500,000 per issuer maximum;15% limit on bonds rated A36 months or less, subject to more restrictive Tier requirementsCommercial PaperTiers 1 and 2Rated P-1/A-1$500,000 per issuer maximum270 days or lessCertificates of DepositTiers 1 and 2Institution rated A or better$100,000 per issuer maximum;FDIC insured12 months or less (except for negotiable CDs which are subject to the U.S. Corporate Debt restriction)Bankers AcceptancesTiers 1 and 2Institution rated A or better$500,000 per issuer maximum270 days or lessRepurchase AgreementsTier 1U.S. Treasury collateral onlyOvernight onlyMoney Market FundsTier 1UnrestrictedDaily demand Sample #3 This succinct statement defines the basic description and objective of an endowment.Endowment FundsDescription. Endowed funds usually require that the principal of the fund remains intact and the income is paid out.Investment Objective. Preservation of principal to allow distribution of income for designated usesAuthority. These funds shall be invested in the same manner as board-designated reserves, and paid out according to the terms of the endowment.Sample #4 This general policy reserves the right, for the board, to dissolve the endowment fund if the purposes can no longer be met.XYZ shall establish an unrestricted endowment fund to support the general purposes of the organization. The principal is to be invested in a prudent manner in accordance with the investment policy as prescribed from time to time by the board, and the income (defined as total return income) is to be used to support the organization’s general purposes.XYZ may allow the creation of named endowments to recognize a donor and his or her wishes. The board, or its designated committee, shall retain the right to dissolve XYZ endowments and use the principal for general purposes or for the restricted purposes contained in each endowment when, in the board’s discretion, the purposes of the endowment can no longer be met or the organization’s needs may so require.Sample #5 This endowment spending policy includes specific distribution values.Sample Spending PolicyThe endowment fund shall annually distribute an amount equal to [five] percent of the fund’s average value as calculated in this paragraph. The distributions shall be made quarterly in an amount equal to [one and one-quarter] percent of the calculated distribution value. The distribution value is the average of the fair market value of the fund as of the close of each of the preceding 12 calendar quarters. The fund’s market value shall be based upon all assets in the fund including principal and retained income, adjusted for all gains and losses, whether realized or unrealized, and determined as of the last business day of the quarter. The distributions shall be made promptly following the close of each quarter. To the extent that it may legally do so, the organization shall interpret this policy as satisfying a gift provision that calls for retaining principal and distributing income.Suggested ResourcesFry, Robert P. Who’s Minding the Money: An Investment Guide for Nonprofit Board Members, Second Edition. Washington, DC: BoardSource, 2009.“Principles of Endowment Management.” Commonfund Institute “Nonprofit Operating Reserves and Policy Examples.” Nonprofits Assistance Fund, October 2010. Financial Audit PoliciesIntroductionAn audit refers to an independent professional examination of the organization’s financial statements and its support materials. The audit will attest to the fair presentation of the financial statements; it will not guarantee their accuracy. Nonprofit organizations — and their boards — benefit from the annual audit as an outside assessment of their financial status and their internal financial controls, as a tool to improve financial and risk management, and as a measure of assurance to constituents and supporters who want to know that their trust and support is deserved.Financial audits are often recommended for organizations with budgets of $1 million or more. California requires any nonprofit with gross revenues of $2 million or more to conduct an annual audit, and some states have much lower revenue thresholds (e.g., $250,000). Furthermore, most organizations that receive government funding are obligated to have an audit. In weighing the benefits of an audit against the expense, many organizations with smaller budgets choose to have an independent accountant prepare or review their financial statements. If the board decides not to have an annual audit, it may choose to conduct a less comprehensive and costly review or to have the audit take place biennially. Key ElementsThe auditor reports to the board and assists management. Responsibility for hiring an auditor belongs to the board, and the full board should receive and review the auditor’s report, management letter, and the IRS Form 990.Some nonprofits, especially larger organizations, have adopted audit practices that mirror those required of publicly traded companies through the Sarbanes-Oxley Act of 2002. They have addressed concerns about auditor independence by requiring rotation of the audit firm or partner periodically, and by stipulating what other professional services the auditor may or may not perform.When a board decides that an audit is desirable, it often delegates certain responsibilities to a separate audit committee (see Part IX: Committees: Financial Committees). The role of this committee is to act on behalf of the full board in carrying out the audit process. This committee may also assume oversight of the organization’s overall ethical standards.Practical TipsHave an executive session with the full board and the auditor, without any staff present. This provides the board with an opportunity to openly review the results of the audit and management letter and to ask candid questions about the organization’s financial health without creating unnecessary distrust between the board and senior staff.The auditor is in a good position to provide guidance and expertise concerning internal controls and general financial practices (see Part V: Finance and Investments: Financial Controls). Take advantage of the auditor’s presence to learn about current issues in nonprofit accounting and auditing and areas for improvement in the organization’s financial systems and structure.Increasingly, nonprofit boards are separating the audit from financial oversight to ensure appropriate checks and balances. If the finance committee also handles the audit, be sure committee members understand the distinction between routine financial review and the annual audit.The auditor also needs support from management to complete the audit. Rather than waiting for the auditor’s instructions, the finance staff should organize files and records in advance of the auditor’s arrival to save time. The auditor should send a preliminary listing of items needed for an efficient start to the audit.Sample Financial Audit PoliciesAll three sample audit policies require an annual financial audit. They range from a very simple acknowledgment of the board’s responsibility for the audit, to more detailed requirements about the process.Sample #1This basic policy mandates an annual audit and its distribution.In order to ensure financial accountability, XYZ will have its financial statements audited by an independent auditing firm on an annual basis. The selection of the firm to conduct the audit will be approved by the board. The auditor’s report, management letter, and IRS Form 990 will be presented to the board for approval. A copy of the audited statement will be distributed to the full board and the chief executive. The audited financial statements will also be made available to anyone else who requests them.Sample #2This sample delegates certain responsibilities to the audit committee and requires periodic rotation of the auditors.Annual AuditThe financial records of XYZ shall be audited annually by an independent CPA firm that has a significant group of nonprofit clients. The finance committee shall be responsible for selecting the audit firm to conduct the annual audit. If the same audit firm conducts the audit for more than five consecutive years, the finance committee shall review the firm’s services and decide if the firm or the audit partner needs to rotate.The audit firm will not be hired to perform non–auditing services, except for tax preparation and Form 990 preparation and shall not perform substantial services for any officer or director personally. The audit firm shall be engaged to present annual audit findings to the chief executive and the finance committee, and if needed, the board. The finance committee shall review the audit and make its recommendation to the board.Sample #3This more comprehensive policy includes guidelines for selecting the audit firm and monitoring the entire audit process.PurposeXYZ is required, under statute, to have an annual audit of its financial statements conducted. The purpose of this policy is toEstablish the process by which XYZ contracts for these audit services for a fixed term,Ensure that the services provided by the external auditors are relevant to the information and fiduciary needs of the board,Ensure that the organization is receiving value for money in the delivery of audit services, andEnsure the independence of the auditors is maintained at the highest level, both in appearance and fact.ScopeThis policy shall apply to all matters relating to the financial and accounting affairs of XYZ, and to any services provided by the auditors.PolicyThe agreement for the provision of audit services is between the XYZ board and the selected audit firm. The board will decide on the firm to be selected, with recommendations from senior management and the finance and audit committee.An audit will be conducted annually and will include such matters as are standard as well as addressing other specific issues as requested by the board.The selection of an audit firm will be based on the fees quoted, the firm’s experience with nonprofit organizations, and the ability of the firm to address any issues identified by the board.The recommendation with respect to the selection of an audit firm will be made by the finance and audit committee, for approval by the board.The appointment of auditors will be confirmed at the annual general meeting of XYZ.XYZ’s auditors should not normally be engaged to perform any non–audit services unless an extraordinary circumstance exists, i.e., where a specific expertise is required that is not reasonably obtained from another vendor. In addition, the auditors shall not perform any substantial services for any officer or director.The finance and audit committee shall review all non–audit services to be provided to XYZ by its independent auditor. With preapproval of the finance and audit committee, the independent auditor may be engaged to perform non–audit services. The organization may not engage the independent auditor to perform the following non–audit services:Bookkeeping or other services related to the accounting records or financial statements of XYZFinancial information systems design and implementationAppraisal or valuation servicesActuarial servicesInternal audit outsourcing servicesManagement functions or human resourcesBroker or dealer, investment advisor, or investment banking servicesLegal services and expert services unrelated to the auditAny other service that the American Institute of Certified Public Accountants determines is inconsistent with the auditor’s independenceThe finance and audit committee chair is authorized to preapprove any audit-related or other non–audit services between finance and audit committee meetings. Such interim preapprovals shall be reviewed with the full committee at its next meeting for its ratification.ProceduresWhile the management of XYZ is involved in the selection process and is responsible for the management of the audit, the approval of an audit firm is the responsibility of the board.When deemed prudent, the management of the foundation will issue a Request for Proposal (RFP) from selected firms with substantial experience auditing nonprofit organizations for the provision of audit services. The RFP will include requests for information on services related to specific issues that the board wishes to address in the course of the audit.The RFP for provision of audit services will be issued to a minimum of three (3) firms eligible to provide audit services in the State of __.The management of XYZ, in consultation with the finance and audit committee on behalf of the board, will select the audit firms to be included in the RFP.All proposals to engage the independent auditor to perform non–audit services shall be presented to, and approved by, the chief executive, vice president of finance and administration, or senior vice president of corporate services and programs before the proposal is submitted to the finance and audit committee for its approval.Each non–audit service that is reviewed by the finance and audit committee shall be reflected in a written engagement letter or writing specifying the services to be performed and the cost of such services.MonitoringThe finance and audit committee will review this policy once annually, at a meeting prior to the annual general meeting, and report on its review to the board including any recommendations for changes to the policy.Suggested ResourcesMcLaughlin, Thomas A. Financial Committees. Washington, DC: BoardSource, 2004.Lang, Andrew S. Financial Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.“The Sarbanes Oxley Act and the Implications for Nonprofit Organizations.” BoardSource and Independent Sector, revised 2006. PoliciesIntroductionThe IRS and Senate Finance Committee are attentive to tax-exempt organizations that provide loans to board members and staff. State laws vary on the legality of loans to board members, so knowledge of one’s own state statutes is a threshold issue in this regard. There is no federal law that prohibits loans to board members except in private foundations, where all self-dealing — a financial transaction between the board member and foundation — is illegal. (The foundation may reasonably compensate a board member for his or her governance role and when he or she provides necessary professional services to the organization.) The assets of a nonprofit are to be spent for its tax-exempt purpose. Even if extending a loan to a board member is not illegal, it can be perceived as improper.Key ElementsClarify the reasons why the organization would or would not grant loans.Discuss who is included in the policy.Stakeholders will want to know how the decision was made to grant the loan and whether the beneficiary was part of the board’s decision-making process. Even if the decision and transaction occurred with total disclosure and transparency, the question will remain: Should a board member be allowed to rely personally on your organizational funds?Unless the organization’s mission is explicitly financial — for example, nonprofit credit union and other financial aid group — public charities should not serve as banks for their insiders. Earned and contributed funds are meant to advance the mission.Private foundations must not engage in self-dealing and therefore may not grant loans.Practical TipsRemember that loans must be reported on the Form 990. Are you comfortable making this public information?Suggest board members check with their own banks and other financial institutions for financial assistance.If your board approves a loan to a board member, it should be prepared to deal with additional challenges. Placing the organization’s financial health under any unusual or questionable risk is in direct conflict with the board members’ fiduciary duty. Discuss the following questions:If one board member can be the recipient of the organization’s generosity, how can the organization deny the request from others?If the board member in question defaults on the loan, how will the organization address this issue, absorb the loss, or justify its due diligence processes?Should the board not be able to take advantage of an exceptional opportunity because reserves are committed elsewhere, how can the board justify its commitment to the organization and its fiduciary duty?Sample Loan PoliciesBoth sample policies oppose internal loans in principle. Sample #1This policy states that the organization does not provide loans to board members. Loans:No loans shall be contracted on behalf of XYZ unless specifically authorized by the board of directors.No loans shall be made by XYZ to any of its directors or officers or to any other corporation, firm, association or other entity in which any of its directors or officers is a director or officer or holds a substantial financial interest.Sample #2Generally, nonprofits do not make loans to board or staff members because they are usually prohibited by state nonprofit corporation statutes and because they may cause “excess benefit transactions.” This policy provides stringent guidelines for those rare instances when they are allowed and appropriate.No loan may be made to any officer, director, or employee of the organization, except in accordance with applicable [State] law. Any such loan may be made only pursuant to a written agreement approved by the board and reviewed and approved by legal counsel. All such loans to an employee shall be repaid through payroll withholding and shall be callable by the organization upon termination of employment or, in the case of a relocation loan secured by a residence, upon the sale of the residence. Staff shall ensure that all such loans are properly reported for employment and income tax purposes.Suggested ResourcesThe Principles Workbook: Steering Your Board Toward Good Governance and Ethical Practice. BoardSource 2009. Principles of Good Governance and Ethics: A Guide for Charities and Foundations. The Panel on the Nonprofit Sector 2007. Sample IRS Form 990 PoliciesIntroductionThe Form 990, 990-EZ, 990-PF, or the simple 990-N are annual information returns that nonprofits file with the Internal Revenue Service (IRS). These Form 990 public documents provide the IRS with the information it needs to determine whether an organization continues to meet the requirements for tax-exempt status. In 2008, the IRS redesigned the form to include questions pertaining to governance. Since then, the IRS has further fine-tuned the form.Subject to minimal exceptions, the IRS requires all tax-exempt organizations to make their past three Forms 990 available for public inspection and to provide copies to anyone requesting them in writing.Key ElementsThe Form 990 is often completed by a professional advisor (e.g., accountant or trust officer). Requiring an internal verification adds an additional level of accountability. The signature of the chief executive or the chief financial officer serves as a testament to the accuracy of the information. Any officer of the organization has the authority to sign the Form 990.Establishing a policy on public disclosure of Form 990 emphasizes the organization’s commitment to public transparency and compliance with the law. The Form also can serve as a marketing tool to gain support for the organization. For these reasons, it is very important to provide accurate and complete information.Because the Form 990 is a public document, the governing body of the organization should be knowledgeable of the contents before it is disclosed to the IRS. The form, in fact, suggests this: There is a question asking if the board has reviewed the form.Practical TipsTo ensure that each board member is familiar with the contents of the Form 990, the chief executive should provide a copy to each board member and record the distribution of the report in the board meeting minutes. Most auditors review the Form 990 in detail with the board during audit committee meetings.Accountability and transparency are key to retaining public trust. Nonprofits can accomplish this by providing easy and open access to their Form 990. The easiest way to facilitate the availability of the Form 990 is to post a copy on the organization’s website. Most 990s are also are available electronically through GuideStar ().A charity need not publicly disclose the names of donors and the amounts of individual contributions. This information may be listed as an attachment marked “Not Subject to Public Inspection.” Private foundations must disclose this information.Sample IRS Form 990 PoliciesWhile brief, the three samples provided address the responsibilities of both board and staff in making the appropriate information available to the public.Sample #1This short statement ensures timely filings.Required filings (e.g., tax returns and agency reports) including the Form 990 will be filed yearly by the due dates. The circumstances for requesting an extension shall be reported to the Treasurer and to the Board of Directors. The President and Treasurer will approve the required filings prior to filing. The Finance Committee and Board will receive the Form 990.Sample #2 This policy clearly articulates expectations related to the Form 990.The chief executive shall ensure that tax payments and other government-ordered payments or filings are filed in a timely and accurate manner.The chief executive shall sign and certify that the IRS Form 990 is accurate and complete.The audit/financial committee shall review and approve the IRS Form 990 annual tax filing prior to submission, and the full board shall receive a copy of the IRS Form 990 within 30 days of its submission.Consistent with the requirements of §6104(d) of the Internal Revenue Code and the regulations thereunder, copies of the organization’s Form 990 shall be made available, upon request, in a timely manner, and [without charge OR subject to the charges permitted by law] to any individuals who request it.Sample #3This checklist outlines a series of proactive steps that staff undertakes, with board oversight, to publicly disclose financial information, including the Form 990 and audited financial statements.Board Checklist for IRS Form 990The board shall ensure that the following steps toward public disclosure of XYZ’s financial status take place:Review Form 990 and Form 990-T by legal counsel by [September 30, based on fiscal year ending June 30] each year.Distribute, to the full board, a copy of the Form 990 in advance of filing for review and consideration.File accurate, complete, timely, and in compliance with regulatory requirements Form 990 by [November 15, based on fiscal year ending June 30], without extension, each year.File accurate, complete, timely, and in compliance with regulatory requirements Form 990-T (Unrelated Business Income Tax) by [November 15, based on fiscal year ending June 30], without extension, each year.Disclose to the general public, through the organization’s Web site, Form 990 and the audited financial statements by [November 30, based on fiscal year ending June 30].Suggested ResourcesGuideStar . Department of the Treasury, Internal Revenue Service. Instructions for Form 990 Return of Organization Exempt From Income Tax. . Form 990. Risk Management PoliciesIntroductionOne of the board’s responsibilities is to safeguard the organization’s resources — both human and financial. By putting a risk-management policy in writing, the organization communicates its commitment to managing potential organizational threat. This policy statement reflects the organization’s mission and purpose, states the intent of the program, and lists the actions that others throughout the organization can take to contribute to the organization’s risk-management efforts. Key ElementsA comprehensive risk-management policy identifies potential risks to the organization, evaluates their prevalence, and selects suitable techniques to deal with them. These techniques may include ways to avoid the risk (fix broken railing), modify its presence (install burglar alarm), accept the possibility for the risk to materialize (low probability for floods), or transfer the consequences to someone else (purchase insurance).For many nonprofits, risk management includes a variety of other policies, such as employee hiring and screening policies, safety and accident reporting policies, investment policies (see Part V: Finance and Investments: Investments), and other personnel-related policies (see Part VII: Personnel Policies).Practical TipsWith respect to the risks posed by the decisions and operations of the board, in addition to purchasing directors’ and officers’ liability insurance, adopt board policies to address issues like conflict of interest (see Part 1: Ethics and Accountability: Conflict of Interest) and indemnification (see Part III: Board Practices: Indemnification).The organization’s commitment should go beyond developing a policy statement and having proper insurance policies. Be sure to put a risk-management plan in place. A risk-management plan describes an organization’s priority risks and the strategies the organization has identified to prevent harm or loss, or to respond to incidents should prevention measures fail. It helps to protect not only paid and volunteer staff, but also the general public.Sample Risk Management PoliciesA basic risk-management policy is a brief statement, often just a few sentences. Some nonprofits will include additional guidance about insurance, sources of risk, and risk-management plans. Sample #1This brief, general statement recognizes the importance of risk management and commits the board to ensuring that a risk-management plan is updated annually.XYZ organization is committed to protecting its human, financial, tangible, real estate, and goodwill assets and resources through the practice of effective risk management. XYZ’s board and management are dedicated to safeguarding the safety and dignity of its paid and volunteer staff, its clients, and anyone who has contact with the organization. To this end, the board will ensure that the organization has a risk management plan for the organization that is reviewed and updated on an annual basis.Sample #2This statement identifies general areas of risk that the chief executive is responsible for managing and provides some guidance on the level of protection.Asset ProtectionThe chief executive shall adequately protect and maintain from unnecessary risk XYZ assets. Accordingly, the chief executive shallInsure against theft and casualty losses of tangible personal property to at least 80 percent replacement value and against liability losses to board members, staff, or the organization itself at no less than minimally acceptable prudent levelsHave sufficient employee dishonesty insurance and directors’ and officers’ liability insurance for personnel with access to material amounts of fundsEnsure office and equipment is not subjected to improper wear and tear or insufficient maintenanceProtect the organization, its board, and staff from exposure leading to claims of liabilityProtect intellectual property, information, and files from loss or significant damageSeek bids or demonstrate other prudent methods for any purchases over $__ and protect against conflicts of interestReceive, process, or disburse funds under financial controls that meet the board-appointed auditor’s (or other grant) standardsInvest or hold operating capital in secure instruments, such as insured checking accounts and bonds of greater than __ rating, interesting bearing accounts (except when necessary to facilitate ease in operational transactions or where restricted by the funder) Acquire, encumber, or dispose of real property only with board approval, with the price set on any property to be disposed of following either a formal market appraisal or analysis of comparable properties by at least two reputable realtors in that marketNot endanger the organization’s public image or credibility, particularly in ways that would hinder its accomplishment of mission, except when necessary to accomplish its missionSample #3This brief policy specifies what kind of insurance protection must be maintained.InsuranceXYZ will purchase necessary policies to insure the organization against risk. Types of insurance to be purchased should includeInsurance against employee theft and dishonestyIndemnificationGeneral liability (personal and property damage and punitive damage)Commercial (for physical assets)Nonprofit Officers’ and Directors’ Liability (also known as association professional liability)Workers’ CompensationAnnual Meeting CancellationERISA Fiduciary LiabilityAdditional types of insurance needed to protect the organization must be approved by the board.Sample #4 This policy reflects the organization’s commitment to developing an emergency response and recovery plan. The details are naturally very specific to the organization, but the framework should help others prepare their plan.PolicyIt is the policy of XYZ to protect its employees and to prevent the interruption of vital operations. XYZ is committed to employing all appropriate strategies for anticipating and controlling crisis situations.Management is responsible for development and implementation of an emergency response and recovery plan. This plan will establish contingencies and anticipate threats that could harm XYZ personnel, property, clientele, and reputation. XYZ’s board is responsible for review and approval of this plan. All employees are expected to comply with this plan and to minimize risk to themselves and to XYZ property, clientele, and reputation.Copies of this document and other documents referenced in this plan will be stored off-site and be readily available for reference in the event of an emergency situation that restricts or prohibits access to the normal workplace.PurposeThis Emergency Response and Recovery plan is intended toanticipate potential threats to XYZ operationsprovide an orderly and efficient transition from normal to emergency conditionsprovide specific guidelines appropriate for complex and unpredictable occurrencesprovide consistency in actionprevent activity inconsistent with the organization’s philosophyestablish threshold events that may trigger an emergency responseEmergency Response and Recovery Manual Table of ContentsPolicyPurposeEmergency Response TeamEmergency Responsibilities and Location of Fire ExtinguishersEmergencies Requiring Building EvacuationFire EmergenciesBomb ThreatsMiscellaneous EmergenciesFirst AidBusiness Operations Recovery — Server Contingency PlanEmergency EvaluationServer Contingency Plan Offsite BackupEmergency Response Plan AppendicesSuggested ResourcesHerman, Melanie L. et al. Managing Risk for Nonprofit Organizations: A Comprehensive Guide. New York: John Wiley & Sons, 2004.The Nonprofit Risk Management Center: Part VI: Fundraising Board Member FundraisingDonor RelationsGift AcceptanceSponsorships and EndorsementsBoard Member Fundraising Policies IntroductionBoard members have a crucial role to play in raising funds for the organization they serve. They are volunteers dedicated to the mission of the organization and the people served by the organization. And, they have contacts in the community. The expectation of board member involvement in fundraising continues to rise, yet many boards have not created a policy that specifies what that involvement should entail. A board fundraising policy can take the form of a narrative or a specialized agreement or contract in which board members indicate the amount they expect to contribute to the organization in the coming year and how they will participate in the fundraising efforts of the organization. Key ElementsPersonal giving policies state whether a board member is expected to give a certain amount or to give according to his or her means. Funders often ask if 100 percent of board members give.Fundraising policies establish expectations for board members to make a personal donation and to participate in solicitation efforts. The policy may list examples of how board members can or should be involved, such as providing names of potential donors, writing or signing fundraising letters, thanking donors personally, accompanying the chief executive on donor and foundation visits, or making the ask themselves.Some organizations use a special pledge form that guides board members in thinking about the array of fundraising activities taking place throughout the year and asks them to make an annual fundraising commitment.Some nonprofits incorporate board member fundraising expectations into more general job descriptions (see Part II, Sections 1 and 2).If the organization has a separate fundraising body (maybe a supporting organization), it is still important to outline the role for board members and how they relate to this body — and vice versa. Practical TipsTo become a committed fundraiser, a board member must first make a contribution. This requirement is the cornerstone of individual fundraising because it allows a board member to use himself or herself as an example of someone who supports the organization.Not every board member will be able to give the same size gift. Some organizations stipulate a minimum gift amount; many do not. The policy should encourage each board member to make the organization a one of the priorities in his or her personal giving plan or to make what, for that person, is a substantial financial contribution. The policy should not, however, eliminate capable and valuable individuals from joining the board and contributing other skills and expertise.Board members possess different skill levels and aptitudes for solicitation. Provide board members with training in fundraising and practical tools like checklists, sample elevator speeches, and steps for approaching a potential donor, to help each member gradually assume more responsibility. Providing mentors and coupling inexperienced board members with staff or more seasoned board members is another way to increase everybody’s comfort with personal solicitations.Some individuals, because of their profession or position (e.g., journalists, judges), may be prohibited from certain kinds of fundraising solicitations (e.g., workplace campaigns). Seek other activities so these board members can still support the organization in a meaningful way.Sample Board Member Fundraising PoliciesThe sample fundraising policies included range from broad statements of general expectations to specific requirements and commitments for board member participation. They are arranged in order of least to most specific.Sample #1This brief statement acknowledges that each board member should give according to his or her means and should participate in all fundraising efforts. Fundraising is a major part of a board member’s responsibility, and financial support of the annual appeal and special events is expected. Board members are expected to make an annual financial contribution according to their personal means.Sample #2This general policy outlines expectations for board member participation that is beyond simply “giving and getting.”Board members are expected to give an annual monetary gift to XYZ and are asked to make XYZ a priority in their personal giving. Board members are expected to be involved in fundraising by using their personal and business connections when appropriate, by soliciting funds when appropriate, by serving on fundraising committees, and by attending fundraising events.Sample #3This brief sample, which may be incorporated into other statements, identifies a specific sum each board member is responsible for either raising or contributing.Give or Get: We ask that each board member be responsible for raising (or giving) a minimum of $__ annually. We also ask that each board member make a personal contribution, which will be counted as part of this amount.Sample #4This brief statement not only establishes a minimum amount for personal contributions but also separates fundraising obligations from personal giving.Each board member is expected toSupport XYZ by making a meaningful financial gift of at least $__ each calendar year.Solicit the financial, in-kind, and political support of others and obtain at least $__ in contributions made to XYZ each fiscal year in addition to his or her personal contribution.Attend as many XYZ program and fundraising events as possible.Sample # 5This sample statement suggests more personal ways that board members can support the organization’s fundraising activities. It was adapted from a national organization to encourage board members to get involved in local fundraising.In addition to any organization-wide fundraising activities approved by the bard, board members can engage in individual fundraising activities on behalf of XYZ, includingAnnual end-of-year fundraising letter to personal and professional contactsYearly fundraising activities in their communitiesMaking contacts for support of XYZ programs; seeking assistance from other board members if neededEncouraging local members [or supporters] to consider planned givingSample #6This statement summarizes how board members are expected to actively participate in fundraising. It refers to three major areas of responsibility in this regard — leadership, personal action, and advocacy — and is also meant to be used as a guide to evaluate board members’ performance in fundraising.FUNDRAISING JOB DESCRIPTION FOR BOARD MEMBERSBoard Member DutiesBoard members must identify and evaluate prospects, cultivate and solicit gifts, actively support fundraising programs by their presence, and offer personal acknowledgments to donors and volunteers.Board members are obliged to provide leadership and actively advocate the organization’s priorities and the necessity of its fundraising efforts. Board members must engage in personal gift support to their level of ability. Board DutiesThe board is responsible for attracting and supervising all the resources of the organization to carry out its programs and services.The board must develop a strategic plan to deliver benefits to the community it serves and to attract public support. The board must deliberate on and develop fundraising plans that address staff, systems, space, and budget.The board is part of an essential team, with the obligation to lead, support, and work together with staff and volunteers in the design, supervision, and conduct of fundraising activities.The board must select and evaluate the chief executive, rating performance as a key team member in the fundraising team.The board must take responsibility for guidance and direction on ethical and professional practices — including use of budget allocated for fundraising activities.The board must ensure that budget appropriations for fundraising are evaluated as an investment strategy designed for reliable long-term results from faithful donors, committed volunteers, and reliable net revenue that meets organizational priorities.The board must review the results and evaluate the performance of fundraising activities at all levels to their satisfaction, in accordance with established goals and objectives.Sample #7This more comprehensive sample, in the form of an annual pledge form, specifies the level of contribution, level of participation in fundraising activities, and ability to donate or identify in-kind giving sources. This form needs to be prefaced by an explanation in the job description for new board members in order for them to feel comfortable with this expectation.XYZ recognizes that board members contribute in many valuable ways — not only funds, but information, professional guidance, and in-kind resources. Therefore, each board member is asked to complete the following pledge form (as also stated in the board member job description), which will facilitate the organization’s fiscal planning and eliminate repetitive requests.For the fiscal year __ my contribution toward the support of the organization will bePersonal contribution ( ) $100 ( ) $250 ( ) $500 ( ) $1,000 ( ) Other $_________Please indicate:( ) Check enclosed ( ) Check(s) will be sent on the following date(s): ____________Please send me a reminder notice on _______________________My company will match $___________________Other contributions (art/stock/planned giving) Special events are important to our organization. I will participate in( ) Planning events ( ) Purchasing tickets ( ) Encouraging others to attendI can assist with fundraising outreach to the following foundations, corporations, individuals: (please list)I can provide/identify in-kind resources/services (computer equipment, office supplies, furniture, volunteers, vehicles, tickets, professional services [public relations, legal, financial, etc.]) Signature of Board MemberDate In turn, this organization is responsible to me in a number of ways:1.I will regularly receive financial reports.2.I can call on the paid staff to discuss programs and policies, goals, and objectives.3.Board members and staff will respond to the best of their ability in a straightforward and thorough fashion to any questions I have that I feel are necessary to carry out my fiscal, legal, and moral responsibilities to this organization.Signature of the Chief Executive Date Suggested ResourcesSternberg, Dave, Fearless Fundraising for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2008.Greenfield, James M. Fundraising Responsibilities of Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2009.Tempel, Eugene R. Development Committee. Washington, DC: BoardSource, 2004.Donor Relations PoliciesIntroductionTreating donors with respect, gratitude, and consideration not only makes sense but is also the only way a charitable organization will keep donors coming back. A nonprofit organization is accountable to the public and to the donors who support it. Respecting donors’ wishes, first and foremost, demonstrates responsible and ethical behavior. If a donor makes an unrestricted contribution, the organization is free to use the money to advance the mission however it deems appropriate. If a donor specifies what the money is to be used for or puts conditions on the contribution, the organization is obligated to follow the donor’s wishes if it accepts the gift. Donors have a right to know that their contributions have been put to good use.Key ElementsRecognizing donors for their gifts is an essential part of responsible fundraising. There are numerous ways this can be done, but it is best managed by clear guidelines that spell out the process and define the levels and methods of recognition.A donor relations policy should be clear about proper handling of confidentiality and anonymity desired by some donors. Additional guidelines should state how to treat donor contact information and how the donor prefers to be listed or named in recognition vehicles.Federal tax law imposes rules as to written substantiation of contributions above specific amounts and statements as to whether a donor has received anything in return that might lower the deductible portion of the contribution. Practical TipsFollowing rules of accounting on how to record unrestricted, temporarily restricted, and restricted grants and donations is the only way to keep track of the use of donated funds.Always keep the donor informed. He or she has the right to know how his or her contribution or grant is being used and what the organization has been able to accomplish with the gift. In the policy, stipulate what information is shared with donors and at what intervals.Donor intent must be honored. If conditions change and the donor’s intent can no longer be followed, go back to the donor (if possible) and negotiate another use for the balance of the funds. It is best to do this as soon as it becomes clear that the funds will need to be allocated or the term of the grant extended. It is inadvisable to wait for the formal grant reporting deadline.When defining the different levels of recognition, always leave the options open for a major gift. It is desirable to be able to provide a worthy and equitable recognition for the gift.Share with all major donors your audited financial statements and annual reports. Adopt the Donor Bill of Rights as a way to let donors know that their needs are respected in the organization. (A copy of the Donor Bill of Rights is included at the end of the sample fundraising policies).Sample Donor Relations PoliciesThe first two samples are policies related to donor recognition and informing donors appropriately. The third sample is the Donor Bill of Rights, which is a good addition to (not a substitute for) a donor relations policy.Sample #1 This succinct policy highlights some of the key elements in donor recognition.Donor Intent. Donors’ wishes will be considered to the extent possible, as long as their intended use of funds is in keeping with the purpose of XYZ and with the policies and priorities of the organization as expressed in the corporate plan. XYZ will not accept a gift for which it is incapable of honoring donor intent.Acknowledgment. All gifts, regardless of value, form, or stipulations, shall be acknowledged by XYZ in the form of a written substantiation, including a gift receipt.Recognition. Formal recognition of donors includes methods that convey appreciation to the donor and provide opportunities for public acknowledgment.Public Notice. XYZ will respect a donor’s wish to remain anonymous.Confidentiality. The fund development unit shall maintain confidentiality concerning all correspondence regarding contributions, gift records, prospect cards, and other data on donors, and will ensure that this donor information is used on a need-to-know-basis only for the support of fund development for XYZ.Sample #2 This policy includes more specifics about the information provided to donors.XYZ solicitation of funds from the public or from donor institutions uses material that is truthful. XYZ respects the privacy concerns of individual donors and expends funds consistent with donor intent. XYZ discloses important and relevant information to potential donors. In raising funds from the public, XYZ will respect the rights of donors, as follows:To be informed of the mission of XYZ, the way the resources will be used, and capacity to use donations effectively for their intended purposeTo be informed of the identity of those serving on XYZ’s governing board and to expect the board to exercise prudent judgment in its stewardship responsibilitiesTo have access to XYZ’s most recent financial reportsTo be assured their gifts will be used for purposes for which they are givenTo receive appropriate acknowledgment and recognitionTo be assured that information about their donations is handled with respect and with confidentiality to the extent provided by lawTo be approached in a professional mannerTo be informed whether those seeking donations are volunteers, employees of XYZ, or hired solicitorsTo have the opportunity for their names to be deleted from mailing lists that XYZ may intend to shareTo be encouraged to ask questions when making a donation and to receive prompt, truthful, and forthright answersSample #3 The Donor Bill of Rights was created by the Giving Institute: Leading Consultants to Non-Profits [formerly known as the American Association of Fund Raising Counsel (AAFRC)], Association for Healthcare Philanthropy (AHP), the Association of Fundraising Professionals (AFP), and the Council for Advancement and Support of Education (CASE). It has been endorsed by numerous other nonprofit associations, and many charities incorporate it into their operating policies and procedures.THE DONOR BILL OF RIGHTSPhilanthropy is based on voluntary action for the common good. It is a tradition of giving and sharing that is primary to the quality of life. To ensure that philanthropy merits the respect and trust of the general public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights:To be informed of the organization’s mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposesTo be informed of the identity of those serving on the organization’s governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities To have access to the organization’s most recent financial statements To be assured their gifts will be used for the purposes for which they were givenTo receive appropriate acknowledgement and recognition To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by lawTo expect that all relationships with individuals representing organizations of interest to the donor will be professional in natureo be informed whether those seeking donations are volunteers, employees of the organization, or hired solicitorsTo have the opportunity for their names to be deleted from mailing lists that an organization may intend to shareTo feel free to ask questions when making a donation and to receive prompt, truthful, and forthright answersSuggested ResourcesThe Donor Bill of Rights Poderis, Toni. “Building Donor Loyalty.” Sternberg, Dave. Fearless Fundraising for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2008.Gift Acceptance PoliciesIntroductionNearly all charitable organizations accept, and most actively solicit, financial gifts. However, there are times when the perception of such gifts might compromise the mission of the organization or the gift might have too many conditions imposed by the donor. Having a gift acceptance policy helps the board decide whether to accept controversial or “high-maintenance” gifts. Because nonprofits also receive non-cash contributions, clear gift acceptance policies provide guidance as to whether the organization should accept gifts of real estate, stock, art, or automobiles, and how those gifts will be liquidated or maintained.Key ElementsA nonprofit organization need not accept a gift simply because it is offered. A gift acceptance policy defines the types of gifts the organization will allow.Not every gift is a blessing. Donors and nonprofits don’t always share the same values and priorities. Gifts that do not enhance the organization’s mission, priorities, and reputation should be not accepted.Planned giving vehicles, such as bequests and charitable trusts, require that the organization have the capacity to administer them. They may not be appropriate for every organization. Practical TipsSeek ways to encourage donors to make unrestricted gifts that support the general operating budget. Donor restrictions and conditions must be acceptable to the organization and not endanger the tax deductibility of the contribution. Negotiating with generous but demanding donors may be time consuming, but it is important that both parties agree on the terms of the gift and that the gift reflects an investment in work/activities that advance the mission of the organization.The federal law mandates how certain kinds of gifts (e.g., cars, real estate, art) must be documented, valued, and even taxed. Work with lawyers specialized in charitable giving to avoid problems for the organization, and ask that donors do the same.To protect the organization’s integrity, consider having a policy that requires the immediate sale of gifts of securities. This eliminates ethical concerns about affiliation with certain companies and avoids second guessing the timing of stock sales.Seriously consider whether the nature of the gift or the source of the gift is in conflict with the mission of your organization. For example, should an environmental organization accept funding from a known environmental offender, or should a gun control advocacy organization accept funding from an arms manufacturer?Remain independent to the beliefs and values of the organization and do not allow a major donor to lead you off course or to compromise your objectives.Sample Gift Acceptance PoliciesThe sample gift acceptance policies provided range from very a simple acknowledgement of the board’s role in accepting gifts to expansive policies that address values, process, and administrative details. They are arranged in order from least to most comprehensive.Sample #1This brief policy clarifies the board’s right, on behalf of the organization, to refuse a gift.Refusal of GiftsThe board shall have the right to refuse contributions that do not enhance, promote, and ensure further the purpose of XYZ and the long-range financial viability of the organization.Sample #2This brief policy specifies how the organization will treat gifts of stock.XYZ receives gifts in the form of cash, checks, and securities. Securities are received into the investment account maintained at ABC, which is located at DEF.Gifts of securities will be acknowledged to the donor at the value received into the account, as of the day received.All securities will be sold immediately upon receipt into the account. The funds available after the sale will be invested only in interest-bearing accounts of low risk, such as money market accounts, treasury notes or bills, or certificates of deposit.Sample #3This short sample establishes the board’s role in accepting gifts of property valued over a certain amount.Any gifts of property valued at $__ or more must be approved by the board [or designated committee] of XYZ.Sample #4 This general policy outlines the basic parameters a nonprofit board and organization should take into account when deciding whether to accept a gift.XYZ actively solicits gifts and grants to further the mission of the organization. There is a potential that the acceptance of certain gifts could compromise the ability of the organization to accomplish its goals or could jeopardize its tax-exempt status. Hence, the following gift acceptance policy applies:The chief executive of XYZ and the board have the authority to solicit and/or accept gifts on behalf of XYZ.XYZ’s responsibility is to productively pursue gifts that will further the organization’s mission, goals, and objectives. The primary consideration in the pursuit of gifts is how they can benefit the organization in the most ethical and unencumbered manner. To that end, the following caveats must be considered:Core Values. Is the gift one that is consistent with the organization’s standards, principles, and core values?Compatibility of Cause. Will the gift unnecessarily challenge the organization’s ability to further its mission, goals, or objectives?Public Relations. Does the acceptance of the gift present the organization in an unfavorable light? Does it appear that there may exist a conflict of interest between the donor and the organization?Motivation. Is there clear charitable intent and a commitment to the organization?Consistency. Will the acceptance of the gift be compatible and in agreement with other fundraising activities or gifts of the organization?Credibility. Are the circumstances surrounding the donor and the gift believable?Organizational Stability. If controversy develops, will it be significant enough to weaken the structure of the organization?Form of Gift. Will the nature of the in-kind contribution create problems, such as in advertising or sponsorship?Source of Gift. Who is the donor? Is the gift from an individual or a corporation? Does the donor represent a perceived conflict of interest, or might the donor’s objectives not fit with the mission of the organization?Sample #5 This policy lists clearly the kinds of gifts that the organization will not accept. Gift Acceptance PolicyUnrestricted, outright gifts of cash, check, credit card, and publicly traded securities do not require approval. Routine gifts are accepted and administered through the director of development, with final authority to accept routine gifts lying with the chief executive. Gifts will only be accepted where there is charitable intent on the part of the donor. XYZ is unable to accept gifts that are overly restrictive in purpose. The most desirable gifts are those with the least restrictions, as unrestricted funds allow the organization to address its most pressing needs. Unless the board grants a specific exception, XYZ will not accept any gifts thatContain a condition that requires any action on the part of the organization that is unacceptable to administrationContain a condition that the proceeds will be spent by the organization for the personal benefit of a named individual or individualsRequire the organization and its administration to employ a specified person now or at a future dateInhibit the organization from seeking gifts from other donorsExpose the organization to adverse publicity, litigation, or other liabilitiesRequire undue expenditures, or involve the organization in unexpected responsibilities because of their source, conditions, or purposeInvolve unlawful discrimination based upon race, religion, gender, sexual orientation, age, national origin, color, disability, or any other basis prohibited by federal, state, and local lawsNoncash gifts will be accepted only when it is reasonably expected they can be converted into cash within a reasonable period of time or when XYZ can utilize the property in its operations. Generally, [six months to one year] shall be considered reasonable for conversion to cash. All noncash gifts to XYZ will be sold at the discretion of XYZ, whose express policy will be to convert the property to cash at the earliest opportunity, keeping in mind current market conditions and the potential use of the property in the accomplishment of the mission of XYZ.Property encumbered by a mortgage or other indebtedness cannot normally be accepted as a gift unless the donor agrees to assume all carrying costs until the property is liquidated. Exceptions to this guideline can be made when the value of the property exceeds the anticipated exposure, or will produce income, or will be used by XYZ in its programs. Associated expenses of a gift made to XYZ are to be borne by the donor.Donors of property gifts of over $5,000, except for gifts of publicly traded stock, must obtain an appraisal by an independent third-party appraiser in accordance with current tax law requirements.To avoid conflicts of interest, the unauthorized practice of law, the rendering of investment advice, or the dissemination of income or estate tax advice, all donors of noncash gifts must acknowledge that XYZ is not acting as a professional advisor, rendering opinions on the gift. All information concerning gift planning from XYZ is to be for illustrative purposes only and is not to be relied upon in individual circumstances. XYZ may require a letter of understanding from a donor of a property gift, along with proof of outside advice being rendered, before such a gift will be accepted. All gifts of life insurance must comply with applicable state insurance regulations, including insurable interest clauses.XYZ does not accept any gifts requiring annuity payments that will be guaranteed by the organization.All gifts and gift consideration must meet all applicable local, state, and federal laws and regulations.Sample #6 This comprehensive sample provides detailed guidance for staff in working with major donors and articulates their respective responsibilities.AcceptanceXYZ reserves the right to decline any financial commitment, gift, or bequest, as well as the right to determine how a gift will be credited and/or recognized.Restricted and Unrestricted GiftsUnrestricted gifts shall be encouraged unless 1) the donor indicates that he or she is only willing to make a restricted gift or 2) the option of a restricted gift will otherwise significantly increase the chances of obtaining a gift from the donor.In drafting instruments for the gift of restricted funds to XYZ, or to any of its affiliated organizations, donors and their advisors shall be encouraged to use language that would permit application of the gift to a more general purpose if, in the opinion of the board, the designated purpose is no longer feasible.All receipts from unrestricted bequests, annuities, charitable remainder trusts, or charitable lead trusts shall become a part of the general endowment, unless the executive committee determines a particular unrestricted gift of the type enumerated in this paragraph should be deposited in a different account.Administrative ExpensesXYZ will not pay commissions or finder’s fees as consideration for directing a gift to XYZ or to any of XYZ’s affiliates.Donors are responsible for obtaining their own appraisals for tax purposes of real property or tangible or intangible personal property being given to XYZ and for any fees or other expenses related to such appraisals.XYZ retains the right to obtain its own qualified appraisals of real property or tangible or intangible personal property being offered as a gift at its own expense.XYZ will acknowledge receipt of gifts of tangible personal or real property in accordance with the federal tax law and will sign any IRS form or other documents necessary for the donor to obtain a tax deduction for such gifts, so long as such acknowledgment does not entail valuing the gift.Prospective donors shall be responsible for their own legal, accounting, appraisal, transportation, and other fees related to XYZ.Professional AdviceProspective donors shall be strongly encouraged in all cases to consult with their own independent legal and/or tax advisors about proposed gifts, including tax and estate planning implications of the gifts. No representative of XYZ shall provide legal or tax advice to any donor or prospective donor.Upon request, representatives of XYZ may provide to the donor sample bequest language for restricted and unrestricted gifts to ensure that a bequest is properly designated. XYZ may also provide, upon request, IRS-approved prototype trust agreements for review and consideration by the donor and his or her advisors. The sample nature of such language or agreements shall be clearly stated on all documents given to donors, and donors shall be advised that consultation with their own legal advisors is essential prior to use of such standard language or specimen agreements.ConfidentialityAll information about donors and prospective donors, including but not limited to their names, the names of their beneficiaries, the nature and amounts of their gifts, and the sizes of their estates will be kept confidential by XYZ and its representatives, unless the donor grants permission to release such information. All requests by donors for anonymity will be honored, except to the extent that XYZ is required by law to disclose the identity of donors.AuthorityThe board chair or his or her designee is authorized to enter into planned gift agreements on behalf of XYZ and to execute any and all documents necessary or appropriate to consummate such agreements.Any exceptions to these gift acceptance policies may be made only in exceptional circumstances, on an individual basis, and shall require the approval of the vice chair of development and the executive committee of the board.These gift acceptance policies may be amended by the executive committee, upon recommendation from the development committee of the board.Sample #7This comprehensive policy outline presents a thorough gift acceptance policy that addresses ethical considerations, legal requirements, and administrative procedures.IntroductionThe purpose of this gift acceptance policy is to give guidance and counsel to those individuals within XYZ concerned with the planning, promotion, solicitation, receipt, acceptance, management, reporting, use, and disposition of private sector gifts.These policies must be viewed as flexible and realistic in order to accommodate unpredictable situations as well as donor expectations, as long as such situations and expectations are consistent with XYZ’s mission and policies. Flexibility must be maintained since some gift situations will be complex, and proper decisions can be made only after careful consideration of all related factors. These policies may, therefore, require that the merits of a particular gift be considered by the appropriate staff and/or committee of the board along with legal counsel and directors if necessary.All fundraising activities and gift acceptance policies, and their day-to-day implementation, are designed and managed by the chief executive in conjunction with the appropriate staff, and are subject to approval by the board.The board, through the finance committee and the chief executive, is responsible for the gift acceptance policy. This responsibility cannot be delegated or waived. These policies and authorizations shall be reviewed by the finance committee on an annual basis or as circumstances warrant.Policy StatementsBoard Acceptance of GiftsThe board shall exercise its public trust, as mandated by statute, in making final decisions for the acceptance of all gifts and grants and for any exception to its policies and guidelines. Gifts and gift instruments may be received by the chief executive but can be accepted officially only by the board as managers of the public trust.XYZ shall accept only those gifts the transference and implementation of which shall be deemed consistent with the public laws and/or regulations of the United States of America and the State of [insert appropriate state].Philanthropic IntentThe board shall determine that gifts to XYZ are evidence of philanthropic intent and that the donor’s philanthropy is in accord with the stated mission and goals of XYZ. The purpose is to prevent XYZ from being an object of philanthropic intent for either designed or innocent avoidance of taxes, prejudiced purposes, or evaluation of gifts without generous, advanced, objective, experienced evaluation.EthicsThe board shall assure itself that all philanthropic promotions and solicitation are ethical by adopting policies that prohibit XYZ personnel from benefiting personally by way of commissions or other devices related to gifts received.Review Legal ArrangementsLegal counsel retained by XYZ shall, as required, review legal documents, contracts, and all donor agreements. XYZ shall seek the advice of legal counsel in all matters pertaining to its planned giving program. All agreements shall follow the formats of the specimen agreements to be approved by legal counsel unless counsel has agreed in writing to a change for a specific agreement.XYZ shall encourage donors to seek their own counsel in matters relating to their bequests, life income gifts, tax planning, and estate planning. All legally binding documents involving gifts over $__ shall be prepared and/or reviewed by counsel retained by the donor, to avoid any conflict of interest or undue influence. Alternatively, a donor may sign a document prepared by XYZ, releasing XYZ from any liability and waiving any conflict.Professional FeesWhile XYZ is happy to offer assistance to attorneys and other professional advisors by providing specific language to be used in charitable giving instruments, it cannot pay any attorney’s or advisor’s fees associated with this work.Unacceptable GiftsXYZ reserves the right to refuse any gift that is not consistent with its mission. In addition to and without limiting the generality of, the following gifts will not be accepted by XYZ:Gifts that violate any federal, state, or local statute or ordinanceGifts that contain unreasonable conditions (e.g., a lien or other encumbrance) or gifts of partial interest and propertyGifts that are financially unsound Gifts that could expose the XYZ to liabilityStewardshipXYZ will be responsible for good stewardship toward its donors by following these guidelines:All gifts will be acknowledged within the required, or otherwise reasonable, period of time.All gift acknowledgment letters/receipts will be prepared by the chief executive or his or her designee.Gifts to XYZ shall be reported in a manner consistent with the standards recommended by the Association of Fundraising Professionals (AFP) or the National Council on Planned Giving (NCPG).Files, records, and mailing lists regarding all donors and donor prospects are maintained and controlled by XYZ. Maximum use will be made of information and contacts that members of the board, various volunteer groups, or the staff have with potential donors. Written reports of interviews and solicitations will be maintained in the donor prospect file and/or computer.This information is confidential and is strictly for the use of XYZ board and staff. Use of this information shall be restricted to organization purposes only. Donor has the right to review his or her donor fund file(s).XYZ will provide the donors of endowed scholarships with appropriate information about the recipients of scholarship assistance.Should the gift be restricted, XYZ will provide the donor with a narrative and financial report detailing the activities made possible by their support. This report will be submitted to the donor within __ days of the completion of the underwritten activities.Gifts to XYZ and accompanying correspondence will be considered confidential information, with the exception of the publication of donor recognition societies. All donor requests for confidentiality will be honored.Names of donors will not be provided by XYZ to other organizations, nor will any lists be sold or given to other organizations.Conflict of InterestThe XYZ board will assure itself that XYZ personnel are circumspect in all dealings with donors in order to avoid even the appearance of any act of selfdealing. The board will consider a transaction in which the employee has a “material financial interest” with a donor an act of self-dealing. In reviewing selfdealing transactions, the board shall consider financial interest “material” to an employee if it is sufficient to create an appearance of a conflict. In each case, this will be a question of fact.The board will examine all acts of self-dealing including, but not limited to prohibition against personal benefit. Those individuals who normally engage in the solicitation of gifts on behalf of XYZ shall not personally benefit by way of commission, contract fees, salary, or other benefits from any donor in the performance of their duties on behalf of XYZ. (The definition of individuals includes each of the categories of employees of XYZ. Individuals are further defined to include associations, partnerships, corporations, or other enterprises in which a member of the staff holds a principal ownership interest.)Conformity to Federal and State LawsThe board will assure itself that fundraising activities comply with local, state, and federal laws.Gift ValuationsXYZ shall follow accepted guidelines for the valuation of gifts such as stock, real estate, personal property, and life insurance that require specific methods of valuation for the protection of both the donor and XYZ.Gifts of art, furniture, books, stamps, coins, and other collections must have values assessed by properly accredited independent appraisers retained by potential donors for appropriate gift tax credit. XYZ shall acknowledge receipt of such properties but must not verify values.Required Reporting of Gifts to the Internal Revenue ServiceShould XYZ sell, exchange, or otherwise dispose of any gift (other than checks, cash, or publicly traded stocks or bonds), within two years after the date of the gift, XYZ will furnish the Internal Revenue Service and the donor with a completed Form 8282.Suggested ResourcesTempel, Eugene R. Development Committee. Washington, DC: BoardSource, 2004.Fowler, Ronald and Amy Henchey. “In-Kind Contributions.” Sponsorship PoliciesIntroductionA corporate sponsorship is a financial relationship between a nonprofit organization and a commercial enterprise that is of mutual benefit. In exchange for money, products, or services, the nonprofit provides the corporation with recognition and, at times, use of its name in corporate marketing. Generally, there are four types of corporate sponsorship:Event Marketing: A company sponsors a specific event. For example, Adidas, Heineken, and Hyundai have been sponsors of past Olympic Games.Partner Sponsorship: A long-term partnership between a nonprofit and a corporation. For example, a local mechanic sponsors a little league baseball team.Cause-Related Marketing: A corporate sponsor promotes a specific cause by donating a percentage of its profits from the purchase of a product or service. For example, American Express gives a percentage of its profits to Share our Strength.Endorsements: A corporation pays a royalty fee for the use of a charity’s name or logo on its products. For example, Nicoderm has given money to the American Lung Association to use the ALA name and logo in commercials and on its packaging.Key ElementsA sponsorship policy defines the relationship between the nonprofit organization and its corporate sponsors. It should provide guidelines on the types of companies the organization will work with and any potential concerns related to the nonprofit’s mission and values.Sponsorships, by their very nature, require giving the company prominent recognition. A sponsorship policy should establish guidelines for corporate recognition based on the level or value of the sponsorship and, likewise, boundaries for use of the nonprofit’s name and logo.The policy should also acknowledge who has authority for making sponsorship decisions. Depending on the scale and scope of the organization or the activity, the board may reserve the right to review and even approve corporate sponsorships.The board should establish and approve the organization’s sponsorship policies, but staff will often handle operational issues, such as negotiating contracts, coordinating communication efforts, and implementing the activities.The board should establish parameters for sponsorship agreements that address limitations and exclusivity, requirements for entering and terminating contracts, and other basic terms.Responsibility for corporate sponsorships can be confusing. In nonprofit organizations, either the development or the marketing department may take charge. In corporations, it is often part of the marketing department, rather than the philanthropic or community affairs department.Not every nonprofit organization is suited to corporate sponsorships. Small nonprofit organizations may find sponsorship difficult because they lack the staff and resources required to work with a large company. Other organizations, with strong ideology or controversial missions, will find few companies willing to promote their cause.Practical TipsEngage in the necessary due diligence with respect to a corporation. Make sure that the company’s activities, affiliations, business practices, and reputation do not compromise the organization’s mission or brand. Ensure that the nonprofit’s supporters and stakeholders will be comfortable with this relationship.Clarify expectations on both sides. What does the organization want out of this relationship? How important is it in the short- and long-term? How does the company want to be recognized? Does it want sole sponsorship?Remain independent and true to the values of the organization. Do not allow a donor or a sponsor to steer the organization off of its course or beliefs.Beware of IRS regulations. The IRS regulates sponsorship relationships and separates them from taxable business activities, such as advertising. To avoid taxable income, sponsorship payments should not provide a substantial benefit to the company, but recognition is allowed. You can avoid taxable income and still acknowledge sponsors by citing the sponsor’s name, logo, phone number, and address; using value-neutral descriptions of products and services; and linking to the sponsor’s Web site’s home page. Sample Sponsorship PoliciesBecause there are so many variations on corporate sponsorships, from high-profile events and program underwriting to co-branding and product endorsements, the policies are relatively general.Sample #1 This succinct statement affirms the organization’s commitment to its values and establishes the board’s authority for making decisions related to endorsements.XYZ will not solicit or accept gifts from?individuals or entities whose?practices, policies, or operations are deemed unacceptable and contrary to the values implicit in its mission.XYZ will not endorse the policies or views of its funders or donors.XYZ will not promote corporate products without approval by the board.Sample #2 This policy encourages active solicitation of sponsors for the organization’s programs. Policy StatementXYZ actively solicits and encourages the business community, service clubs, and other organizations to become sponsors of XYZ events, programs, and services. XYZ enters into sponsorship agreements with sponsors it deems appropriate. Sponsorship agreements may vary by sponsor.DefinitionsA sponsorship is defined as a mutually beneficial exchange arranged in advance wherebyXYZ obtains support for a specified activity.Sponsor receives value in return for cash and/or products and services-in-kind to XYZ.Policy ObjectivesXYZ’s sponsorship policy has been developed within the framework provided by the [official credentialing agent]. Policy PrinciplesSponsorship ApprovalsXYZ’s board has the right to refuse an offer of sponsorship that is deemed inappropriate or incompatible with the mission, goals, or best interests of XYZ.Conditions of SponsorshipXYZ undertakes to ensure that all partners understand that the sponsorship agreement will have no impact on the policies or practices, such as materials selection or purchases, of XYZ.Use of XYZ’s name or logo is strictly controlled. Any use of XYZ’s name or logo by community or business partners requires prior approval in writing.A partnership agreement will define the terms of the sponsorship (e.g., project details, timing, limitations, invoicing, and formal recognition of the sponsorship) and any recognition to be provided to the sponsor. The sponsorship agreement will have a set time period and all obligations on the part of XYZ and the sponsor will end upon the termination of the agreement, unless otherwise specified in the agreement.Certain partnership agreements may entitle a sponsor to exclusivity. In all other cases a sponsor may not limit XYZ’s ability to enter into other sponsorships.Sponsor RecognitionSponsors will be provided with a level of recognition commensurate with their contribution. Recognition shall be in conjunction with, but not limited to, the programs or services that are supported by the sponsor.Charitable Tax ReceiptsCharitable receipts may not be issued for sponsorships where the sponsor receives a benefit such as advertising or promotion in return for the donation. However, XYZ will issue an appropriate numbered receipt to its business partners for tax purposes.Sample #3 This sample provides general guidelines for choosing a sponsor.XYZ SPONSORSHIP POLICYDefinitionA sponsorship is a mutually beneficial exchange whereby the sponsor receives value in return for cash or goods or services-in-kind provided to the organization. The relationship requires a formal written agreement or confirmation setting out the terms of the sponsorship, including any recognition to be provided to the sponsor, and must be signed by an authorized member of the sponsor and by XYZ’s chief executive or designee. Tax receipts are not issued to sponsors. Sponsorships are usually considered business expenses and not charitable donations. They are typically funded from corporate marketing budgets. Sponsorships must comply with the organization’s policy on conflict of interest. The organization reserves the right to refuse or decline any offer of sponsorship at its absolute discretion or to negotiate with the sponsor concerning any aspect of a proposed sponsorship. Sponsorships do not imply endorsement of products or services by the organization. A sponsorship does not automatically imply any exclusive arrangement with the organization. XYZ’s chief executive, in concert with the marketing and communications division, is responsible for determining whether a sponsorship will be solicited and/or accepted based on an assessment of the best interests of the organization and the wishes of its members. XYZ’s chief executive may refuse any sponsorship deemed at variance with the organization’s mission, goals, policies, and best interests. It is important that any sponsorship arrangement involving XYZ shouldBe unambiguous and clearly understood by all parties.Avoid any real or perceived conflict of interest.Avoid real or implied endorsement of a commercial product.Avoid partnerships with inappropriate individuals and organizations.Receive appropriate approval (see below).Be fully accountable to XYZ’s board.General Principles Governing SponsorshipThere must not be preferential treatment as a result of sponsorship, for example an expectation that a company will get favored treatment by XYZ over a competitor.Where appropriate, sponsorship should be arranged after publicly calling for expressions of interest to ensure there is no disadvantage to any individual or business.Individual staff should not receive any substantial benefit from association with sponsors. Any commissions, substantial gifts, or other financial benefits should be brought to the attention of a supervisor.XYZ must retain control over any sponsored program and sponsors should not have any input into operational matters relating to a project they have sponsored.Who Can Be a Sponsor? Sponsorship arrangements will only be with individuals or companies held in high regard.Sponsorship should be avoided with any industry or organization that has a real or perceived conflict of interest and does not support the way XYZ staff perform their duties. The sponsoring organization’s policies and procedures will be in concert with the corporate philosophy of XYZ and not likely to cause embarrassment to XYZ. General GuidelinesIn order to ensure editorial integrity, XYZ has established the following principles to guide the acceptance and display of sponsorship advertising in association with its content: All sponsorship or advertising shall comply with the laws and regulations of the United States, including the Food and Drug Administration (FDA). XYZ shall have sole discretion for determining sponsors and the display of sponsor advertising. All sponsored programs will be recognized as such. Acceptance of sponsorship advertising shall in no way indicate XYZ’s endorsement of the sponsor’s products and/or services. XYZ shall review all sponsorship and advertising claims to therapeutic benefit and reject any unsubstantiated claims. XYZ will not knowingly advertise any forms of products or services that are harmful to health. Sponsors shall not dictate the form or substance of any content appearing on a sponsored program for XYZ. XYZ shall be directly responsible for communicating and ensuring compliance of its sponsorship advertising policy to all of its participants. The XYZ sponsorship policy will be available on XYZ’s Web site. Sample #4 This policy gives guidelines for product endorsement and sponsorships for special events.Corporate Partnership/Product Endorsement PolicyXYZ will enter into corporate partnerships and/or endorse a product of a firm or individual only after careful consideration and research to ensure that doing so would be in the best interest of the organization.When a request for a corporate partnership or product endorsement is received, or prior to the solicitation by XYZ of such a relationship, the executive committee or another committee so designated by the board chair will research the firm or individual to ensure the partnership or endorsement will be consistent with the current programs, position statements, and strategic plan of XYZ. Criteria to be evaluated during this research process may include, without limitation, corporate or individual history, compliance with applicable laws, and marketing practices.After review of the proposed partner using the criteria set forth above, the resource development committee shall make a recommendation to the board concerning the proposed corporate partnership or product endorsement. The decision to approve the partnership or product endorsement must be made by a majority of those present and voting at a regularly scheduled board meeting. However, in the event that a decision is required between board meetings, the executive committee is authorized to act on behalf of the full board.Special Event/Project Fundraising PolicyXYZ welcomes, encourages, and appreciates sponsored fundraising events/projects that benefit our programs and services. Any fundraiser considered must meet all applicable local, state, and federal laws and regulations. The following guidelines shall be adhered to when considering such events:Special fundraising events/projects shall be evaluated by the director of resource development using the following criteria: profitability, demands on staff time, strength of support from the organizing group/volunteers, public relations exposure, costs/budget, and potential conflicts of interest.The chief executive must approve the use or inference of XYZ’s name, services, or logo.All promotional materials for special fundraising events/projects must be preapproved by the director of resource development. Promotional materials include media releases, fliers, invitations, posters, point-of-purchase stands, tickets, etc.The solicitation of corporate, foundation, individual, or association sponsors for a fundraising event/project must be preapproved by the director of resource development and the chief executive. This will avoid duplications and existing agency exclusives.XYZ reserves the right to disassociate itself from any event or project not in compliance with its policies, procedures, or guidelines.Any special fundraising event/project considered must meet all applicable local, state, and federal laws and regulations.Special fundraising events/projects not originated by the resource development committee must be brought to the attention of and reviewed by said committee. If the resource development committee deems a fundraiser to be in keeping with the mission and goals of XYZ, a recommendation will be made to the board concerning the proposed event/project. The decision to approve must be made by a majority of those present and voting at a regularly scheduled board meeting. However, in the event that a decision is required between board meetings, the executive committee is authorized to act on behalf of the full board. Sample #5 This comprehensive policy defines terms, scope, and restrictions for sponsorship activities and clarifies the process for approving contracts.XYZ SPONSORSHIP POLICYPurposeThe aim of this policy is to create an authorized environment for entering into sponsorship agreements with third parties where such sponsorships are mutually beneficial to both parties in a manner that is consistent with all applicable policies set by XYZ. The purpose of the policy and procedures as outlined is toUphold XYZ’s stewardship role to safeguard XYZ’s assets and interests;Provide employees with guidelines and procedures based on best practices; andProtect XYZ from risk.The policy provides an enabling environment for XYZ to enter into sponsorship agreements within set guidelines and procedures for the purpose of optimizing non–tax revenue sources. Under the conditions of this policy, XYZ staff may solicit such sponsorship agreements.XYZ shall not relinquish to the sponsor any aspect of XYZ’s right to manage and control XYZ’s assets or facilities.This policy is not applicable to philanthropic contributions, grants, or unsolicited donations in which no benefits are granted to the sponsor and where no business relationship exists.ScopeThis policy applies to all XYZ business units, departments, and divisions.This policy does not apply toIndependent foundations or registered charitable organizations from which XYZ may receive benefit.Philanthropic contributions or unsolicited donations to XYZ.Funding obtained from other orders of government through formal grant programs.XYZ sponsorship support of external projects where XYZ provides funds to an outside organization.Third parties who lease XYZ property or hold permits with XYZ for activities or eventsDefinitions“Sponsorship” shall mean a mutually beneficial business arrangement between XYZ and a third party, wherein the third party provides cash and/or in-kind services to XYZ in return for access to the commercial and/or marketing potential associated with XYZ. Sponsorships may include sponsorship of one or more of XYZ’s services, projects, events, facilities, or activities.“Sponsorship agreement” shall mean a mutually beneficial, contractual agreement that reflects the business arrangement for the exchange of commercial and/or marketing benefits between XYZ and a third party for a specified period of time.“Sponsor” shall mean a third party that enters into a sponsorship agreement with XYZ.“In-kind sponsorship” shall mean a sponsorship received in the form of goods and/or services rather than cash.“Request for sponsorship (RFS)” shall mean an open and competitive process whereby third parties may express their interest in participating in sponsorship opportunities with XYZ. Requests for sponsorship should include a summary of the sponsorship opportunity, benefits for participation, and a description of the open and competitive procedure for expressing interest in participating in sponsorship opportunities.“Naming rights” shall mean a type of sponsorship in which a third party purchases the exclusive right to name a whole asset or venue. The naming of a component of an asset or venue (e.g., a bench in a park, specific room in a building) is not considered to be naming rights for the purposes of this policy and would be categorized as per section VI (Type A, B, or D). Sponsorship naming rights are considered in the commercial context only, where the naming right is sold or exchanged for significant cash or other revenue support. This arrangement must be documented in an agreement signed by the interested parties and shall have a specified end date to the contractual obligations. This policy shall not apply to honorary and philanthropic naming rights, which are addressed as provided in the [relevant policy]. “Naming rights agreement” shall mean a written contract evidencing the right to name or rename XYZ-owned facilities or land that contains terms acceptable to XYZ. In most cases, indemnification and termination clauses would be required as part of the agreement. All such agreements are to be reviewed by XYZ’s attorney prior to finalization to ensure that XYZ’s legal interests are protected. Dates indicating the term of the agreement should be included.“Philanthropic contribution” shall mean a contribution to XYZ from a third party for which there is no reciprocal commercial and/or marketing benefit expected or required from XYZ. Such contributions are separate and distinct from sponsorship and shall be governed by a separate XYZ policy.RestrictionsIn general, the following industries and products are not eligible for sponsorships with XYZ: police-regulated businesses; faith-based and political organizations; companies whose business is substantially derived from the sale of alcohol, tobacco, firearms, or adult use. Sponsorships by sponsors that fall into one of the above-stated categories shall be subject to review and approval by the board. XYZ shall reject advertising that does not comply with the standards set forth in this policy. All full advertising graphic designs must be submitted in sufficient detail to determine content and final general appearance to the [relevant administrator] or his or her designee for review and approval before application. The approval process for advertising design shall not exceed __ business days from time of submittal.The following standards for advertising are adopted and will not be displayed if itIs false, misleading, or deceptiveRelates to an illegal activityIs explicit sexual material, obscene material, or material harmful to minorsAdvertises tobacco productsIncludes language that is obscene, vulgar, profane, or scatologicalRelates to instruments, devices, items, products, or paraphernalia that are designed for use in connection with specific sexual activitiesDepicts violence and/or antisocial behaviorPolicySponsorships will not result in any loss of XYZ jurisdiction or authority.Sponsorship CategoriesType A: Individual Sponsorship. Sponsorship of an individual XYZ event, program, or asset. Events, programs, or assets shall be limited to those coordinated or managed by a single departmental entity.Type B: Multiple Sponsorship. Sponsorship of a series of XYZ events, programs, or assets OR sponsorship of an individual event, program, or asset coordinated or managed by multiple departmental entities.Type C: Naming Rights Sponsorship. Any sponsorship that falls into the definition for naming rights.Type D: Purchasing Sponsorship. Any sponsorship that includes purchasing of commodities, materials, equipment, or services.Procedures and AuthorityAll sponsorship projects must be submitted in writing to the [relevant administrator] or his or her designee using the [official form] [attached to this policy].Utilizing the approved [official form], a request for sponsorship (RFS) shall be developed and forwarded to the [relevant administrator] or his or her designee for approval. Upon approval, the RFS must be publicly noticed for a minimum of __ business days prior to any designated closing date for submission of proposals. Public notice shall consist, at a minimum, of posting on XYZ’s Web site.All sponsorship proposals must be submitted in writing. For all sponsorship proposals submitted in response to an RFS, with the exception of Type D sponsorships:Negotiations shall be conducted by designated contact as defined on the RFS. Negotiations may commence after the designated closing date for submission of proposals. If no closing date has been designated, negotiations may commence after the RFS has been publicly noticed for a minimum of __ business days.Upon completion of negotiations, [official form] shall be completed by designated contact and forwarded with [official transmittal slip] [attached to this policy] to [department director].If “Fair Market Value” listed on [official form] does not exceed purchasing competitive bid threshold stated in the [relevant document], then [official form] shall be completed by designated contact and sent to [department director] for approval; ([official transmittal slip] will not be used). Upon approval, [department director] shall forward to [relevant administrator] or his/her designee. Skip to step 8 below.[Department director] shall forward to [risk management office].[Risk management] shall forward to [office of management and budget]. Upon approval by [office of management and budget], [official form] shall be forwarded to:Type A: assistant administrator governing departmental entity under which sponsorship falls.Type B: assistant administrator(s) governing any departmental entities under which sponsorship falls.Type C: assistant administrator governing departmental entity responsible for facility.After approval by assistant administrator(s), the agreement shall be forwarded to attorney’s office.All sponsorships with sponsorship value in excess of [director of purchasing] bid award authority as stated in the [relevant document] shall be forwarded to [relevant administrator] for approval.All sponsorships in excess of [relevant administrator] bid award authority as stated in the [relevant document] are subject to approval by the board. In addition, all Type C sponsorships and all sponsorships by sponsors that fall into a category listed in the section titled “Restrictions” shall be subject to approval by the board, regardless of the sponsorship value.If not approved at any stage of approval process, [official form] shall be returned to designated contact with explanation for non-approval.All Type D sponsorship requests shall be governed by [board purchasing ordinance and policies].All approved sponsorship agreements must includeSignatures by authorized representatives of XYZ and the sponsor. Authorized representative of XYZ shall be the highest ranking approval authority from the above-stated review process.Term of the agreement, including provisions for termination.Details of the exchange of benefits, including what will be provided to XYZ by the sponsor and what will be provided by XYZ to the sponsor.A report summarizing approved sponsorship agreements shall be filed on the consent agenda of the board at least quarterly and filed with the clerk of the circuit court for placement in board records.Solicitation and negotiation of sponsorships will be conducted by XYZ staff who are specifically designated by the department director, or by outside contract as approved by the department director. Directors are responsible for ensuring that staff understand the requirements of this policy and that they are provided with appropriate guidance and/or training related to sponsorship practices. All XYZ sponsorship agreements will be negotiated in good faith and represent XYZ in a professional manner.Sample #6 This detailed sample is attentive to the legal definitions of sponsorship and advertising. It details the types of sponsorship and advertising the organization deems acceptable and unacceptable.ADVERTISING and CORPORATE SPONSORSHIP POLICYStatement?of PolicyXYZ welcomes corporate support and advertising in organization publications subject to the following guidelines:XYZ will not accept advertising or corporate sponsorship that reflects in a negative manner on the organization, does not align with its mission statement, or is not in the best interest of the health and safety of the organization as determined by decision-making parties listed below.XYZ does not accept advertising or corporate sponsorships for certain categories of products and services, including alcohol products, illegal drugs and drug paraphernalia, weapons, tobacco products or establishments, sexual escort services, gambling opportunities or casinos, weight-loss products or plans, check cashing services, and credit cards.XYZ does not accept advertising or corporate sponsorship acknowledgments on its Web site.XYZ does not endorse, directly or by implication, any products, services, or ideas advertised except those sponsored directly by the organization.Purpose of PolicyXYZ seeks to provide an environment in which [organization-specific activities] can occur relatively free from the pervasive messages of the broader commercial society. The advertising and corporate sponsorship policy is designed to guide decision making for XYZ personnel who are approached by external advertisers or sponsors who want to access the XYZ community and for departments and programs seeking supplemental revenue to support XYZ activities from external advertisers or sponsors. The policy also is designed to be mindful of XYZ’s status as a nonprofit organization under the law.ProceduresCorporate SponsorshipXYZ departments or organizations must receive approval from the office of development before gifts are solicited. Because corporate sponsorships are charitable contributions by IRS definition and must be appropriately receipted under the law, departments and organizations must report all gifts received to the office of development in order to ensure accurate accounting and acknowledgment of all contributions to XYZ.To be considered a contribution, a corporate sponsorship payment must include all of the following characteristics:A payment received from a business or commercial enterpriseA printed or other acknowledgment of the business or commercial enterprise from XYZ (e.g., included on a sports scoreboard, banner, or other display)The acknowledgment may not containXYZ’s endorsement of the business entity or its products or servicesAny qualitative or quantitative language about the business entity’s products or services (e.g., statements or information about the quality or prices of products or services)Any information other than business name, logo, address, telephone, and/or Internet address The payment received may not be from a vendor as part of an exclusive provider arrangement between XYZ and that vendor If the above characteristics are not all met, then the payment is considered advertising revenue according to tax laws and regulations (see tax implications below).AdvertisingTo ensure XYZ’s compliance with applicable tax laws and regulations, the responsible department head is required under this policy to notify the [director of?accounting and budget?services] about advertising activity if any of the following conditions exist:A publication is issued more frequently than once per year and it contains advertising.A substantial part of any XYZ employee’s job is devoted to selling advertising.XYZ enters into an exclusive provider contract with a vendor and the vendor will make one or more payments to XYZ. Revenues received are to be classified as advertising revenues if the transaction has any of the following characteristics:An endorsement by XYZ of the business or commercial enterprise or its products or servicesQualitative or quantitative language about the business or commercial enterprise’s products or servicesAn exclusive provider arrangement exists between XYZ and a vendor and the vendor makes a payment to XYZAdvertising revenues earned by XYZ are currently subject to [state and city] tax and should be classified as miscellaneous service revenue (account __), so the applicable tax can be calculated and income from advertising revenue (e.g., advertising revenue less related expenses) is currently subject to federal UBIT if any of the following conditions exists:The publication is issued more frequently than once per year. A substantial portion of any employee’s job is devoted to selling advertising. The revenues generated are from a payment(s) where an exclusive provider arrangement exists between the vendor and XYZ. Tax Implications of Advertising and Corporate Sponsorship RevenueFor revenue classification and tax purposes, a distinction is made between corporate sponsorship and advertising revenues. Corporate sponsorship revenue is considered contribution revenue not subject to tax, whereas advertising revenue is subject to both [state and city] tax, and may be subject to federal UBIT depending on the facts and circumstances.Definitions/Descriptions/Abbreviations“Advertising” means offering space in a print publication to another party for the purpose of promoting or marketing any trade or business, or any service, facility, or product. Advertising includes messages containing qualitative or comparative language, price information, or other indications of savings or value, an endorsement, or an inducement to purchase, sell, or use any company, service, facility, or product.“Corporate sponsorship” means accepting a contribution from a business or commercial enterprise in exchange for a printed or other acknowledgment that is limited to only the business name, logo, address, telephone, and/or Internet address.UBIT is federal unrelated business income tax.Suggested Resources “What is a Corporate Sponsorship?” National Council of Nonprofits . IRS. “Rules and Regulations, Taxation of Tax-Exempt Organizations’ Income From Corporate Sponsorship.” , Toni. “Fitting Annual, Endowment, Capital, Sponsorship & Underwriting Campaigns into Your Organization’s Plans and then Making Them ‘Sing.” Part VII: Personnel PoliciesResponsibility for Human ResourcesEqual Employment OpportunityNepotismSexual HarassmentWorkplace EnvironmentSubstance AbuseSolicitationElectronic CommunicationPerformance ReviewGeneral Staff ComplaintsSeverance PaySustainabilityHuman Resources Responsibility PoliciesIntroductionThe board is ultimately responsible for the personnel policies of the organization. In practice, this means that the board should periodically review the personnel policies to ensure that they are appropriate and up-to-date. The board may also consider overarching employment policies that reflect the organization’s values and desired interactions with its stakeholders — clients, volunteers, staff, and/or the public. That said, except for its supervision of the chief executive, the board does not usually get involved with human resource management. In practice, this means that the board delegates general responsibility to the chief executive for the nonprofit’s employment practices.Personnel policies cover such things as hours of work, paid holidays, paid leave for illness and personal reasons, and employment status. They also cover issues that may lead to litigation, such as employee complaints, discrimination, and sexual harassment. It is especially important for the board to provide guidance on these latter areas. So, in delegating responsibility to the chief executive, the board should be sure to articulate core elements related to human resource issues and the workplace environment.Key ElementsA simple policy helps to delegate responsibility for the organization’s employment practices and procedures to the chief executive. The chief executive, in turn, may carry out that responsibility himself or herself or by assigning it to another employee (e.g., a human resource manager).Nonprofit organizations often borrow personnel policies — from more established organizations and/or those with similar programs — to serve as guidelines, but the personnel policies of each organization should reflect the values of that particular organization. The board should ensure that any borrowed policies meet the requirements of the state laws that are applicable to them.In young nonprofit organizations, with their first paid staff, the board may be reluctant to create personnel policies out of fear that the policies imply a lack of trust. While board members may want to maintain the collegial work environment, they should not underestimate the value of clear guidelines in helping the organization function better and avoiding potential problems in the futurePractical TipsMake certain that the dissemination of policies to employees does not constitute a contract between management and employees that could result in legal liability under state laws if the policies are not followed. In states where policy manuals may be deemed to constitute contracts, employers can protect themselves by adding a waiver in prominent language, preferably at the beginning of the manual, which states that the manual and/or the policies stated in it do not constitute a contract. Often, this waiver clarifies that employment with the organization is at will, meaning that employees can be terminated for any reason that does not violate federal or state law. Be sure to have specialists in human resource management and employment law review all personnel policies to make sure they are fair and equitable and that they include all legally required elements. Sometimes, a board member with special expertise may serve as a resource for reviewing and updating the policies.Sample Human Resources Responsibility PoliciesThe two policies provided delegate overall responsibility for employment policies and practices to the chief executive: the first by establishing a positive framework, and the second by defining the minimum requirements.Sample #1 This brief, affirmative statement sets the framework for the organization’s employee philosophy and assigns responsibility for personnel policies to the chief executive.Philosophy for Staff EmploymentWith respect to the treatment of paid or volunteer staff, the chief executive is responsible for ensuring that working conditions meet all local, state, and federal legal requirements, are humane and safe, and that employees are treated in an equitable, professional manner. The chief executive shouldEnsure that employment decisions are based on the individual’s qualifications and ability to perform the job.Hire quality people with known maturity.Pay compensation reasonably required to attract and retain employees with the skills and experience necessary to accomplish the organization’s mission.Develop and maintain appropriate personnel policies in a handbook reviewed by legal counsel and available to all staff (and kept in the [Board Reference Book]).Sample #2This policy defines the management boundaries within which the chief executive must operate vis-à-vis employees and personnel policies.In relating to staff, the chief executive shall not fail toEstablish human resource policies and to acquaint staff with the organization’s personnel procedures. In developing these policies, the chief executive shall not fail to consult with legal counsel.Seek gender, ethnic, and age diversity in the composition of staff consistent with the organization’s staffing requirements.Ensure that the rights of the employees to equitable and humane treatment are not impaired and establish procedures through which employee complaints will be resolved.Develop a plan for periodic and systematic review of employee performance and of compensation and benefits package for XYZ employees.Establish management policies and procedures that protect the rights of the employees and of the organization.Initiate appropriate intervention or advocacy on behalf of any employee or agent of XYZ who in the course of duty is unlawfully detained, subjected to physical harm, or otherwise placed in jeopardy.In addition, the chief executive shall notConduct the decision-making process of XYZ’s administration in a secretive manner except as required for personal privacy and confidentiality of personnel records.Subject staff to unsafe or unhealthy conditions.Discriminate or retaliate against any staff member for expressing an ethical dissent, or discriminate among employees on other than job-related individual performance or qualifications.Allow any position descriptions to be vague, or to inaccurately reflect the responsibility and tasks given to the position.Hinder an employee from expressing a complaint to the board in cases where internal complaint mechanisms have been exhausted, and where the employee contends thatBoard or administrative procedures have been erroneously or capriciously applied to his or her detriment; or Board policies or administrative procedures are inhumane, unfair, or constitute a violation of the employee’s legal rights.Suggested ResourcesHeathfield, Susan M. “What Does a Human Resources Manager, Generalist, or Director?Do?” Society for Human Resource Management U.S. Department of Labor, Occupational Safety & Health Administration: Equal Employment Opportunity PoliciesIntroductionThe most frequent legal actions against nonprofit organizations are in employment areas such as wrongful termination, discrimination, and sexual harassment. It is crucial for nonprofit boards to be vigilant about having non-discrimination and anti-harassment policies, seeing that staff carries them out appropriately.Key ElementsDiscrimination in employment based on race, color, gender, national origin, ethnic background, religion, age, sexual orientation (in some state and local jurisdictions), and disability is illegal, and an organization’s policies must be clear about this.Equal employment opportunity policies are generally meant to cover the hiring, promotion, job assignments, development, and termination of staff.As part of its equal opportunity policy, the organization should also define a complaint process so that employees can speak when they feel that the organization is not treating them fairly or equally (see Part VII, Section 7).Policies related to equal opportunity may be found in several places, ranging from the employee handbook or a code of ethics, to board policies or even bylaws.Practical TipsWhen crafting equal opportunity employment policies, consider emphasizing proactive efforts alongside the legal requirements. (Employers must be careful to avoid quotas. These are illegal unless the employer has a demonstrated history of illegal discrimination.) The value in equality policies lies in their implementation and in the results they produce. This may require proactive efforts, from training to monitoring to outreach. For example, to broaden the pool of employee applicants, ask staff to scrutinize where they advertise. To assure non-discrimination in the workplace, offer diversity training.To truly live up to your equal opportunity policies, ensure that you also implement the principles when seeking bids from vendors, recruiting members, or providing services to your customers.Sample Equal Employment Opportunity PoliciesThe set of policies provided includes basic nondiscrimination policies for employment situations. Some closely mirror the law, while others have more expansive categories and organizational procedures for employee complaints. Sample #1This short statement fits well within a code of ethics, and lays the foundation for equal employment opportunity.Diversity and Equal OpportunityXYZ is an equal opportunity employer committed to principles of the broadest form of diversity. We thereforeValue, champion, and embrace diversity in all aspects of XYZ activities and respect others without regard to race, color, creed, age, sex (including pregnancy, childbirth, or related medical condition), national origin, religion, marital status, veteran or military status, disability, sexual orientation, personal appearance, family responsibility, or political affiliation.Support affirmative action to the extent permitted by law and equal opportunity programs.Refuse to engage in or tolerate any form of discrimination or harassment by stakeholders or vendors.Sample #2This policy relies on federal nondiscrimination laws as the basis for its employment practices and establishes an Equal Employment Opportunity Commission officer to handle complaints.XYZ shall not discriminate because of race, color, age, sex, disability, national origin or ancestry, or religion. This covers all areas of employment, recruitment, advertising, hiring, promotion, demotion, lateral reassignment, transfer, layoff, discharge, rates of pay or other compensation, training, or any other benefits. Employment will be solely on the basis of merit and qualification.XYZ shall comply with the Americans with Disabilities Act of 1990 and shall not knowingly discriminate against qualified individuals with disabilities. XYZ will consider modifying schedules and other adjustments to reasonably accommodate such employees.Any complaint regarding discrimination shall be handled through the Equal Employment Opportunity Commission officer (the chief executive or designee) of XYZ and in consultation with the personnel committee when appropriate. The complainant should contact the EEOC officer (the chief executive or, if the complaint is against the chief executive, the board chair of the personnel committee), who shall provide information and assistance on filing and pursuing the complaint.Sample #3This document expands the list of protected individuals beyond those required by law, and it provides more clarity about which acts constitute discrimination.XYZ prohibits discrimination against employees based on any legally protected classification such as race, color, national origin, sex, sexual orientation, pregnancy, maternity or family status, age, religion or creed, marital status, military or veteran status, disabled veterans status, or disability. Similarly, XYZ prohibits its employees from discriminating in provision of services against anyone based on any legally protected classification.These policies and provisions contained here apply to every aspect of XYZ’s programs, practices, and activities. Specifically, no person within XYZ will intentionally commit any of the following acts for reasons prohibited by this policy:Discriminate in the recruitment, hiring, training, compensation, benefits, promotion, transfer termination, layoff, reduction in workforce, or any other terms or conditions of employment; orMake any comments or display or distribute any materials that constitute unlawful harassment based on an individual’s membership in a legally protected class.An XYZ employee who has become aware of violations of this provision has the affirmative obligation to report the conduct to his or her immediate supervisor, or if the supervisor has participated or is participating in the conduct, to another member of the management team. Sample #4This sample has an expansive definition of protected classes, and it includes vendors and customers within the purview of the equal opportunity policy.XYZ follows an equal employment opportunity (EEO) policy and employs personnel without regard toGender (including pregnancy), gender identification (an individual’s internal sense of one’s own gender), and sexual orientation (determined by whom an individual is sexually attracted to and also has the potential for loving)Race, color, ethnic or religious background, descent, or nationalityDisability (including past, present, or future physical, intellectual or psychiatric disability, learning disorders, or disease — for example, HIV)Marital statusAge, height, and weightMilitary or veteran statusThis EEO policy applies to employment, customer service, vendor selection, internal promotions, training, opportunities for advancement, and terminations.Sample #5 This policy takes a more proactive stance on nondiscrimination, explains what the organization is committed to doing, and provides a reporting procedure for those who want clarification or redress.Equal Opportunity StatementXYZ is committed to the policy of equal opportunity in employment. It is our policy to recruit and employ qualified persons on the basis of merit without regard to race, color, religion, national origin, sex, age, ancestry, marital status, sexual orientation, disability, military or veteran status, or any other protected class as set forth under applicable state and federal civil rights laws. Employment decisions will be based on the individual’s qualifications to perform the job. This policy of nondiscrimination applies to employment, training, compensation, promotion, transfer, social and recreational programs, and all other conditions of employment.It is the policy of XYZ toFollow personnel procedures that will ensure equal opportunity for all people without regard to race, color, religion, national origin, sex, age, ancestry, marital status, sexual orientation, disability, military or veteran status, or any other protected class.Make reasonable accommodations wherever necessary for all employees or applicants with disabilities, provided that the individual is otherwise qualified to perform the major functions of the job.Thoroughly investigate instances of alleged discrimination and take corrective action if warranted.If you have any questions regarding our equal opportunity policy, or if you believe you have in any way been discriminated against, refer to the policy containing the complaint procedure (if applicable) and/or contact your supervisor immediately. If you cannot discuss the matter with your supervisor, please contact the chief executive or the human resources manager.Suggested ResourcesSociety for Human Resource Management: .The U.S. Equal Employment Opportunity Commission: facts/qanda.html. Nepotism PoliciesIntroductionNepotism is a conflict-of-interest issue involving favoritism shown to relatives or friends; or more specifically, to the employment of relatives and the supervision of one relative by another. Usually nepotism refers to employment practices, but it also has board implications. The simple fact of having family members or spouses reporting to each other or serving on the same board raises questions concerning accountability, conflicts of interest, and independent mindedness. At the staff level, it may also foster resentment among colleagues.Key ElementsNepotism policies should define what the organization means by nepotism, specify who is a relative, and make clear what the prohibited employment relationships are.A nepotism policy can reduce the likelihood of questionable practices and perceptions by providing the chief executive with a routine way to avoid pressures to hire individuals based on their relationship with someone close to the organization rather than on needed skills.Practical TipsConsider extending the definition of a family member to include “significant others” (who should be clearly defined) and close friends.Especially for community-based organizations, it may help to illustrate examples, such as the major donor’s daughter who can build the Web site for only $250, the staff member trying to find summer work for his college-age son, the board member’s cousin who promises to do the job cheaply, or the employee’s friend looking for a career change.Sample Nepotism PoliciesThe sample policies, while all relatively short, start with the most straightforward and include various nuances, ranging from spouses to donors.Sample #1 This sample does not allow board members and staff members to be related.Board members and their immediate family members (as defined below) will be excluded from consideration for employment by the organization.Employees shall not hold a position with the organization while they or members of their immediate family (as defined below) serve on the board or any committee of the board.Employees may not hold a job over which a member of their immediate family exercises supervisory authority. For purposes of this policy, “immediate family” includes the following: spouses, parents, grandparents, children, grandchildren, brothers, sisters, brothers- and sisters-in-law, fathers- and mothers-in-law, sons- and daughters-in-law, step-parents, step-brothers, step-sisters, and step-children. Sample #2 This short policy starts with a justification for avoiding nepotism.Favoritism based on family or close personal relationships is unfair to other employees and vendors. The appearance of such favoritism is often perceived, even if unjustified or harmless. To avoid such appearance, XYZ employees may not hire, supervise, or exercise management authority over, directly or indirectly, staff with whom they have a relationship that may adversely affect impartiality. Similarly, the staff of XYZ may not influence the award of contracts to vendors with whom they have a familial or personal relationship. All questions concerning the hiring of any individual who may be related to another XYZ employee should be referred to the human resources office or the chief executive.Sample #3 This policy, which stresses that supervisors may not work closely with family members, is more applicable for larger organizations with different departments.It is widely accepted that employment of relatives in the same area of an organization can cause serious conflicts and problems with favoritism and employee morale. In these circumstances, all parties, including supervisors, leave themselves open to charges of inequitable consideration in decisions concerning work assignments, transfer opportunities, performance evaluations, promotions, demotions, disciplinary actions, and discharge. In addition to claims of partiality in treatment at work, personal conflicts from outside the work environment can be carried into day-to-day working relationships.For this reason, relatives of persons currently employed by XYZ may be hired only if they will not be working directly for or supervising a relative. If already employed, they cannot be transferred into such a reporting relationship. If the relative relationship is established after employment, management shall decide who is to be transferred. In other cases where a conflict or the potential for conflict arises, even if there is no supervisory relationship involved, the parties may be separated by reassignment or terminated from employment.For purposes of this policy, a “relative” includes the following: spouses, parents, grandparents, children, grandchildren, brothers, sisters, brothers- and sisters-in-law, fathers- and mothers-in-law, sons- and daughters-in-law, step-parents, step-brothers, step-sisters, and step-children. This policy also applies to individuals who are not legally related but who reside with another employee.Sample #4This policy distinguishes between a spouse and other family members.Employment of SpousesWith respect to the employment of relatives, XYZ reserves the right toRefuse to place one spouse under the direct supervision of the other spouse where such has the potential for creating an adverse effect on supervision, safety, security, or morale.Refuse to place both spouses in the same department, division, program, or facility where such has the potential for creating an adverse effect on supervision, safety, security, morale, or involves potential conflicts of interest.Employment of Other RelativesRelatives of any organization employee, board member, or any person exercising hiring, promotion, and termination authority may not be hired into organization service without approval of the chief executive (or, in the case of a relative of the chief executive the executive committee of the board)Relatives by blood or marriage of any organization employee, regardless of status, will not be hired in the same department, division, program, or facility where such has the potential for creating an adverse effect on supervision, safety, security, morale, or involves potential conflicts of interest without the written prior approval of the chief executive (or, in the case of a relative of the chief executive, the executive committee of the board).For purposes of these rules, “relative” means the employee’s spouse, child, parent, sibling, half-sibling, or step-relatives in the same relationship; the spouse of the employee’s child, parent, sibling, half-sibling, or step-relative; and the employee’s in-laws, aunt, uncle, niece, nephew, grandparent, grandchild, or first cousin. If two employees marry or become related or cohabit and a conflict arises, only one of the employees will be permitted to stay with XYZ unless a reporting relationship for each spouse can be designed to ensure that no conflict or appearance of impropriety exists. The decision as to which relative will remain with XYZ must be made by the two employees within three calendar days or by XYZ on the basis of service value. Suggested ResourcesHamlett, Christina. “Nepotism in the Workplace with Friends.” in Workplace Essays and Term Papers , Suba. “Nepotism: Is it a Boon or Bane for the Organization?” Sexual Harassment PoliciesIntroductionAnti-sexual harassment policies are necessary for all employees, including nonprofit organizations. Sexual harassment is not only an infringement on personal dignity but it can create serious legal consequences for an individual and the entire organization. Every nonprofit should have a statement that reproves this kind of behavior and ensures prompt and thorough resolution.Key ElementsA good policy should define sexual harassment, set forth a procedure for bringing a sexual harassment complaint, and define the responsibility of the nonprofit organization in responding to the complaint.The rights of both the accused and the accuser should be specified in the policy.The policy should also address the process for handling allegations, investigations, disciplinary actions, and retaliation.Practical TipsIn many organizations, simply having a policy is not sufficient. Consider providing sensitivity training and initiating discussions among staff on what constitutes harassment, providing a foundation for proper professional behavior. It is important to distinguish between discriminatory harassment and obnoxious behavior that does not target another individual because of sex.Provide managers with special training on their personal legal liability, as well as guidance on how to manage staff on either side of the situation.Sample Sexual Harassment PolicesThe policy statements provide clear examples of sexual harassment guidelines and procedures for taking action in a sexual harassment claim.Sample #1 This sample policy provides brief definitions of what constitutes harassment and outlines the basic steps for addressing it. It is written to apply to any kind of harassment, though it addresses sexual harassment explicitly.XYZ is committed to providing a work environment that is free of unlawful discrimination. In keeping with this objective, XYZ maintains a strict policy prohibiting unlawful harassment, including harassment based on any of the following categories: race, color, religion, sex, pregnancy, disability, national origin, ethnicity or ancestry, age, or any other protected category.In particular, sexual harassment is defined as any unwelcome conduct that would not have occurred but for the employee’s gender, including but not limited to sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that 1) has been made either explicitly or implicitly as a term or condition of an individual’s employment or 2) is used as a basis for employment decisions such as promotions and benefits affecting such individual and other offensive behavior directed toward an employee because of or on account of his or her gender, which substantially interferes with an individual’s work performance or creates an intimidating, hostile, or offensive work environment.In addition to sexual harassment, XYZ also prohibits all forms of harassment on any basis prohibited by discrimination laws, such as race, religion, ethnicity, age, and disability. While it is not easy to define precisely what harassment is, it certainly includes slurs, epithets, threats, derogatory comments, unwelcome jokes, teasing, and other similar verbal, written, or physical conduct.Any employee who believes he or she has been or is being harassed by a coworker, supervisor, or agent of XYZ should immediately report the facts of the incident(s) and names of the individuals involved to his or her supervisor or, in the alternative, to the human resources office, the chief executive, the board president, or executive committee chair. Employees who report harassment, in good faith, should not fear any reprisal (also, refer to whistleblower policy). All employees should also immediately report any incidents of harassment they witness to a management representative.After a report of harassment is received, an investigation by management will be undertaken promptly. Any supervisor, agent, or other employee who has been found by XYZ, after investigation, to have harassed another employee in violation of this policy will be subject to discipline that may range from a warning up to, and including, termination.Sample #2 This policy offers more detailed definitions about what constitutes sexual harassment, and assigns responsibility for addressing it to the human resources staff.XYZ prohibits any employee, volunteer, or vendor from making sexual advances of a verbal or physical nature toward another employee or applicant for employment and from engaging in offensive conduct, verbal or otherwise, directed at an employee because of his or her gender.Sexual harassment is viewed as a form of employee conduct that undermines the integrity of the employment relationship. All employees must be allowed to work in an environment free both from unsolicited and unwelcome sexual overtures and from all other offensive conduct aimed at individuals because of their gender. Sexual harassment is defined as behavior that is unwelcome and personally offensive. It reduces morale, interferes with work productivity, impugns individual dignity, and is contrary to XYZ’s mission.Some examples of sexual harassment areUnwelcome or unwanted sexual advances. This includes patting, pinching, brushing up against, hugging, cornering, kissing, fondling, or any other similar physical contact considered unacceptable by another individual.Requests or demands for sexual favors. This includes subtle or blatant expectations, pressures, or requests for any type of sexual favor accompanied by an implied or stated promise of preferential treatment or negative consequences concerning one’s employment.Verbal abuse or kidding that is sexually oriented and considered unacceptable by another individual. This includes comments about an individual’s body or appearance (where such comments go beyond a mere compliment); off-color jokes that are clearly unwanted; or any other tasteless, sexually oriented comments, innuendoes, stereotyping, or offensive language directed to or about another individual because of his or her gender.Any sexually oriented conduct that would unreasonably interfere with another’s work performance. This includes extending unwanted sexual attention to an employee.Participation in fostering a work environment that is generally intimidating, hostile, or offensive because of unwelcome or unwanted sexually oriented conversation, suggestions, requests, demands, physical contacts, or attention.Offensive or demeaning language or conduct directed to or about an individual because of his or her gender.Sexual harassment is a practice that demeans the individual being treated in such a manner. Consequently, XYZ will not tolerate sexual harassment of its applicants, employees, or volunteers by anyone. XYZ will, as necessary, take disciplinary action, up to and including termination, in accordance with this policy to ensure that we meet our responsibilities to our employees.The responsibility of administering and enforcing XYZ’s sexual harassment policy is assigned to the director of human resources, who will ensure that the policy is disseminated to all employees and is posted in a public place. Each employee of XYZ is accountable for acting in compliance with and support of the policy. Every employee is encouraged to discuss any violations of this policy with the director of human resources without fear of any reprisals. Employees may also bring such violations to the attention of their immediate supervisor or division/field executive.Sample #3this policy clearly defines sexual harassment and provides detailed steps for addressing a complaint.PolicyTitle VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, sex, age, or national origin. Sexual harassment is a form of discrimination on the basis of sex. It is XYZ’s policy to promote a workplace free from sexual harassment. Each individual has the right to work in a professional atmosphere that promotes equal opportunities and prohibits discriminatory practices, including sexual harassment. At XYZ, sexual harassment, whether verbal, physical, or environmental, is unacceptable and will not be tolerated.DefinitionSexual harassment consists of any unwelcome or unwanted sexual attention, sexual advances, requests for sexual favors, and other verbal, visual, or physical conduct of a sexual nature or other offensive behavior directed toward an employee because of or on account of his or her gender, whether by a person of the opposite or same gender, whenSubmission to or rejection of such conduct by an individual is made explicitly or implicitly a term or condition of an individual’s employment or is used explicitly or implicitly as a factor in decisions affecting hiring, evaluation, promotion, discharge, or other tangible employment action; orSuch conduct is severe or pervasive enough to interfere with an individual’s work performance or otherwise renders the workplace as intimidating, coercive, hostile, or offensive to the reasonable.Examples of sexual harassment include, but are not limited to, unwanted sexual advances; demands for sexual favors in exchange for favorable treatment or continued employment; repeated sexual jokes, flirtation, advances, or propositions; verbal abuse of a sexual nature; graphic, verbal commentary about an individual’s body, sexual prowess, or sexual deficiencies; leering, whistling, touching, pinching; suggestive, insulting, or obscene comments or gestures of a sexual nature; display in the workplace of sexually suggestive objects or pictures; and other offensive conduct, whether verbal, visual, or physical, that is not overtly sexual but tends to poke fun at or stereotype an individual because of gender.GuidelinesThis policy covers all employees of XYZ. XYZ will not tolerate, condone, or allow sexual harassment, whether engaged in by fellow employees, supervisors, managers, or by vendors, clients, or other nonemployees who conduct business with XYZ. XYZ encourages reporting of all incidents of sexual harassment regardless of who the offender may be.All supervisory personnel within the organization are responsible for eliminating any and all forms of sexual harassment of which they are aware. Any management personnel who are made aware of sexual harassment and fail to take corrective action pursuant to this policy will be subject to discipline up to, and including, termination.While XYZ encourages individuals who believe they are being harassed to firmly and promptly notify the offender that his or her behavior is unwelcome, XYZ also recognizes that power and status disparities between an alleged harasser and a target may make such a confrontation difficult or impossible. In addition to or in lieu of giving such notice to the harasser, a person who believes he or she has been sexually harassed should contact the human resources department through the procedure outlined below. XYZ will not in any way retaliate against an individual who makes a report of sexual harassment, nor will XYZ permit any supervisor, officer, or employee to do so. Retaliation is a serious violation of this sexual harassment policy and should be reported immediately. Also see Whistleblower Protection Policy. ProceduresA report of an alleged violation of this policy should be made immediately to the director of human resources.An investigation of the alleged harassment will be handled through the human resources department in as confidential a manner as possible so as to protect the privacy of persons involved. Confidentiality will be maintained throughout the investigation process to the extent practical and appropriate under the circumstances. In pursuing the investigation, the human resources department will try to take the wishes of the complainant into consideration, but will thoroughly investigate the matter as appropriate under the circumstances. The alleged harasser will be made aware of the alleged harassment and will be given an opportunity to respond and present witnesses. The human resources department will keep the complainant informed as to the status of the investigation. Upon completion of the investigation of a sexual harassment complaint, the human resources department will recommend to management the appropriate action to be taken. If XYZ concludes that harassment occurred, the harasser will be subject to appropriate disciplinary procedures, as described below. The complainant will be informed of the disciplinary action taken.In the event that the harassment cannot be substantiated, this finding will be communicated to the complainant in an appropriately sensitive manner. The complainant is always free to provide additional evidence that will also be investigated.If either party directly involved in a sexual harassment investigation is dissatisfied with the outcome or resolution, that individual has the right to appeal the decision. The dissatisfied party should submit his or her written comments in a timely manner to the chief executive.Employment conditions of the offended party and witnesses will be in no way adversely affected through use of this procedure, subject to paragraph 7, below.Individuals found to have engaged in misconduct constituting sexual harassment will be severely disciplined, up to and including discharge. Appropriate sanctions may include written reprimand, referral to counseling or training, withholding pay, or termination.If an investigation results in a finding that the complainant falsely accused another of sexual harassment knowingly or in a malicious manner, the complainant will be subject to appropriate sanctions, up to and including termination. Sample #4 This comprehensive sample provides a thorough outline of what constitutes harassment, what procedures to follow to address the issue, and what steps to take for any necessary disciplinary action.Sexual Harassment policyPurposeXYZ is committed to maintaining a work environment that is free from discrimination where employees at all levels of the organization are able to devote their full attention and best efforts to the job. Discriminatory harassment, either intentional or unintentional, has no place in the work environment. Accordingly, XYZ will not tolerate any form of harassment of or by an employee, whether supervisory or nonsupervisory, or by third parties such as vendors or clients, based on race, sex, religion, color, national origin, age, disability, or any other factors protected by law. The term “harassment” for all purposes includes, but is not limited to, offensive language, jokes, or other verbal, graphic, or physical conduct relating to an employee’s race, sex, religion, color, national origin, age, disability, or other factor protected by law that would make a reasonable person experiencing such harassment believe that the conditions of employment have been altered and that the work environment has become hostile or abusive or which interferes with the person’s job performance. This policy will be posted and distributed to all employees.PolicyXYZ believes that all employees have the right to work in an environment free from sexual harassment. Accordingly, we strive to ensure a workplace characterized by mutual respect. Sexual harassment will not be tolerated under any circumstances.Definition of Sexual Harassment Sexual harassment violates Title VII of the Civil Rights Act of 1964. The U.S. Equal Employment Opportunity Commission (EEOC) and the courts define sexual harassment as any unwelcome or unwanted sexual attention, sexual advances, requests for sexual favors, and other verbal, visual, or physical conduct of a sexual nature, or other offensive behavior directed toward an employee because of or on account of his or her gender, whether by a person of the opposite or same gender, whenSubmission to or rejection of such conduct by an individual is made explicitly or implicitly a term or condition of an individual’s employment or is used explicitly or implicitly as a factor in decisions affecting hiring, evaluation, promotion, discharge, or other tangible employment action (sometimes referred to as “quid pro quo” harassment); orSuch conduct is severe or pervasive enough to interfere with an individual’s work performance or otherwise renders the workplace as intimidating, coercive, hostile, or offensive to the reasonable person (sometimes referred to as “hostile environment” harassment).Examples of the types of conduct that may constitute sexual harassment include, but are not limited toUnwelcome sexual advances, propositions, flirtations, or innuendoesDemands for sexual favorsUnwanted and unnecessary physical contact (such as grabbing, rubbing, patting, pinching, touching, or hugging)Demands for sexual favors in exchange for favorable treatment or continued employmentDisplay of pornographic materialExcessively offensive remarks, including unwelcome graphic or suggestive comments about an individual’s body, appearance, dress, sexual prowess, or deficienciesObscene jokesThe display in the workplace of sexually suggestive objects or picturesAny other unwelcome and unwanted conduct of a sexual nature, such as leering, whistling, staring, name calling, and sexual innuendoOther discriminatory harassment consists of unwelcome conduct, whether verbal, visual, or physical, that tends to poke fun at or stereotype an individual because of his or her protected status. Examples of this type of conduct include, but are not limited to Making inappropriate or disrespectful comments about a person’s genderUsing sexist slurs or epithetsNegative stereotypingExcluding individuals from the use of or making them feel uncomfortable in their use of XYZ facilities because of their genderBoth the victim and the perpetrator of sexual harassment may be male or female, and the victim does not have to be of the opposite sex.XYZ regards all such conduct as creating a hostile and offensive work environment in violation of this policy, regardless of whether submission to such conduct is made either explicitly or implicitly a term or condition of employmentProceduresComplaint ProcedureAn employee who alleges that he or she is the victim of sexual harassment, or an employee who has knowledge of, or an employee who has witnessed any form of sexual harassment should bring the subject to the attention of his or her supervisor or the chief executive immediately. If there is a legitimate reason that the victim is uncomfortable reporting the matter to the chief executive, the employee should alert the board chair of XYZ. After making the complaint known to the proper person at XYZ, an employee also has the legal right to file a complaint with the EEOC or another outside agency.After a complaint has been received, an investigation will be conducted. Both the complainant and the alleged harasser will be interviewed, as well as any witnesses. All employees must cooperate with the investigation. Depending on the complexities of the investigation, all parties involved should be informed of the status of the complaint as promptly as possible, consistent with conducting a thorough investigation.ConfidentialityXYZ will maintain the confidentiality of the complainant, the accused, and the witnesses to the extent possible under the circumstances. XYZ cannot promise absolute confidentiality, but pledges to conduct the investigation on a need-to-know basis. Only those who must know about the complaint and the identity of the complainant will be made aware of and have access to that information. Disciplinary ActionIf management finds that the alleged harasser violated company policy, it will take the proper disciplinary action. Such actions include but are not limited to verbal/written reprimand, suspension, and dismissal. The seriousness of the violation, the existence and nature of prior sexual harassment complaints and/or policy breaches, and the wishes of the accuser, as well as other considerations, will be taken into account when determining disciplinary action. Retaliation against any party involved — the accused, accuser, witnesses, and investigators — will not be tolerated. Employees who violate XYZ’s no-retaliation policy will be disciplined or terminated.If the complaint is found to be false, disciplinary actions will be taken against the accuser. If the complaint is unresolved, no disciplinary actions will be taken against either the accuser or the accused. No retaliation against either party or any witness will be tolerated. Employees who do not cooperate in investigations, such as witnesses who refuse to provide information, will be subject to disciplinary action.Harassment by NonemployeesXYZ will strive to prevent sexual harassment of employees by nonemployees (members, vendors, etc.) in the work environment and employees should promptly report any such harassment to the appropriate individual(s) listed above. An investigation will be conducted and remedial measures taken if found to be warranted.Employer ResponsibilitiesXYZ will inform and educate its employees about its sexual harassment policy and ensure that the appropriate authorities know how to handle sexual harassment complaints. Suggestions and complaints regarding XYZ’s sexual harassment policy as well as the communication and implementation of this policy are welcome.Suggested ResourcesThe U.S. Equal Employment Opportunity Commission facts/fs-sex.html.“Know Your Rights: Sexual Harassment at Work.” Equal Rights Advocates “Development of Sexual Harassment Law” Workplace Environment PoliciesIntroductionA safe, congenial, and considerate work environment is essential for efficiency and teamwork. Staff must be able to come to work feeling comfortable about collaborating and communicating with colleagues in a professional setting. Policies and guidelines should protect the employees and their time, as well as the property of the organization. This section addresses substance abuse, solicitation, and electronic communication.Substance AbuseAlcohol and illegal drugs have no place in the work environment. They adversely affect productivity, employee morale, safety, and healthcare costs. An effective substance abuse policy establishes the organization’s commitment to creating a safe place for employees and clients alike. Key ElementsThe organization’s values will shape its philosophy toward substance abuse. Some organizations follow a legal model that focuses on detecting and disciplining those who violate the policy. Others prefer a policy that emphasizes performance and offer assistance to those struggling with substance abuse problems.The terminology used for policies ranges from substance abuse to drug-free workplace policies, and the level of specificity in the policy is likely to depend on the organization’s scope of programs and services. Some organizations — such as those who work with children, the elderly, or substance abusers — need more stringent prohibitions and explicit guidelines to protect both their employees and their clients. Practical TipsConsider beginning the drug-free workplace policy with a values statement about the organization’s commitment to a safe and healthy environment.Include strict prohibitions of substance abuse within the facility and during delivery of services. The policy should specifically define what activities and behavior are prohibited. Especially for organizations that host special events, the policy should address any exceptions, such as moderate alcohol consumption at certain types of organization-sanctioned events.Include a definition of the organization’s procedures for investigating reported violations and drug testing processes. The policy should also address issues of confidentiality and due process for employees.Articulate consequences for those who violate the policy. Disciplinary action may include referral for assistance and/or termination.SolicitationThe objective of all organizations is to promote a productive, uninterrupted, and non-coercive work environment. Solicitation within the work premises can easily get out of hand, while, in general, most offices are accustomed to the annual Girl Scout cookie drives by parents on behalf of their children. Clear policies on solicitation create acceptable parameters for what is acceptable and what is inappropriate within the office setting.Key ElementsThe policy should indicate who is covered: employees and/or non-employees.The policy should specify types of solicitation (e.g., political and lobbying efforts, commercial promotions, personal fundraisers) that are strictly forbidden versus those that are tolerated.The policy should address the specific areas where solicitation is allowed.Some organizations may require permission to be granted for all solicitation efforts.Practical TipsDiscuss solicitation during a staff meeting to clarify the reasons for a policy. Discuss ‘forced’ solicitations and political propaganda and their potentially negative impact on co-workers. On the other hand, acknowledge that some personal solicitations — properly conducted — may provide an opportunity to help someone in need or contribute to a cause.Provide bulletin boards or designate the office kitchen for personal announcements in order to keep the solicitation in a contained area. Electronic CommunicationPractically all work places today communicate at least through voicemail, e-mail, and the Internet. These modes of communication are essential tools to getting work done. It is necessary to remember, however, that these tools are owned by the organization and that using them for personal purposes during work hours is rarely acceptable. Key ElementsThe organization may reserve the right to monitor messages and Internet usage.All potential misuses should be listed to differentiate between personal and professional communication.It is safe to assume that no electronic communication is fully confidential. Special discretion is necessary.Practical TipsRemind employees that the organization owns the communications systems and expects employees to spend work hours fulfilling work-related responsibilities.Change all systems passwords regularly as an added protective device.Sample Workplace Environment PoliciesThe eight policies address the above-defined subcategories: substance abuse, office solicitation, and electronic communication.Sample #1 This policy, with emphasis on working with minors, provides stringent prohibitions against alcohol and drugs, as well as cigarettes, within the office environment.Use of alcohol or illegal drugs or any medication not prescribed to the user will not be permitted under any circumstances by minors or adults on any activity for minors. Any person convicted of illegal drug use will not be appointed to a leadership position, if the offense was within the past seven years, except such convictions in connection with juvenile offenses, which have been or are capable of being expunged from the volunteer’s record.Smoking is prohibited in all facilities occupied by XYZ, including, but not limited to, offices, restrooms, conference rooms, stairwells, hallways, elevators, cafeteria, staff lounge and lunchroom, and XYZ vehicles.There shall be no smoking permitted in XYZ-owned or -operated buildings and facilities. Volunteers and staff working with minors shall not smoke in front of them at any time.Sample #2 This policy frames the restrictions for substance use in terms of the workplace environment, allows moderate alcohol consumption during work-related events, and calls for drug testing when necessary.Drug and Alcohol Policy XYZ has a vital interest in maintaining a safe, healthy workplace and our employees have a right to expect such a working environment. Anyone under the influence of illegal drugs, alcohol, or other unauthorized controlled substances while on or about XYZ premises at any time, on XYZ business, or engaged in an XYZ-sponsored activity poses a serious threat to the safety and productivity of, among others, himself or herself and his or her coworkers.Employees must report to work free of alcohol and other drugs (other than those used by and in accordance with a prescription). An employee will be subject to discipline, up to and including termination, for possessing, consuming, having in his or her system, using, manufacturing, distributing, dispensing, selling, or purchasing drug paraphernalia, alcohol, or other drugs while on or about XYZ premises, on the property of clients, while on duty, or at any time while operating an XYZ vehicle. The only permitted exceptions are for employees attending XYZ-sponsored events or attending events as representatives of XYZ where alcohol is served. Under these circumstances, moderate consumption of alcohol is permissible as long as the employee’s behavior remains acceptable to XYZ.Legally prescribed drugs are permitted on XYZ premises and time, provided the drugs are contained in their original containers and are prescribed by a medical practitioner for the current use of the person in possession of the drug. If a prescription drug may impair performance or safety, the employee should discuss the matter with his or her supervisor prior to working under the influence of the medication.Under certain circumstances, XYZ may require employees to undergo an alcohol and/or other drug test when XYZ reasonably suspects that the employee is in violation of this policy. Refusal to cooperate may result in termination. In addition, any employee involved in a work-related accident may be subject to alcohol and other drug testing. Such testing may also be required by local, state, or federal health, safety, or other law or regulation.Sample #3 This sample provides detailed guidance for handling the service of alcohol during events.Alcohol PolicyThe possession and consumption of alcoholic beverages is controlled by state statutes, city ordinances, and XYZ policy and procedure. All members of XYZ are expected to obey the law and all policies and procedures. Noncompliance may subject XYZ to legal liability and/or negative publicity. In order to ensure against violations of the law, the possession, service, and consumption of alcoholic beverages at XYZ-sponsored events is subject to the policies and procedures described below.XYZ may not be represented as the sponsor of an event at which alcoholic beverages are served without express written permission from the chief executive and the executive committee of the board of XYZ.Use of alcoholic beverages on XYZ premises or at XYZ-sponsored events must not violate state or local laws. XYZ must provide the insurance carrier with proper notification as to the specifics in regards to any events where alcoholic beverages will be served. If existing insurance carrier will not provide coverage for the event, other insurance arrangements must be finalized before proceeding with the event.XYZ administration and board are accountable and responsible for compliance of the alcohol policy by members and guests of sponsored social events.If an XYZ-sponsored social event will allow the presence of minors (under 21 years of age), a method to identify guests age 21 or over will be determined before any distribution of alcohol is permitted.Alternate nonalcoholic beverages and food must also be provided at any event at which alcoholic beverages are served.Events at which alcoholic beverages are served will be closed to all persons not specifically invited.Persons who appear to be intoxicated will not be served or permitted to consume alcoholic beverages on the premises.Alcoholic beverage service will be limited in direct proportion to the duration of the event. At a minimum, service will cease one hour prior to the conclusion of the event.Alcoholic beverages may not be carried or consumed outside rooms or areas designated for an approved event.Alcoholic beverages may not be sold, directly or indirectly, on XYZ premises. State funds may not be used for the purchase of alcoholic beverages. The XYZ board reserves the right to require additional precautions such as the use of trained persons to dispense alcoholic beverages and greater limitations on time of service.Sample #4 This policy elaborates on the use of drugs and alcohol and includes more specific guidelines about drug testing.As part of XYZ’s commitment to safeguarding the health of employees, providing a safe place for employees to work, and supplying our members with the highest quality services, the management of XYZ is committed to a drug-free workplace.XYZ believes that illegal drugs and the abuse of alcohol have no place in the workplace. The possession of controlled substances or alcohol is strictly prohibited at the XYZ office, any XYZ business function, conference, or meeting, whether on XYZ property or elsewhere, and in any XYZ-leased or -owned vehicle. The unauthorized and/or unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance or alcohol in the workplace is unlawful. XYZ’s policy regarding the work-related effects of drug use and the unlawful possession of controlled substances is as follows:The employees are required to report to work free from the influence of illegal drugs and alcohol. It is XYZ’s intention and obligation to provide a drug-free, healthy, safe, and secure work environment.Any employee who demonstrates an unusual behavior pattern should be reported immediately to the chief executive. Employees believed to be under the influence of drugs, narcotics, or alcohol will be required to leave XYZ’s premises. Arrangements will be made if the need for safe transit is warranted.The unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance on XYZ’s premises, or while conducting XYZ business away from the office, is prohibited. Any violations of this policy are subject to disciplinary action up to and including termination. It is a violation of XYZ’s policy for anyone to use prescription drugs illegally. (However, nothing in this policy precludes the appropriate use of legally prescribed or over-the-counter medications.) It is the responsibility of the chief executive to counsel employees whenever he or she sees changes in performance or behavior that suggests an employee is under the influence of alcohol or other drugs. Although it is not the chief executive’s responsibility to diagnose personal problems, the chief executive should encourage such employees to seek help and advise them about available resources for getting help. Everyone shares responsibility for maintaining a safe work environment and coworkers should encourage anyone who uses alcohol or other drugs in the workplace to seek help.If the chief executive has cause to believe or has a reasonable suspicion that an employee is impaired or is using legal or illegal substances, the employee may be asked to give written consent to a test. At that time, the testing requirements will be described in detail to the employee by the chief executive. The testing would be performed by a laboratory that is certified for drug and alcohol testing by the U.S. Department of Health and Human Services and has a medical review officer who is certified as a substance abuse professional. The chief executive will rely on the medical review officer to provide appropriate documented data and testimony if the test results in an adverse personnel action.Refusal to consent to a drug/alcohol test may result in disciplinary action up to andincluding immediate termination, and any attempt to contaminate or alter test specimens will result in disciplinary action up to and including immediate termination.Sample #5 This policy generally prohibits solicitations in the office space, except when approved by management or otherwise allowed by law.The following conduct is prohibited at all times on XYZ property unless prior approval has been secured from management or unless specifically required by law to be allowed:Sales of commercial products and services; solicitation of funds and charitable contributions; and the distribution or posting of advertising materials, circulars, leaflets, petitions, or other literatureSolicitation by organizations or individuals who are not employeesOnly employees may conduct solicitations and distributions approved by law or management on authorized nonworking time, such as rest breaks and meal breaks. Such solicitation shall not interfere with other employees who are on working time. Employees violating any of these rules will be subject to appropriate disciplinary action up to and including termination.Sample #6 This policy frames solicitation issues in terms of work disruptions and generally prohibits any solicitations, with the exception of recognized charities.To ensure quality services are provided to our members, it is necessary to avoid disruption and disturbances during working time and in working areas. Therefore, solicitation and/or distribution of literature, pamphlets, subscriptions, and/or other printed materials by employees during working time or in working areas is not permitted.Working time is defined as that time that an employee is expected to be working, and working areas includes all property except any break room and parking area. Any employee who engages in solicitation and/or distribution of literature may be subject to disciplinary action.Solicitation or distribution of any kind by individuals who are not XYZ employees is prohibited unless approved by the organization. Any persons not employed by XYZ who come onto the organization’s premises to solicit contributions or distribute literature without advance approval of management must be reported to the chief executive.Sample #7 This policy limits electronic communication to legitimate business purposes.ELECTRONIC COMMUNICATIONS POLICYOF XYZXYZ maintains electronic communications systems, including electronic mail (“e-mail”), telephone voicemail, and Internet access. These systems are provided to assist in the conduct of business within the organization. All computers, e-mail, voicemail, and the data stored on them are and remain at all times the property of XYZ, and all e-mail and voicemail messages composed, sent, and received using these systems are and remain the property of XYZ. These systems may be used primarily for legitimate business purposes. XYZ reserves the right to prevent employees from using these systems for personal purposes.No Expectation of PrivacyYou should never consider your electronic communications to be either private or secure. Because all voicemail and e-mail messages are the property of XYZ, XYZ may, without prior notice, review any material created, stored, sent, or received on its computer network, including but not limited to e-mail messages, voicemail messages, and Internet usage, to ensure that its computer and telephone systems are being used for legitimate business purposes; to ensure compliance with XYZ policies; to ensure compliance with federal, state, and local laws; and to protect XYZ from liability. Furthermore, information stored on XYZ’s computer network, including e-mails and computer files, may be subject to discovery in legal proceedings.Employees are also reminded that e-mail may be stored indefinitely on any number of computers, and that copies of your messages may be forwarded to others either electronically or on paper. In addition, e-mail sent to nonexistent or incorrect usernames or e-mail addresses may be misdelivered to third parties.Deleting e-mail or voicemail messages does not guarantee that they are permanently and irretrievably erased from XYZ’s storage system. Thus, no expectation of privacy should be assumed based upon attempts to delete e-mail or voicemail messages.Content/Prohibited UsesE-mail and voicemail messages may not contain content that may be reasonably considered offensive or disruptive to any employee. Offensive content includes, but is not limited to, any material that is sexually explicit, obscene, profane, harassing, fraudulent, intimidating, hostile, racially offensive, defamatory, or otherwise unlawful, and any comments that would offend someone on the basis of his or her age, sex, race, color, creed, religion, national origin, sexual preference, disability, or any other protected characteristic.XYZ’s communications systems also may not be used to set up personal businesses, distribute chain letters, access copyrighted materials in a way that violates the copyright, or send unsolicited commercial e-mails (e.g., “spam”). Employees must obey all copyrights and may not copy, retrieve, modify, or forward copyrighted materials except as permitted by the copyright owner or by law.XYZ’s electronic communications system must not be used in a manner that is likely to cause network congestion or significantly hamper the ability of others to use the system.All e-mail communications sent by an employee must be identifiable and attributable to XYZ. Employees are prohibited from using XYZ’s electronic communications system to send or disclose confidential or proprietary information to unauthorized recipients. E-mail sent from or to an attorney representing the organization, or that communicates the substance of an attorney’s advice, should include this warning header: “ATTORNEY-CLIENT PR IVILEGED.”Records RetentionE-mail messages (and any attachments) and electronically stored documents (e.g., word processing files, spreadsheets, etc.), like other types of documents and records, are subject to management under XYZ’s document retention policy. Accordingly, XYZ employees have the same responsibilities in managing such information as they have in managing paper and other recorded information.It is the responsibility of each employee to distinguish between “official” and “unofficial” documents (or “records” and “nonrecords”). These distinctions are intended to identify those documents that XYZ must maintain in the operation of its business. “Official documents” (or “records”) that should be retained generally include formulations and execution of XYZ policies; approvals for courses of action; documents that initiate, authorize, or complete business transactions; position papers and reports; policies, directives, and decisions; agendas and minutes of meetings; and other documents identified in the XYZ document retention policy.All e-mails and other electronically stored information that constitute “official documents” (or “records”) shall be printed to paper and maintained in the appropriate files. Printed e-mails must include related attachments and all metadata associated with the message (metadata includes the names of the sender and recipients, and the date and time of the message). This information shall be preserved, maintained, protected, and disposed of in accordance with the XYZ document retention policy. Employees must manage their e-mail databases in compliance with XYZ’s e-mail archival best practices guide. In general, all nonofficial e-mail communications, not subject to the document retention policy, should be deleted from XYZ’s e-mail server within __ months of the creation/receipt date. Further, any locally archived nonofficial e-mails should be deleted from local archives within __ years of the creation/receipt date. Responsibility for Enforcement of This PolicyEach department manager has responsibility for promoting proper use of the communications systems and compliance with this policy. Terminating EmployeesAn employee’s access to XYZ electronic systems and services will be terminated on the employee’s last day of employment, unless directed earlier by management. Because the documents and information contained in the employee’s files is property of XYZ, that information may be reviewed, used, transferred, removed, disposed of, or otherwise handled in a manner at XYZ’s sole discretion. In no case may an employee copy or take such documents and/or information upon his or her termination of employment with XYZ.Reused with permission from Marc Fleischaker and Deanne Ottaviano, Arent Fox PLLC, Washington, DC.Sample #8This sample provides clear guidelines for e-mail and Internet use, as well as personal telephone calls during business hours.E-Mail and Internet policyThe purpose of this policy is to define the proper use of electronic mail (e-mail) and Internet services at XYZ. Personal use of the organization’s e-mail and/or Internet must be kept to a minimum and must not violate the terms of this policy or any other organization policy, such as the antiharassment policy and no-solicitation policy. To that end, the following are guidelines for employees’ use of XYZ’s e-mail and Internet systems:E-MailXYZ maintains a computer system, including an e-mail system, to assist in the conduct of business within the organization. All messages composed, sent, received, or stored on the e-mail system are (and remain) the property of XYZ. They are not the private property of the employee. Personal e-mail accounts are not to be used on XYZ’s computer system.The e-mail system is not to be used to send offensive, sexually suggestive, obscene, lewd, demeaning, or disruptive messages. This includes, but is not limited to, messages that are inconsistent with XYZ’s policies on equal employment opportunity, nondiscrimination, and antiharassment. Moreover, the e-mail system is not to be used to solicit or proselytize for commercial ventures, religious or political causes, or other non–job-related solicitations.XYZ reserves and intends to exercise the right to review, audit, intercept, access, disclose, and use all messages created, received, or sent over its electronic mail system for any purpose. The contents of e-mail may be disclosed and used by XYZ to protect its rights and/or property without the permission of the employee, at XYZ’s discretion.The confidentiality of any message should not be assumed. Even when a message is erased, it is still possible to retrieve and read that message. Further, passwords for security do not guarantee confidentiality. All passwords must be disclosed to XYZ or they are invalid and cannot be used.Employees not involved in the maintenance or operation of XYZ’s e-mail system are not authorized to retrieve or read any e-mail not sent to them. Any exception to this policy requires the approval of senior management of XYZ.InternetXYZ’s computer network, including its connection to the Internet, is to be used for business-related purposes. Any unauthorized use of the Internet is strictly prohibited. Unauthorized use includes, but is not limited to, connecting, posting, or downloading pornographic material; engaging in computer “hacking” and other related activities; attempting to disable or compromise the security of information contained on XYZ’s computers; or otherwise using XYZ’s computers in a manner that interferes with their business purpose.Employees should not send highly confidential information through the Internet without encryption. Anything sent through the Internet passes through a number of different computer systems, all with different levels of security. The confidentiality of messages may be compromised at any point along the way.Because postings placed on the Internet may display XYZ’s address, make certain before posting information on the Internet that the information reflects the standards and policies of XYZ. Under no circumstances should information of a confidential, sensitive, or otherwise proprietary nature be placed on the rmation posted or viewed in the Internet may constitute published material. Therefore, reproduction of information posted or otherwise available over the Internet may be done only by express permission of the author.Offensive, sexually suggestive, obscene, lewd, demeaning, or disruptive messages are prohibited. This includes, but is not limited to, messages that are inconsistent with XYZ’s policies on equal employment opportunity, nondiscrimination, and antiharassment.Use of XYZ’s e-mail and Internet systems from a personal or company-owned computer through company-owned connections is subject to the same policies that apply to use from within company facilities. Any employee who violates XYZ’s e-mail and Internet policy shall be subject to discipline.Employees must protect all system user IDs and passwords, along with voicemail PIN numbers and e-mail account passwords at all times. Individual passwords must not be printed or stored online. Individual passwords must not be shared with others. Users must never access any XYZ computer system using another user’s account or password.For more detailed information on IT policies and procedures, please contact the chief financial officer, or appropriately designated person for IT issues. Personal Telephone Calls During Work HoursXYZ recognizes that employees will occasionally need to place and receive personal phone calls during the work day. Personal calls should be minimal, whether the calls are placed or received using company phones or personal phones. Receiving and placing excessive personal calls is disruptive to others. Therefore, abuse is subject to disciplinary action following normal company procedures. Employees should attempt to make calls during their lunch hour, whenever possible. Suggested ResourcesSociety for Human Resource Management: .U.S. Department of Health and Human Services Review PoliciesIntroductionEven if the board is not involved in evaluating the performance of staff, other than the chief executive, it is valuable to have organizational policies in place that stress the importance of these assessments. The purpose of annual performance evaluation is to clarify goals and ensure that they are met, foster communication between an employee and the supervisor, and identify areas that benefit from professional development. Key ElementsIt should be clear who is involved in the assessment process, how, and when.Regardless of possible informality of the process, written records of the process and results should be kept.All employees should understand how the evaluation results are used in setting compensation and sharing potential bonuses.Practical TipsCreate a standard form for the employee’s self-assessment and another one for the use of the supervisor. Evaluate the effectiveness of these forms from time to time.Require all employees to review their job descriptions annually to ensure that they are still accurate.Ensure that there is a meeting between the employee and the supervisor to discuss any discrepancies in the evaluation and/or steps to take to implement recommendations. Sample Performance Review PoliciesThe policies provide the basis for performance evaluation by stating that there is a process in place, how to deal with performance that does not meet expectations, and how the assessment results relate to compensation.Sample #1 This short policy simply states that performance evaluation takes place annually.Performance ReviewAlthough employees are continually evaluated by their immediate supervisor, an initial performance appraisal will generally be conducted prior to completion of the first 90 days of employment. Annual performance appraisals will be conducted in January of each year. Supervisors will solicit input from the employee and the standard XYZ performance appraisal form will be used. Sample #2 This policy focuses on the relationship between performance evaluation and compensation. Performance EvaluationSupervisors and employees are strongly encouraged to discuss job performance and goals on an informal, day-to-day basis. Additional formal performance evaluations are conducted to provide both supervisors and employees the opportunity to discuss job tasks, identify and correct weaknesses, encourage and recognize strengths, and discuss positive, purposeful approaches for meeting goals.There is eligibility for three types of pay increases: promotional increases to reward employees for a move to a new job with more responsibility; equity increases granted to employees as deemed appropriate by XYZ; and merit increases that may be granted on an individual basis following performance evaluations. Increases may vary depending upon the date of the last raise, job responsibility, attitude, length of service, and experience in the current job.All increases are subject to XYZ’s sole discretion.Sample #3 This policy outlines the disciplinary courses of action for unsatisfactory performance or unprofessional conduct. While not a complaint policy, it follows similar steps and processes for dealing with a difficult situation.Disciplinary Courses of ActionPurposeTo establish the framework for the discipline of employees at XYZ.PolicyEmployees of XYZ are expected to conduct themselves in a professional and conscientious manner. These standards of conduct have been established to address situations in which performance, behavior, or attendance is unsatisfactory or inappropriate. The chief executive will examine each disciplinary case individually, considering the facts, the nature and extent of the incident, and the past record of the employee, before taking corrective action.A progressive counseling process, the concept of increased severity in counseling employees, has been developed and will be followed depending on the incident. This progressive counseling procedure is intended to help the employee change the unsatisfactory performance or inappropriate action or behavior and to succeed in the position — not to punish.Under most circumstances, the progressive counseling will follow the steps outlined below. However, depending upon the frequency and/or severity of the situation, certain infractions may warrant bypassing any one or all of the progressive steps outlined in this policy. Critical situations may require immediate termination. Unsatisfactory performance during the probationary period may also result in immediate termination.XYZ reserves the right to terminate an employee at any time for unsatisfactory performance or inappropriate actions or behavior. Prior notification, or utilization of the progressive discipline procedures below, is not a prerequisite for termination or other disciplinary action.Verbal Warning CounselingFor first-time violations of rules that are not of a serious nature, the chief executive will discuss with the employee the violation of the policy or the unacceptable performance, ensure that the employee understands the policy or performance standard, and obtain the employee’s commitment to compliance with the policy or improved performance. This verbal discussion should be documented by the chief executive on an “Employee Conference Memorandum” including the date, content of the notice, and the employee’s response and commitment. These notices should be retained as part of the employee’s personnel file.Examples of types of misconduct that may result in the employee receiving a verbal warning counsel from the chief executive include, but are not limited to, the following:Unsatisfactory performance, including failure to follow supervisory instructionsDistracting other employees or causing general confusionSmoking in unauthorized areasUnsafe or improper use of equipment after being instructed on the proper care and use of equipmentPerforming outside work that interferes with the duties of the employee’s work at XYZExcessive tardinessFailure to adhere to dress codeUnauthorized use of electronic equipment or information (e.g., e-mail, electronic data, etc.)A reoccurrence of these types of misconduct may result in a written counseling, and could result in termination.B. Written Warning CounselingWhen informal counseling has not been successful in achieving necessary performance improvement or policy compliance in identified areas of concern, the chief executive will meet with the employee and discuss the violation or performance issue. The chief executive will complete an “Employee Conference Memorandum.” The documentation on this conference memorandum must be specific, including the policy violations(s), references to any verbal discussions, and a statement of performance problem(s) or inappropriate action(s). It must also establish actions that the employee must take to correct the situation, clear expectation for improvement, type of action being taken, consequences of continued improper action, a specific date for a follow-up conference, and a statement reaffirming the employee’s commitment to corrective action. The “Employee Conference Memorandum” will be filed in the employee’s personnel file.Examples of types of misconduct that may result in the employee receiving a written warning counsel from the chief executive include, but are not limited to, the following:Failure to notify chief executive of absence from work within required time framesLeaving the worksite without permission during working hoursDiscourteous treatment of visitors, members, or fellow employeesPerformance not meeting expectationsLoud, boisterous, or inappropriate behaviorUnauthorized solicitation, vending, or collecting contributionsExcessive absenteeismUnauthorized use of electronic equipment or information (e.g., e-mail, electronic data, etc.)Disclosure of proprietary or confidential information about employees, clients, or the organizationOpportunity To ImproveAn employee may be given a final opportunity to improve for a specified time (maximum of 90 days) in a final effort to correct inappropriate behavior or unsatisfactory performance. The employee’s performance/conduct should be monitored during the period to assess performance and determine if further action is necessary. The employee may be terminated at any time during this period if the unsatisfactory performance or inappropriate action continues. The chief executive will ask the employee to sign a statement that includes the following:Acknowledgment of the violated policy or unsatisfactory performanceReaffirmation of the employee’s commitment to improve or complyAcknowledgment that another similar violation will indicate the employee’s lack of desire to remain employed by the organization and the employee’s voluntary terminationThis opportunity to improve should be documented on an “Employee Conference Memorandum.”D. TerminationWhen an employee’s unsatisfactory performance or inappropriate behavior continues after warnings given through the progressive correction system, termination will result. The chief executive terminates the employee’s employment with XYZ following the termination policy.In the case of serious violations of policy, unsatisfactory performance, and/or misconduct, the progressive counseling process will not be used and termination will be immediate.Examples of violations that may be reasons for immediate termination include, but are not limited to, the following:Release of confidential organization, member, or employee informationAbandonment of assigned duties (walks off job or fails to report to work according to absenteeism policy)Harassment of any type of an XYZ client, member, or employeePossession of a deadly weapon while on XYZ propertyThreatening other individuals while on XYZ propertyFighting while on XYZ propertyFraud or theft of employee or XYZ propertyPossession or consumption of alcohol or any other drugs (other than those properly prescribed by a physician and over-the-counter medications) while on propertyReporting to work under the influence of alcohol or drugsFalsification of XYZ recordsFalsification of one’s own or another employee’s time recordInsubordination (in the form of direct refusal to obey the instruction of the employee’s supervisor or the chief executive)Conviction of a felony or violation of law that reflects in a negative manner upon the employee’s suitability for continued employmentAbuse, destruction, or waste of XYZ propertyUnauthorized use of electronic equipment or information (e.g., e-mail, electronic data, etc.)E. Administrative LeaveIncidents involving an employee may arise that call for further investigation. In these instances, the chief executive should be notified and he or she may place the employee on paid administrative leave not to exceed [five] days. Administrative leave allows the chief executive time to conduct an appropriate investigation that may include, but is not limited to, talking with members or witnesses to the incident. Upon completion of the investigation, the employee will either be reinstated, continue on administrative leave without pay indefinitely or for a specified number of days, or be terminated.Suggested Resources“Guide to Effective Staff Evaluations.” California State University Long Beach, Staff Human Resources Society for Human Resource Management Heathfield, Susan. “360 Degree Feedback: the Good, the Bad, and the Ugly.” Staff Complaint PoliciesIntroductionWhile it is generally the chief executive’s responsibility to hear staff complaints, a responsible board may attempt to resolve a dispute that threatens to go outside of the organization and result in costly lawsuits or adverse publicity. To avoid undermining the authority of the chief executive, however, the board should provide guidance on the specific types of cases it will address, such as accusations of improper conduct against the chief executive. The board should therefore ensure that its complaint procedure policy is up to date and is being implemented by management.Key ElementsStandard and clear policies that are consistently enforced are the primary prevention against employee complaints. Supervisors should always treat employees fairly and equitably.The policy may provide a process for the use of outside conciliation when no other solution seems feasible or acceptable to both parties.A complaint procedure document functions as a parallel process to whistleblower policies (see Part I: Ethics and Accountability: Whistleblower Protection). In developing the procedure, consider its relationship to this other policy.Practical TipsClarify the proper hierarchy for complaints. Unless the supervisor is the cause for a complaint, he or she should generally be the first contact.Indicate the role of the board in the complaint process. Most personnel issues should remain within the purview of the chief executive, and the board should not get involved. However, when the complaint concerns the chief executive or management has allegedly not reacted to a serious complaint, it may be advisable to permit the staff to contact the board.Immediate reaction and thorough investigation are essential in handling employment complaints. Supervisors should keep a written record of every complaint.Sample Complaint PoliciesThese policies provide alternative ways of framing complaint policies by focusing on different aspects of the resolution process.Sample #1 This brief policy provides basic guidelines for a speedy resolution to a complaint.Employees are expected to consult promptly with their supervisor regarding any action, occurrence, or attitude either expressed or implied that is perceived as unfair or inequitable. Employees who believe it is not feasible to discuss the problem with their supervisor, for any reason, may consult directly with the chief executive. A written record of the consultation will be made.Employees are generally required to discuss and seek resolution of personnel issues with either their supervisor or, if the problem involves the supervisor, the chief executive. In limited circumstances, an employee may contact the board chair. These circumstances include only issues involving employment discrimination, illegal conduct, or threatening or abusive conduct, and the board chair may be contacted only if the matter 1) has not been reasonably resolved by the chief executive within a reasonable time or 2) if the matter involves misconduct by the chief executive. Any contact to the board chair should be in writing and must detail the matter so that a prompt and complete investigation may be conducted.Employees should contact their supervisor, or the chief executive, if appropriate, as soon as possible, preferably within 24–48 hours of any incident giving rise to a complaint. Any contact with the board chair should be initiated as soon as possible, preferably within 24 to 48 hours of either the occurrence of the event from which the complaint arises or the chief executive’s failure to resolve the issue within a reasonable time. If contact with the board chair is made, a decision will be rendered as promptly as possible under the circumstances. Sample #2 This brief policy stresses that the board is only to be used as a court of last resort.If an employee has a problem or complaint regarding any aspect of employment with XYZ, the matter should first be discussed with his or her supervisor.If the issue is not resolved through discussion, the employee should submit a formal written complaint to the chief executive. Every attempt will be made to resolve the issue by the employee at this level.After thirty (30) days, if the matter is still unresolved, it may be subject to review by the board. The board’s decision, or that of the board chair if the board elects not to review the matter, will be final, and will not be subject to further review or appeal within XYZ.Sample #3 This sample outlines a process and timeline for resolving a complaint.Problem Resolution ProcessXYZ employees who believe they have been treated unfairly are required to use the following problem resolution process:In the event an employee believes he or she has been treated unfairly, the employee should discuss the situation with his or her immediate supervisor in an effort to resolve the issue.If a resolution cannot be reached through discussion with the supervisor, the employee must put the complaint in writing to the supervisor who is required to respond in writing in a timely manner, preferably within __ days. If a resolution still has not been reached, the employee should present the written material (his or her complaint and supervisor’s response) to the chief executive within __ days of receiving the supervisor’s response. The employee must notify the supervisor of this action.The chief executive will respond to both parties in a timely manner, preferably within __ days of receiving the complaint.If the chief executive does not resolve the complaint, or if the complaint involves the chief executive, the employee may present the complaint to the personnel committee of the board. The personnel committee will review any complaint brought before it and will respond in writing to the parties concerned in a timely manner, preferably within __ days of receiving the complaint. The decisions of the personnel committee are final.There will be no retaliation of any kind against an employee for making a complaint under this procedure. However, an employee may be disciplined or terminated for purposefully filing a false complaint.Sample #4 This policy outlines an informal and a formal administrative review process for handling complaints, including suggested time limits for resolving them.ADMINISTRATIVE REVIEW (DISPUTE RESOLUTION) POLICYThe organization’s policy is to treat employees in a fair and impartial manner. Undisclosed problems will remain unresolved, and eventually lead to a decay of work relationships, dissatisfaction in working conditions, and a decline in operational efficiency. The organization has therefore established the administrative review system that follows, the intent of which is to solve problems as quickly, fairly, and informally as possible, and it should not be interpreted by any person as anything more than a method of solving problems before they reach damaging proportions. This policy applies only to regular nonsupervisory/nonmanagement employees, as management and supervisory personnel have a more direct means of resolving matters related to their employment.Employees who seek resolution of employment situations by using these established procedures will not be subjected to discrimination or retaliation, or be penalized in any way, for their use of these procedures.Matters Covered by Administrative Review SystemEligible employees who have complaints, problems, concerns, or disputes with another employee, the nature of which causes a direct adverse effect upon the aggrieved employee, may initiate an informal or formal administrative review according to established procedures. Such matters must relate to specific working conditions, safety, unfair treatment, disciplinary actions, compensation, job classification, reassignments, or any form of alleged rmal Administrative Review ProceduresAn employee having a problem, complaint, or dispute is to make every effort to resolve the matter through informal discussion with the immediate supervisor within five working days of the occurrence or cause of such matter. The supervisor(s) will take the matter under consideration and attempt to provide a satisfactory resolution or explanation within five working days unless the circumstances require additional time. Formal Administrative Review ProceduresIf the employee’s matter is unresolved, or not resolved to the employee’s satisfaction through informal procedures, the aggrieved employee may file a written administrative review request with the chief executive within five working days following the supervisor’s informal response. Upon receiving the employee’s written request, the chief executive shall arrange a meeting with the employee to allow the employee to present a personal and complete description of the situation. Thereafter, the chief executive will take the matter under consideration, including any necessary investigation or evaluation of the facts related to the situation and render a written decision, response, or explanation as expeditiously as possible but preferably within 15 working days. Such a decision or response will be final and conclusive.Exceptions to Procedural StepsThe organization recognizes that there may arise certain circumstances in which it may be inappropriate for employees to pursue the resolution of a problem in the prescribed sequence. Consequently, the following exceptions are instances where an employee may bypass steps to seek resolution of a situation by the next higher authority. Employees who are uncertain as to the proper authority or the method are to discuss the matter confidentially with the chief executive ifthe complaint or problem involves a known or suspected violation of the lawthe complaint or problem is clearly not within the authority of the employee’s supervisor to resolve the employee and supervisor mutually agree to bypass the supervisor’s stepthe nature of the complaint, problem, or dispute involves the employee’s supervisor, and the employee reasonably believes the supervisor is not impartial.Sample #5 This sample document clarifies the respective responsibilities of those involved in addressing a complaint.A complaint refers to any verbal or written report addressing breaches or violation of personnel practices, either between coworkers or between employer and plaints Involving Another EmployeeEmployees are encouraged to take complaints involving a coworker directly to that person for discussion and resolution. If the two employees are unable to resolve their differences, they may at any time request a mediation meeting with their supervisor where both employees are present.If the complaint is unresolved at that level, a second mediation meeting can be arranged with the director of human resources. The decision of the human resources director, in consultation with the chief executive, shall be considered final.XYZ discourages gossip among or about plaints against XYZThe procedure set forth is intended to serve as a means for amicable settlement of disputes that arise between employees and XYZ. Extension of times beyond those indicated in the formal steps of the procedure outlined below should be agreed to by the parties involved and put in writing. Failure by the employee to comply with any limitations shall constitute withdrawal of the complaint. Failure by management to comply with the time limitations shall constitute the right of the employee to proceed to the next step of the complaint procedure.Step One: Immediate SupervisorEvery effort shall be made by both employee and supervisor to resolve the problem through discussions.If discussions fail to resolve the issue, the employee shall submit the substance of his or her complaint in writing to the immediate supervisor.The immediate supervisor shall convey his or her decision in writing to the employee within five working days of receipt of the complaint.If the aggrieved employee is not satisfied by this decision, he or she may submit in writing his or her complaint to the director of human resources — with a copy to the supervisor — within five working days of receipt of the immediate supervisor’s decision.Step Two: Director of Human ResourcesThe human resources director, in consultation with the chief executive, shall, as soon as possible after notification, arrange a meeting with the employee to discuss the complaint.A decision regarding the disposition of the complaint shall be conveyed in writing to the employee in a timely manner, preferably within five working days following the meeting.If the matter is resolved at this level, it shall be mutually acknowledged in writing, and no further action is required.If the employee is not satisfied with the human resources director’s decision, and if the issue involves conduct by the chief executive or an alleged violation of law or XYZ’s policies, the employee has five working days to submit a written notice outlining the complaint to the chair of a committee of the board, and including a copy of all written communications from Steps a and b, above.Step Three: A Committee of the Boarda. Upon receiving the written request, the board chair shall request copies of all written communications from Step 1 and Step 2. The chair shall convene a committee of the board (no fewer than three people), which shall meet as soon as possible, preferably within 10 working days to discuss the issues. With the exception of the employee and his or her representative, the committee of the board shall decide who else shall be in attendance.b. The committee of the board shall decide on the matter by majority vote and shall issue its decision in writing to the employee and the chief executive as soon as possible, preferably within five working days of its meeting.c. Decisions of the committee of the board shall ordinarily be final. Failure of a party to cooperate with the committee of the board does not preclude the board from conducting a further proceeding.Step Four: Boarda. In the event that the committee of the board is unable to reach a decision, then the committee shall bring this matter to the board for consideration. Upon referral by the committee, the employee shall have the right to be present and be accompanied by a representative and by a person who could substantiate the complaint. The board shall issue its decision in a written statement to the employee and the chief executive as soon as possible, preferably within five working days of its meeting. This decision shall be final.Sample #6This policy — or rather process guidelines — explains how an individual board member should react if a staff member contacts him or her directly with a concern.Staff grievancesIt is rarely appropriate for troubled staff members to contact board members directly about management concerns. Staff should talk to their supervisors first or, if this is not possible, bring the issue to the chief executive.Board members should adhere to the following guidelines if a staff member brings up management issues.Encourage the staff member to meet and discuss the concerns with his or her direct supervisor or the chief executive. Remind him or her that the chief executive is responsible for overall management.If the concerns are general in nature, suggest the staff member communicate with peers and possibly form a delegation to approach the chief executive.If the complaint is anonymous, assess its seriousness and validity. If it is clearly trivial and should be part of normal supervisor/supervisee communication, it may be best to disregard it. More serious issues should be brought to the attention of the chair.If the complaint concerns specific actions by the chief executive that seem to have general implications on staff morale or the direction the organization is taking, contact the chair.When a board member brings a staff complaint to the chair’s attention, the chair should decide the next step.Discuss the seriousness of the complaint with the board member. Assess whether to contact the chief executive and/or the rest of the board in an executive session.If feedback is necessary, contact the chief executive — even informally. Ask the chief executive about the general issues in the complaint and listen to his or her side of the story. If the chief executive is aware of the concerns, discuss together what the remedy might be. If support or advice is needed, provide it.If the chief executive is unaware of potential problems with staff, determine why. This may signal a deeper conflict. Guide him or her to address any management issues with the staff.If it seems that the chief executive is the cause of the problem due to an abrasive style, lack of management skills, or other reasons that affect effectiveness, ensure that these factors are taken seriously in his or her performance evaluation. If the chief executive has committed an illegal act, contact the board immediately and seek legal counsel on how to proceed. Depending on the situation, contacting the chief executive may not yet be appropriate.Suggested ResourcesPierce, Britenae. “Defending Against Employee Complaints and Litigation.” Ryan, Swanson, and Cleveland, 2007. Taking the High Road: A Guide to Effective and Legal Employment Practices for Nonprofits. Washington, DC: The Nonprofit Risk Management Center, 2006.Murray, Jean. “Arbitration vs. Litigation: What is the Difference?” Severance Pay PoliciesIntroduction Severance pay refers to compensation that an employee may receive when he or she has been laid off, the position has been eliminated, or there has been a mutual agreement of separation. Some organizations have a formal written policy or general guidelines, but many have no explicit policy and handle specific situations as they arise. Executive staff often have a separation pay clause in their employment contract but no law requires organizations to provide severance pay. Providing severance pay can contribute to a positive mindset for other employees, however, who may see it as proof that the organization cares for its employees. Key ElementsDetermine the formality of the organization’s approach to severance pay. If there is a formal policy, clarify who is covered (not all employees may get the same benefits), how to calculate the amount of pay, how unused vacation days are included, and when it is paid. In return for severance pay, require an employee to sign a release that frees the organization from all potential lawsuits in the future.Practical TipsCalculate the benefits and disadvantages of a formal written policy. Discuss potential negotiations, individual flexibility, policy as a retention tool, and impact of changes in the economic rmality may be an obstacle in potential mass layoffs.Ensure that all employees in similar positions are treated equally.Ensure that your budget is able to cover potential severance packages.Have your policy reviewed by your legal counsel.Sample Severance Pay Policies These samples are not legal documents; they simply address the various ways you can approach a severance pay agreement.Sample #1This statement makes severance pay a standard practice for the organization.The amount of severance pay received by an eligible employee is based on the length of employee’s years of continuous service.For the purpose of determining the severance payment, partial years of service are rounded up to the next highest year. For example, if an employee has five years and five months of service at the time of layoff, it will be considered six years of service for the severance payment calculation.Sample #2This sample shows how to calculate the amount received by employees eligible for severance pay.Employee must have been employed for 2 years before receiving any severance pay.The maximum severance payment to which an employee may be entitled is 36 weeks of salary.Years of ServiceAmount of Benefit2 years 4 weeks’ salary3 to 9 years4 weeks’ salary plus an additional week for every year over 210 to 14 years12 weeks’ salary plus 2 additional weeks for every year over 915 years or more2 weeks’ salary per year not to exceed 36 weeks of salarySample #3This statement looks at the amounts in a slightly different way from Sample #2 and states when severance pay is not due.When an employee is let go involuntarily, he or she is eligible for severance pay. Two years of service or less shall be entitled to a benefit equal to four weeks of salary;Three to ten years of consecutive service shall be entitled to four weeks of salary plus one additional week of salary for every year of service over two years;Eleven years or more of consecutive service shall be entitled to receive a transitional severance benefit equal to two weeks of salary for every year of service, not to exceed thirty-six weeks of salary.An employee is not entitled to severance pay if he leaves XYZ under the following conditions:Voluntary resignationDischarge for causeDisability covered by Worker’s Compensation for State Disability InsuranceRetirementReused with permission of the Virginia Tech Board of VisitorsSample #4This statement is geared toward executive staff.Executive Severance Policy The benefit payable to executive officers under the Executive Severance Policy is equal to 12?months’ base salary, plus one month’s pay per year of service, up to a maximum of 24?months. Such benefits would be reduced or eliminated by any income the executive officer receives from subsequent employers during the severance payment period. Suggested ResourcesUnites States Department of Labor. “Severance Pay.” “Should You Offer Severance Pay?” Skladany, Bob. “Read This Before Accepting Severance Offer.” AARP 2007 Sustainability PoliciesIntroductionSustainability is based on the concept that our society’s future is dependent on how well we manage to balance and regenerate our economic, environmental, societal, and personal systems. The goal is to renew resources at the same or greater rate than we consume them. Sustainability requires us to be cognizant of how our actions affect future generations. In 1987, a UN report defined the sustainability process as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”When committing to sustainability, you are tying your organization’s existence and activities to a cause that transcends its immediate goals and objectives. No organization functions in a vacuum, but rather as a part of an increasingly intertwined world. By controlling your practices in a responsible way, you play a role in preserving the integrity of our planet. Key ElementsDefine what sustainability means for your organization. How can your activities incorporate “green” initiatives?Address recycling, flexible work hours, electronic filing, office cleaning supplies, and socially responsible investing.Discuss allocation of resources, cost reduction, schedules for reaching goals, and monitoring processes.Practical TipsStart the process of embracing sustainability by gaining the board’s and senior staff’s support and the necessary funds.Often, interested staff members can facilitate the organization’s education by organizing an internal green task force that evaluates your processes and suggests new ways of being more responsible.Sample Sustainability PoliciesSample #1This short statement lists the key objectives of sustainability.Sustainability objectivesBecome carbon-neutral and/or generate zero net waste.Reduce the total energy consumed by/on behalf of the organization by X percent.Reach and maintain a record of no lost-time injuries to employees on an annual basis.Become a recognized sustainability leader among peer organizations.Sample #2 This statement is internally focused and accommodates staff interests. Environmental and Social Sustainability PoliciesEnergy & TransportationWe subsidize public transit costs for commuting staff and for hybrid car owners to enable them to access the high occupancy vehicle lane.We allow staff to flex their hours, within reason, so that they can avoid traffic congestion.We apply?carbon offsets?to all XYZ-related air travel by staff, board members, and guest speakers.InvestmentsWe actively vote our proxies for environmentally and socially responsible corporate policies.We maintain at least XX percent of the XYZ endowment in environmentally and socially screened investments.We provide our staff the option of investing in environmentally and socially responsible retirement funds.As shareholders, XYZ co-signs letters to corporate management requesting more environmentally sustainable practices. Some of the XYZ investments are program-related.SuppliesWe use 100-percent post-consumer recycled paper, and re-use paper whenever possible.?We buy local, organic (or pesticide-free) and fair-trade foods whenever available at or below a XX-percent price premium.We buy sustainably produced office supplies whenever available at or below a XX-percent price premium.We purchase 100-percent biodegradable and nontoxic cleaning supplies. StaffWe subsidize up to X days of paid volunteer activity at a nonprofit organization for each of our staff every year.We match on a [2:1] basis charitable contributions of [$100] or more made by our staff and board members, up to a total of [$9,000] per person per year.We subsidize job-related professional and educational development programs for all staff as schedules and budgets permit.We allow our staff to flex their hours, within reason, in order to fulfill family caregiving responsibilities.Sample #3 This sample clarifies the leadership’s motivation and beyond-compliance commitment.Sustainability Policy StatementIn this statement, the term “sustainability” includes the natural, built, economic, and social environments of XYZ.XYZ recognizes its sustainability obligations to its staff, visitors, communities, and stakeholders — both locally and globally —and to present and succeeding generations.XYZ aims to take a leading role in defining best sustainability practice, and will set its own appropriate and demanding standards where none exist.XYZ is committed to implementing the requirements of all relevant sustainability legislation and regulations and, where possible, exceeding any relevant minimum requirements.XYZ will monitor its use of natural resources, both non-renewable and renewable, and maximize the efficiency and effectiveness with which they are used, with a view to minimizing environmental impacts.XYZ will provide appropriate sustainability training and development for its staff, and will encourage them to apply sound sustainability practices at work, at home, and within the wider community.Suggested ResourcesJones, Gary. “How to Prepare a Sustainability Policy.” Management Portfolio, 2009. United States Environmental Protection Agency “Sustainability Goals and Guiding Principles.” ICMA 2010. Soyka, Peter A. Govern Green. Washington, DC: BoardSource, 2011.Part VIII: CommunicationsMedia RelationsSocial MediaElectronic MediaCrisis CommunicationsLobbying and Political ActivityMedia Relations Policies IntroductionOrganizations can get into public relations trouble if too many people attempt to speak to the media on behalf of the organization, especially in emergency situations. An organizational media policy should include the development of positive, consistent messages; print and other supporting documents (including a one-page description of the organization and a press kit); and a pool of official spokespeople versed on issues that are important to the organization. By having a media policy and establishing a designated media contact — whether an officer or a staff member — the organization can help to avoid potential story inaccuracies, conflicting messages, and/or press leaks. And, in the event that the story relates to improper actions by the chief executive or members of the board, the board may want to elect an impartial spokesperson to act as the principal media contact.Key ElementsThe rationale behind a media policy is to ensure consistency of message. Therefore, the policy should clearly state who may speak on behalf of the organization. For some nonprofits, such as those that work on public policy issues, the media policy may designate subject matter experts on staff who have more latitude in speaking with the media on certain issues.The media policy needs to establish the chain of command for handling media inquiries and clarify the communication process. It should also include alternatives if the primary spokesperson is not available or if the inquiry relates to that individual.The policy should provide direction on whether (and what) documents may be shared with the media. All media relations should be consistent with and supportive of the overall communications objectives of the organization.The policy emphasizes that, as a general rule of law, individual board members (other than the board chair) are normally not authorized spokespersons for an organization. Instead, the board chair, the chief executive, or another designated representative should speak for the organization.Practical TipsIn sharing the media policy with board and staff, explain why it is important to have a single contact person (or a designated group) for all media inquiries. Also, press is used to being transferred to the primary communications director.This designated spokesperson must be able to communicate with a reporter, even if she or he needs to rely on others to provide talking points or to designate someone else to handle technical information. When appropriate, the designated spokesperson may have other staff members provide additional information to the reporter.Develop and share documents that contain basic organizational talking points that board and staff members can use to introduce the organization and its activities.If any media inquiry involves or may involve an allegation of wrongdoing by the organization or any of its officers, directors, or employees, engage the organization’s legal counsel prior to any statements being made to the media or to the general public. In some instances, an individual accused of wrongdoing may need to retain his or her own legal counsel and may not be able to communicate with the organization’s legal counsel in order to avoid waiving the attorney-client privilege. Sample Media Relations PoliciesGeneral media policies tend to be brief, with more specific guidelines included in procedures. The samples provided include general media policies and a media procedures document.Sample #1 This short policy is for a small organization that is concerned about consistency of the message.To ensure the quality and consistency of information disseminated to media sources, the following policy shall be enforced:All media inquiries are to be handled by the chief executive or his or her designee, regardless of who the media representative is, whom he or she represents, or how innocuous the request.All press releases or other promotional materials are to be approved by the chief executive or his or her designee prior to dissemination.Failure to comply with the XYZ’s media policy shall be grounds for disciplinary action.Sample #2 This brief policy provides additional guidelines, such as including the board president as an authorized spokesperson and requiring advance approval from the chief executive.Only the chief executive, board president, board chair, or other individual(s) designated by the board are authorized to speak with the media. The chief executive and the board designate shall collaborate on message development and coordinate who will handle which press inquiries.Employees, board members (other than the chair) and members acting in a capacity within a committee or a caucus shall not make statements, provide information for distribution, or provide background information unless specifically directed to do so by the chief executive and/or the board.Provided that they have prior permission to do so from the chief executive or the board, employees, board members, and members acting in a capacity with a committee or a caucus shall speak publicly on behalf of XYZ only in accordance with established public speaking procedures.Sample #3 This succinct policy allows the chief executive to speak out on public policy issues on behalf of the organization.Public Policy StatementsThe board or executive committee may agree to approve a resolution on any public issue for which it feels a “voice from XYZ” could improve the public dialogue, and the chief executive or board members are encouraged to propose such resolutions for the board’s or executive committee’s consideration. The chief executive is authorized to add XYZ’s name to others’ statements, letters, proclamations, etc. which clearly fit within the guidelines below:Support principles of _____.Support policies to promote _____.Support efforts to show respect _____.Chief Executive’s Public StatementsUsing discretion, the chief executive may speak out or lend his or her name to positions being taken by other leaders, so long as it is made clear he or she is not representing an official position of XYZ and informs the board whenever such positions become publicly controversial. Officers and directors should be cognizant of the fact that they must avoid conflicts of interest and should always ensure that their actions and public statements do not put personal interests above the best interests of their organization.Sample #4 This statement outlines the procedures for anyone responding to a media inquiry and serves as a useful complement to the basic policy.Media Inquiry ProceduresMain Contact: [Name A]Other Contact: [Name B and Name C]DescriptionHow to handle inquiries from any media such as newspaper, radio, TV, cable access, magazine, trade organizations, etc. BackgroundXYZ strives to advance its mission by communicating openly and honestly using consistent messages with its constituents, including the media. It is important for all XYZ staff and board members to reinforce these messages by referring all calls from any media source to the appropriate staff.ProcedurePlease refer all calls or visits to Name A; if he or she is not available, refer to Name B; or if the inquiry is specific to grants, refer to Name C.If senior staff is not available, take the following steps:Find out the reporter’s name, phone number, and deadline.Find out the nature of the story (“Name A is our chief executive and spokesperson for XYZ. May I ask what kind of a story you are working on so that we can gather the information and he (or she) will have all the facts in front of him (or her) when he (or she) calls you back?”), OR, if you are sure that Name A will be available to hear a voicemail message, offer to let the reporter leave a detailed voicemail message.Let the reporter know that Name A or another staff member will return the call by a stated time and date.Contact Name A immediately if the deadline is imminent. His (or her) home phone ___; cell ___.Please do not offer information to media — even if you know the answer. It is helpful for XYZ that all news contacts be handled by senior staff and documented. Also, it’s too easy to get quoted as an organization spokesperson if you volunteer something the reporter wants to use. Assure the reporter that someone will respond in time to meet the deadline.If the reporter needs an immediate response, or if Name A will not be available in time to meet the reporter’s deadline, refer the call to Name B, home phone ___; cell ___. If it’s on the subject of grants, refer the call to Name C, home phone ___; cell ___.If you cannot reach Names A, B, or C (at work, home, or on cell phone) to respond in time for the deadline, call the reporter back, explain the situation, and apologize profusely, but still decline to answer the question yourself. In no case should you let the deadline come and go without any response. Then, please leave a detailed message for Name A (or B or C) so that he or she can follow up with the reporter. In general, it is not advisable to say “no comment,” since that constitutes a form of an answer that may be used against the organization in some instances.Key Points To Remember When Dealing with the Media:Be polite.Be helpful.Find out what the reporter needs to know and what his or her deadline is.Don’t let a deadline pass without a response.Don’t get drawn into providing information or opinions that you don’t have the authority to provide. Always inform Name A (or B or C) of the call for follow-up.Thank you for helping XYZ provide accurate, timely, honest, and thoughtful assistance to the media.Sample #5 This policy, tailored to federated organizations, guides chapters to share media attention with the national office.Release of Information to the MediaIn the event the media contacts XYZ first, the caller’s identity and reason for calling will be ascertained. If the reason for the call is anything other than basic information that would be considered public, XYZ staff will call them back after first notifying the Local Council Affiliate that an inquiry about the organization has been made. Note: XYZ’s call to the Local Council is a courtesy call and is not a request for permission from the Local Council to speak on their behalf. Calls from the media received by XYZ regarding Local Councils shall be handled according to the XYZ board-approved media policy.If a local issue receives media attention, or has potential to draw attention (negative or positive), the Local Council shall notify XYZ within two working days as to the nature of the situation and what possible impact it will have on the Local Council Affiliate and XYZ.Suggested ResourcesFritz, Joanne. “Top 10 Tips for Local Media Relations.” Patterson, Sally J. Generate Buzz! Strategic Communication for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2011.Social Media PoliciesIntroductionSeveral years ago, it became evident that a nonprofit would not be able to function effectively without a Web site. Today, the same can be said about a Facebook page or a presence on LinkedIn, YouTube, Twitter, Instagram, Pinterest, etc. Today’s nonprofit constituents expect instant communication through social media. The key to effective social media communication is to customize and target your messages to the various segments of your constituency.Key ElementDraft your social media strategy. Determine which methods are appropriate for your organization and draft guidelines specifically for these tools.Define your “communities” — the various groups of individuals and types of organizations that would benefit from one type of messaging or a method of mobilization. These target groups could be your funders, colleagues, various age groups using your services, members, former members, new audiences, and so on.In your policies, discuss the line between personal and organizational messages. If your organization has a special “account,” ensure that the messages that originate from that account meet your integrity rules.Empower people to use social media; don’t simply provide restrictions.Practical TipsDraft guidelines and train your staff on the importance and use of the various social media. Don’t assume only the younger generation is interested in it.Don’t get involved just because others are doing it. Be clear how the various media help you advance your cause.Look at sample blogs, tweets, and Facebook postings with your staff to define the acceptable tone, vocabulary, and “slant” of the messaging. For instance, provocative blogs get attention as long as your organization stands behind the message.Overall, the use of social media is economical, but investigate what expenses are necessary from a technology and staff standpoint for you to be efficient and up-to-date. Differentiate between proactive and reactive messaging. Your approach for sharing information ahead of time, mending a situation, or preparing for a situation should be different. Sample Social Media PoliciesThe sample policies mainly guide employees in appropriate social media interactions. Sample #1This policy provides straightforward guidelines for responsible social networking.?Guidelines for social networkingBe honest about your identity.Make it clear that the views expressed are yours alone.You speak for yourself, but your actions reflect back to XYZ.Use your common sense.Play nice.Remember that all communication remains in the cyberspace.Respect the privacy of offline conversations.Don’t write anything you can’t say in public.Adapted with permission from The Ford Motor Company. See original here: Sample #2These guidelines are for employees who communicate about work outside of the official organizational media.Social Media GuidelinesAs XYZ employees, you are encouraged to interact and be a part of social media communities where XYZ is present. As you are participating in these social networks, you represent XYZ. ?Blogs, wikis, and other forms of online discussions are individual interactions, not company communications. Use common sense and be mindful that what you write will be public for a long time.Identify yourself—name and, when relevant, your role at XYZ—when you post something about our organization. Clarify that you are speaking for yourself and not on behalf of XYZ. If you blog outside of XYZ, and it relates to your work, use a disclaimer such as this: “The postings on this site are my own and don’t necessarily represent XYZ’s positions, strategies, or opinions.”Respect copyright, fair use, and financial disclosure laws.Don’t cite or reference clients, partners, volunteers, or vendors without their approval.Sample #3 This short safety policy is part of risk management.Privacy and Safety When Using Social Media?It is the policy of XYZ to protect the privacy and safety of employees and clients. We do not allowtaking or sharing inappropriate photographs in the workplace or at organization activities or eventstexting or talking on cell phones while driving in an organization-owned vehicle or personal vehicle being used on XYZ businesstexting or talking on cell phones while working with clientstaking photographs without the participant’s permissionSample #4This template will help you draft a comprehensive policy. It specifies which circumstances may require a response or action from the organization.XYZ understands that some employees participate in social networking sites (e.g. Facebook, MySpace, Twitter, YouTube, LinkedIn, Pinterest) and chat rooms, and create and maintain personal Web sites, including blogs.? XYZ respects employees’ online social networking and personal Internet use. However, your online presence can affect XYZ as your words, images, posts, and comments can reflect or be attributed to XYZ. As a team member, you should be mindful to use electronic media, even on your own personal time, responsibly and respectfully to others. Because employees’ online comments and postings can impact XYZ and/or the way employees are spending their time at work, XYZ has adopted the following guidelines that employees must observe when participating in social networking sites and/or engaging in other forms of Internet use on and off duty. It shall be considered a breach of acceptable team member conduct to post on any public or private website or other forum, including but not limited to discussion lists, newsgroups, listservs, blogs, information sharing sites, social media sites, social or business networking sites such as LinkedIn, Facebook, or Instagram, chat rooms, telephone-based group communications such as Twitter, or any other electronic or print communication format, any of the following:(1) Anything that may harm the goodwill or reputation of XYZ or any disparaging information about XYZ.(2) Any disparaging, discriminatory or harassing information concerning any customer, employee, vendor or other person associated with XYZ. XYZ’s policies prohibiting harassment apply online as well as offline.(3) Any confidential information, trade secrets, or intellectual property of XYZ obtained during your employment, including information relating to finances, research, development, marketing, customers, operational methods, plans and policies.(4) Any private information relating a customer, employee or vendor of XYZ.In compliance with applicable regulations of the Federal Trade Commission, employees endorsing XYZ’s products or services must disclose their employment relationship with XYZ and must ensure that endorsements do not contain representations that are deceptive or cannot be substantiated. If you are speaking about job-related content or about XYZ, you must either clearly identify yourself as a XYZ employee, or speak in the first person and use a disclaimer to make it clear that the views expressed belong solely to you. In addition, the following statement must be used, “The opinions expressed on this site are my own and do not necessarily represent the views of XYZ.”This Policy applies regardless of where or when employees post or communicate information online. It applies to posting and online activity at work, home, or other location and while on duty and off duty. XYZ reserves the right to monitor and access any information or data that is created or stored using XYZ’s technology, equipment or electronic systems, including without limitation, e-mails, internet usage, hard drives and other stored, transmitted or received information. Employees should have no expectation of privacy in any information or data (i) placed on any XYZ t computer or computer-related system or (ii) viewed, created, sent, received or stored on any XYZ computer or computer-related system, including, without limitation, electronic communications or internet usage.Employees who violate XYZ’s Social Networking Policy will be subject to disciplinary action, up to and including termination of employment. Suggested ResourcesPatterson, Sally J. Generate Buzz! Strategic Communication for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2011. Kanter, Beth and Allison H. Fine. The Networked Nonprofit: Connecting with Social Media to Drive Change. John Wiley & Sons, 2010.2010 Nonprofit Social Network Benchmark Report 2012 Aaker, Jennifer and Andy Smith. The Dragonfly Effect: Quick, Effective, and Powerful Ways To Use Social Media to Drive Social Change. Jossey-Bass, 2010.Electronic Media PoliciesIntroductionNonprofit organizations communicate with a vast array of audiences in many different formats. Technology increases the opportunities for better communications but introduces a new set of risks related to electronic media. It is quite challenging — if not sometimes impossible — not to use e-mail, have a Web site, or not conduct commercial activities via the Internet. Accuracy of information and individual privacy are critical issues. The scope of electronic media policies seems limitless as electronic communications become the primary means of sharing information. Key ElementsIt is important for Web sites to offer accurate information and provide copyright clarification, and to be updated regularly.Policies should cover risk-management issues, such as electronic back-ups, data storage, access authorities, passwords, and general office etiquette for electronic communication.Practical TipsOn your Web site, make sure visitors know what to expect when using your materials or engaging in a transaction — both to protect the organization’s intellectual capital and ensure their privacy.Don’t make promises you can’t keep. State carefully what information is shared and what is not shared with outsiders. For instance, if your organization accepts credit card payments via the website and your fulfillment is handled by a third party, you end up sharing this information. Have your IT team regularly communicate with staff to remind them of the expected procedures for everyone.Sample Electronic Media PoliciesThese sample policies address multiple issues, from updating electronic information, to privacy, to public access to online services. They are designed only as a sampling of the different aspects of electronic media that might warrant policies.Sample #1 This brief policy statement provides guidelines for updating electronic documents and records that the organization uses to communicate with its constituents.A Web site will be established to provide access to member services and information to the general public. The Web site will be updated on a regular basis. Information and updates will be posted by employees after approval from the chief executive or his or her appointee.Listserv: XYZ provides a member-only listserv to provide up-to-date information and promote discussion among members. Member agencies will be added to, or subtracted from, the list upon their request within __ business days. All members have access to post information on the listserv in accordance with list rules.Sample #2 This privacy policy sets parameters for use of electronic data collected through the Internet.Electronic Media PolicyWebsite PolicyPrivacy: XYZ respects the privacy of each visitor to the XYZ Web site. XYZ may use cookies. Any personal information provided by a visitor will be used solely by XYZ for internal purposes and, where appropriate, to contact individuals directly. Personal information will be sold and will be shared only with those third-party service providers who perform functions on our behalf, including processing credit card payments, providing customer service, removing repetitive information from customer lists, analyzing data, and providing marketing assistance. Copyright: The contents of all materials contained on XYZ’s Web site are owned by the organization (unless otherwise indicated) and are protected by U.S. and international copyright laws. All rights are reserved by XYZ, and visitors may not copy, reproduce, download, upload, republish, disseminate, post, distribute, or transmit by any means the contents of the website, except with the prior express written permission of XYZ. Copyright infringement is a violation of U.S. federal law, and violators are subject to criminal and civil penalties.The information contained on XYZ’s Web site is provided by the organization for general informational purposes only. None of the information on the Web site is intended or should be construed to be legal advice or a legal opinion. While every effort has been made to ensure that the information contained on the Web site is as accurate as possible, omissions and errors may occur. Also, because of the nature of Web site development, maintenance, and updating, the information contained on the website may not reflect the most current developments. XYZ and its contributing authors expressly disclaim all liability to any person with respect to the consequences of any act or omission committed based upon reliance, in whole or in part, on any of the contents of the Web site.At certain places on the Web site, live links to other Internet addresses (“third-party sites”) can be accessed. Such third-party sites contain information created, published, maintained, or otherwise posted by institutions or organizations independent of XYZ. XYZ does not endorse, approve, certify, or control these third-party sites and therefore cannot guarantee the accuracy, completeness, efficacy, timeliness, or correct sequencing of information located at such addresses. The information on XYZ’s Web site and third-party sites is provided “as is” and without warranties of any kind, either express or implied. To the fullest extent permissible pursuant to applicable law, XYZ disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability and fitness for a particular purpose. Use of any information obtained from such third-party sites is voluntary, and reliance upon it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference therein to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by XYZ.Your use of the Web site is at your own risk, and you assume full responsibility for all costs that arise out of its use. Neither XYZ nor any of its officers, directors, partners, employees, affiliates, subsidiaries, agents, representatives, or licensors shall be liable to you or any third party for any compensatory, direct, indirect, incidental, special, exemplary, punitive, or consequential damages, or attorneys’ fees, arising out of your use of the website or inability to gain access to or use the website or out of any breach of any warranty, even if such parties have been advised of the possibility of such damages or such damages were foreseeable. E-mail Privacy PolicyThrough membership in XYZ, members are establishing a business relationship with XYZ and authorizing use of the e-mail addresses provided to the organization.XYZ may utilize the e-mail addresses provided by its members for communication and promotion of XYZ events, meetings, education programs, products, and services, unless specifically instructed otherwise by an individual member.XYZ shall provide recipients of all mass e-mail communications the opportunity to unsubscribe from e-mail distribution lists.XYZ may provide the e-mail addresses of primary member contacts to third parties through the XYZ Web site, sale of mailing lists and directories, and direct communication, unless specifically instructed otherwise by an individual member.Fax Privacy PolicyThrough membership in XYZ, members are establishing a business relationship with XYZ and authorizing use of the fax numbers provided to the organization.XYZ may utilize the numbers provided by its members for communication and promotion of XYZ events, meetings, education programs, products and services, unless specifically instructed otherwise by an individual member.XYZ may provide the fax numbers of its members to third parties through the XYZ Web site, sale of mailing lists and directories, and direct communication, unless specifically instructed otherwise by an individual member.Opt-Out PolicyXYZ will provide each member equal opportunity to opt in or opt out of any communication method utilized by XYZ. Members will be notified regarding these policies on an annual basis.Suggested ResourcePatterson, Sally J. Generating Buzz! Strategic Communication for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2011.Crisis Communication PoliciesIntroductionIn every organization there is the possibility of a crisis, internal or external. The nature of that crisis, its origin, and its potential impact will determine how the organization responds. Potential crises should be identified before they happen, with overall processes to set in motion when necessary. These processes naturally need to be fine-tuned and finalized when actually faced with the real thing. Nonprofits generally deal with two kinds of crises: emergencies and controversies. Emergencies are unpredictable events that wreak havoc on the organization and those it serves; they include everything from thefts and accidents to fires and tornadoes. Controversies are crises that threaten the organization’s reputation, such as accusations of fraud, legal disputes, or leadership conflicts. Regardless of the situation, a crisis communication policy is intended to help the board and staff act swiftly and consistently under stressful circumstances.Key ElementsThe follow-on to a crisis communications policy is a crisis communications plan. Having a plan and following it (in order to determine that response) is essential in minimizing or avoiding negative effects.Staff members shoulder the responsibility for emergencies, and they often tap the board for support and resources. The chief executive and the board usually bear the burden of controversies, unless the chief executive is actually involved in the controversy. Practical TipsDefine the process for communicating with media and the general public.Set organizational priorities in the policy during a crisis. Safety of employees and customers must always come first.Address the different kinds of crises your organization may be faced with and provide guidelines for how to deal with them.Clarify authority levels and supervisory roles. In a crisis situation, accountability is important in order to avoid mixed messages. Identify the crisis team, the key spokespersons, and the chain of command through a telephone tree or other immediate communication mechanism.Sample Crisis Communication PoliciesThe first sample policy offers a general approach; the second provides more explicit details when faced with a crisis. Sample #1 This general policy captures the organization’s approach to media relations and contemplates an emergency situation.Emergency Media PolicyIn case of any emergency event, situation, or investigation regarding an inquiry by the media, including radio, TV, or newspaper, into issues relating to XYZ, the following guidelines shall be followed to assist XYZ’s response to the media.XYZ will prepare staff for preventative awareness byEstablishing positive media relations throughout the year with local radio/TV/newspaper reportersEstablishing XYZ as a resource for informationHelping the media when doing research on local storiesProviding training to XYZ on media crisis and the emergency media plan and informing staff not to comment on inquiries, but to refer inquiries to those designated individuals who may release information to the mediaSample #2 This longer policy addresses crisis communications specifically, and it includes clear guidelines and responsibility for responding. Crisis Communication PolicyGeneral PolicyXYZ is committed to taking a preemptive approach to public relations crises, using disclosure whenever possible as the preferred strategy for preventing or minimizing public relations crises.No one is authorized to speak to the news media in a crisis without clearance from the office of communications and munications and marketing will be responsible for developing crisis communication strategies. These strategies will be circulated and reviewed annually by the board and the staff.Final approval of these strategies will rest with the XYZ chief executive or his or her designee.Crisis PreventionCommunications and marketing will maintain regular contact with senior staff, advising the appropriate administrator(s) when internal issues or developments appear likely to lead to public relations problems.Similarly, XYZ’s administration will regularly notify communications and marketing of internal developments that may escalate into public relations munications and marketing also will monitor local, state, and national news coverage of field issues, advising the appropriate administrator(s) of issues and/or trends that might lead to negative stories or opportunities for XYZ to support public dialogue on issues central to its work.Crisis ResponseWhen crises erupt, communications and marketing will gather and verify information about the crisis, assess the severity of the crisis, and develop strategies concerning how information is to be released, who should speak for XYZ, and who is to be notified.The office also will confer with XYZ’s national media consultant, as appropriate, work out logistical details of releasing information, and distribute verified information as quickly as possible to internal and external audiences.Crisis Communication ProcedureTypes of CrisesForeseeable CrisesCrisis assessment: The communications director [or insert other appropriate title] will be notified immediately of an emerging crisis and will determine the necessary strategy and who should be involved.Formation of a crisis team: The team will gather as many details as possible, recommend strategies for internal and external communication, and select an appropriate spokesperson. The chief executive (or his or her designee) has final approval of the recommendations.Sudden CrisesImmediate action: When the sudden occurrence of a severe crisis precludes convening a crisis team, communications will draft and implement a strategy immediately upon approval by chief executive (or his or her designee).After implementing “first-wave” communication strategy, the communications director and the chief executive (or his or her designee) will convene the crisis team to develop ongoing strategy.Establishing a Clear Line of CommunicationCommunications will be authorized to gather and verify information in a crisis, and will be the only department authorized to release information.Releasing Information InternallyWhenever practical, communications will attempt to inform XYZ employees of crises in any appropriate manner before details are released externally. Informing Outside Parties Communications will coordinate notification of key stakeholders and outside parties likely to be affected by or strongly interested in the crisis. The board and staff should also receive regular updates on the crisis and talking points so that they can work with their community contacts to spread the organization’s messages.Releasing Information to the News MediaCommunications will work to supply verifiable details to the news media as rapidly as possible.After releasing information, communications will monitor the news coverage and quickly correct any errors that are made and its assessment of the lessons learned and any new guidelines for the next crisis.Evaluation and Follow-UpCommunications will document the news coverage surrounding a crisis, including wire stories, newspaper articles, radio, and television broadcasts.When the crisis is past, communications will supply the crisis team with a summary of news coverage.Suggested Resources“Mission Controls Fact Sheets on Crisis Management.” The Nonprofit Risk Management Center \Patterson, Sally J. Generate Buzz! Strategic Communication for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2011.Daniels, Jenifer R. “Social Media in Crisis Communication.” Charlotte Mecklenburg Library Lobbying and Political Activity PoliciesIntroductionNonprofit organizations frequently want to — and do — engage in political activities, but federal tax laws regulate what is permissible. The restrictions are very important because the penalties for violating them are serious, from taxes to fines, and even revocation of tax-exemption. Federal law defines actions designed to influence or affect legislation as lobbying, and actions designed to affect elections as electioneering. The nature of an organization’s tax exemption shapes what it may and may not do. For example, public charities (501(c)(3)s) may engage in lobbying, within limits, but not electioneering. Yet, they may conduct voter education and get-out-the-vote efforts, which are not considered electioneering. In contrast, social welfare organizations (501(c)(4)s) and trade associations (501(c)(6)s) have more latitude with both lobbying and electioneering. Private foundations, on the other hand, may not ear mark any part of their grants for lobbying purposes. Nor may organizations use federal grant funds for lobbying activities.Key ElementsEven though the law is strict about lobbying by public charities, a policy not only spells out what is acceptable within your organization but also reminds people of what is prohibited.It is not uncommon to find two related but independent entities. Charities that deal with public policy issues, such as children’s welfare, environmental protection, or human rights, may create a social welfare organization to separate lobbying and advocacy work from educational and service delivery activities. Likewise, trade associations and professional societies may create foundations so they can receive charitable contributions for scholarships and other educational programs. It is important that the distinction between the two organizations is clear in their structure (boards, bookkeeping, etc.) as well as their messaging.If a public charity engages in lobbying, it should distinguish grassroots from direct lobbying. Grassroots lobbying includes activities designed to influence legislation by encouraging the general public, or a segment of it, to contact legislators. Direct lobbying includes communicating directly with legislators involved in formulating the legislation.Practical TipsWithin the organization, clarify who is responsible for lobbying activities and how the funds will be tracked. The latter, in particular, has implications for the organization’s overall reporting requirements.Federal tax law allows 501(c)(3) public charities to engage in lobbying within certain limits. An organization may choose one of two tests when determining the extent of its lobbying activities: 1) the “no substantial part” test, which the IRS does not define; and 2) the expenditures test, also known as the 501(h) election, which sets specific dollar limits based on the organization’s total expenses.Before embarking on lobbying activities (under a 501(h) election), a charity should be sure that it is adminstratively equipped to handle the significant record keeping required. For example, it must be able to track staff time and expenses not only for communicating with legislators but also for preparing for the contact, conducting the research, and writing the communications. Additionally, it must document all direct costs, such as printing and mailing, related to lobbying activities.Because the definitions of legislative activity can be murky and because of the many exceptions and exemptions, those nonprofit organizations that are involved in any kind of legislative activity should seek guidance from legal counsel. The risks are too great should the organization make a mistake.Sample Lobbying and Political Activity PoliciesThe samples cover a range of issues, including definitions, limitations, and acceptable practices.Sample #1 This policy outlines the parameters for limited lobbying, reporting requirements, and clarifies what constitutes lobbying. It also provides guidance to field offices of the organization.Lobbying ExpendituresXYZ engages in limited lobbying to advance its mission. It is XYZ policy to adhere strictly to limitations on lobbying expenditures imposed by the Internal Revenue Service. Lobbying expenditures are reported annually to the IRS on Form 990. To ensure adherence to this policy, lobbying expenditures must be included in the approved XYZ budget or authorized in advance by the [responsible senior staff]. [Senior staff] will alert the chief operating officer to any significant lobbying expenditures in advance, to facilitate compliance with the limits on direct and grass-roots lobbying expenditures. Both expenditures and staff time must be charged to a lobbying project code, which will indicate whether the lobbying is “direct” or “grass-roots.” Below is some general guidance about lobbying, as defined by the IRS. Please contact the general counsel’s office if you have any questions about lobbying. The following organization-wide policies apply to field offices just as they apply to the national office. Definition of Lobbying Lobbying is generally defined as communicating, directly or indirectly, with policymakers for the purpose of trying to influence legislation, whether federal, state, local, or foreign (non-U.S.). U.S. law divides lobbying into two principal categories: “direct” lobbying and “grass-roots” lobbying. Direct lobbying involves communications thatAre directed towards government officials;Refer to specific legislation; andState or strongly imply a position on it. Grass-roots lobbying involves communications thatAre directed to segments of the general public;Refer to specific legislation;State or strongly imply a position on the legislation; and Encourage the recipient of the communication to contact government officials with respect to the specific legislation. (This is sometimes called a “call to action.”) In order to be considered lobbying, an activity must generally meet all the parts of either one definition or the other. In addition, there are certain exceptions to the definitions of lobbying that may apply. Please consult the general counsel’s office. When recording lobbying expenditures, it is critical to specify whether the spending was for direct lobbying or for grass-roots lobbying. The general counsel’s office can provide further advice on applying the lobbying policies. Lobbying with Foundation Funds In general, foundation grant funds may not be used for lobbying. If a project gets only part of its funding from a foundation, the project can include lobbying, so long as the lobbying expenditures are funded by sources that do not exclude lobbying. When designing a project that will include funding from a foundation, any lobbying must be paid for out of general funds or other non–foundation funds that can be used for lobbying. Lobbying with Government Funds In general, we are prohibited from using any government funds for lobbying, including using government funds to hire consultants or make grants that involve lobbying. If you have any questions, please contact the general counsel’s office. Responsibility — Lobbying Expenditures by Field OfficesIn each year’s budget request, the [chief executive of field office] is responsible for identifying and labeling any proposed expenditures for lobbying. In carrying out the approved budget, the [chief executive of field office] is responsible for accurately recording the actual allocation of staff time and other expenditures for lobbying. The [chief executive of field office] is responsible for obtaining authorization before incurring any unbudgeted expenditure for lobbying. Requests for authorization are to be submitted to the [designated senior staff]. In addition to reporting our lobbying expenses annually to the IRS, we are required to report to Congress twice yearly on our lobbying activities that involve trying to influence U.S. federal programs, policies, and practices through communications with congressional employees and certain high-ranking agency employees. If you engage in any activity along these lines, or retain others to do so on our behalf, please contact the general counsel’s office. Sample #2 This brief policy statement is strict about inappropriate political contributions.Political ContributionsXYZ encourages individual participation in civic affairs. However, as a charitable organization, XYZ may not make contributions to any candidate for public office or political committee and may not intervene in any political campaign on behalf of or in opposition to any candidate for public office. We thereforeRefrain from making any contributions to any candidate for public office or political committee on behalf of XYZ.Refrain from making any contributions to any candidate for public office or political committee in a manner that may create the appearance that the contribution is on behalf of XYZ.Refrain from using any organizational financial resources, facilities, or personnel to endorse or oppose a candidate for public office.Clearly communicate that we are not acting on behalf of the organization, if identified as an official of XYZ, while engaging in political activities in an individual capacity.Refrain from engaging in political activities in a manner that may create the appearance that such activity is by or on behalf of XYZ.Sample #3This more complicated policy, from an organization that focuses on public policy issues, outlines what employees may and may not do during elections. SEQ CHAPTER \h \r 1Compliance with Federal Election LawsDuring election years or cycles — and especially within 120 days of any election — it is very important that XYZ employees understand what they may and may not do during an election campaign vis-à-vis political candidates and their campaigns. As a general rule, involvement in election campaigns by XYZ or its employees is strictly forbidden by the Internal Revenue Code. The public policy reason for this is that the federal government, understandably, does not want nonprofit organizations to use their tax-deductible donations or foundation grants to influence elections. Violation of the law subjects the organization to loss of its tax-exempt status and loss of the tax-deductibility of donor contributions to the organization, both very dire penalties.What election activities you may not engage in, as an employee of XYZXYZ and its employees may not endorse, work for, or otherwise support a candidate for public office at any level (federal, state, or local). Likewise, no candidate may be opposed. No funds or resources of XYZ may be used to support or oppose any candidate. XYZ must also take care that any informal or formal coalition of which it is a member does not engage in any partisan electioneering activity.This does not prohibit you, as an individual, from exercising your right to engage in partisan electioneering activities. You may actively work for any candidate during after-work hours, while on leave without pay, or while using accrued vacation. But you must not do it as a representative of XYZ; it must be clearly and solely in your capacity as a private individual. You should be careful, if engaging in personal electioneering activities, not to identify yourself as speaking or acting on XYZ’s behalf. Nor should you be identified as being employed by XYZ in any printed campaign materials or in any public forum.No XYZ funds or resources (e.g., photocopying, postage, telephones, etc.) may be used in your personal electioneering activities.What limited election activities you may engage in, as an employee of XYZXYZ and its employees mayInform candidates or their campaigns of XYZ’s position on issues and provide materials to them. It is important, however, that if the opportunity for a briefing or to receive materials is extended to one candidate for an office, it be extended to all candidates for that office.Ask candidates to support XYZ’s position, if elected. The request must be made privately, not publicly.If a candidate agrees to XYZ’s request to support an XYZ position, XYZ is very restricted as to what use it may make of that agreement. There is a flat prohibition against XYZ “publishing or distributing statements” about a candidate’s response to a request to pledge to support its position on an issue. So any responses must be kept strictly internal within XYZ and may not be published to members, subscribers, the media, or the general public.Somewhat less strict rules govern candidate questionnaires. The results of a questionnaire may be publicly distributed if they 1) cover a broad range of issues, 2) include all candidates in a race on an equal basis, and 3) present the issues neutrally, without suggesting a “correct” position. Voting records of incumbents may be compiled and distributed, but they must also cover a broad range of issues, include all incumbents without identifying those up for reelection, and not indicate a “correct” vote. No overall grade or score may be given.After an election, it is permissible for XYZ to make publicly known that a now-elected candidate supports XYZ’s position, or to release the results of any pledge effort.Ask candidates to go on record publicly as supporting XYZ’s position. Again, the request to the candidate must be made privately, not publicly. Most importantly, the candidate must make the public announcement of his or her support; XYZ may not do so, nor publicize the candidate’s announcement or position in any way. Submit position statements to and testify before the platform committee of a political party. But if statements or testimony are given to one party’s committee, the same request and submissions must be made to other parties’ committees.Sponsor a public forum to which all candidates are invited to discuss issues important to XYZ — although the forum must obviously be conducted with an even hand in a nonpartisan manner.In the situation where you are called on the phone or visited by a staff member of a presidential or congressional campaign committee who is seeking information on your subject area, you can provide information to them under these conditions:The campaign staffer must have initiated the call or visit to you, not the other way around.The information you provide to a campaign staffer orally is not specially prepared or researched for them; it must be information that you would normally supply to anyone calling and asking for this type of information.If the campaign staffer requests any written materials from you, you should ideally refer him or her to XYZ’s Web site where he or she can print out the materials himself or herself. If the materials requested are not posted on the Web site, then you may provide it in printed or written form, but whatever you provide must be available to the general public, not something specially prepared for that campaign.If the information requested by a campaign staffer requires special research or is something not available from XYZ to the general public, then your choices areYou can decline to provide the information to the campaign staffer, citing federal election laws; orYou can provide special information or research to a campaign committee or staff, but you must also make it available in printed or written form to all other candidates.If and when you work in the field with members of the staff of a congressperson, a state legislator, or a local elected official, you should make certain that the staff member is not working for the official’s election-campaign committee, but is, indeed, on the official’s government-paid staff. You may not have conversations with election-campaign committee employees about legislation, strategy, or any other subject, except in the very limited circumstances described above.In 2003, the Federal Election Commission also published its own rules that restrict so-called “coordinated communications” and other activities with a candidate for federal office. Put simply, 501(c)(3) organizations and their employees may not make “coordinated communications” with candidates for federal office. Communications activities that are made in cooperation with a candidate or party and that are directed to voters are considered electioneering and in-kind election contributions to a candidate, which are, of course, prohibited under IRS rules for nonprofit 501(c)(3) organizations, like XYZ. So a coordinated communication is particularly dangerous because it violates both federal election laws and federal tax laws.Because of the extreme complexity and the significant danger to XYZ of any activity by employees that might be considered electioneering, XYZ employees should not engage even in the very limited activities permitted, without the explicit approval of the chief executive.If you have any questions about this memo, its guidance, or interpretation, please contact the chief executive or chief financial officer.Suggested ResourcesIndependent Sector. About Nonprofit Advocacy. Alliance for Justice National Council of Nonprofits Part IX: CommitteesIntroduction to the Role of CommitteesSample Protocol for Board CommitteesCreation of CommitteesGovernance CommitteeFinancial Committees (Finance, Audit, and Investment)Development CommitteeExecutive CommitteeOther CommitteesAdvisory CouncilCommittee Chair Job DescriptionIntroduction to the Role of Committees Committees are often considered the work horses of the board because they do the majority of the board’s work between meetings, thereby allowing the full board to focus on the big picture and critical decisions. Committee work engages all board members in activities that extend their responsibilities beyond participation in board meetings. Committees allow the organization to tap into an individual board member’s full experience, talents, interests, and enthusiasm. They can also expand the board member’s understanding of the organization and are often the training ground for prospective board members and future board officers. Key ElementsThe full board determines which committees or task forces are necessary and the general purpose of each committee. Remember, the board determines the charter for the committee, not the committee itself. Committee structure should flow from the organization’s strategic goals and the board's priorities. Periodically, the board should review its committee structure and determine which committees are necessary.The easiest way to keep the committee structure simple and flexible is to limit the number of standing committees to the bare minimum and to supplement these with a few less-permanent work groups (e.g., ad hoc committees, task forces, advisory councils) to deal with specific short-term assignments such as an executive search, strategic planning, or planning a special event.No matter how many committees it needs, the board should always make sure each committee has a significant amount of ongoing and important work to do. If a committee does not have ongoing work, it should be disbanded. Board committees often fail when they do not know what they are supposed to do. Therefore, giving them definite areas of responsibility, or charges, is crucial for their success. While the bylaws may state the roles of particular standing committees, separate committee charters should define their specific responsibilities. A guiding statement about committees may articulate how committee chairs are selected and who may serve on each committee. Often, the board chair appoints committee chairs from the board. Committee members may be board members or other interested individuals, and they may be appointed by the board chair or by the committee chair. The role of the committee chair should always be defined. The chair of the committee runs the committee process and leads the work group to accomplish the expected tasks.Sample Protocol for Board The board will decide what committees will be formed and appoint a board member to chair each committee.Non-board members can be invited to be part of the committee.The committee chair is authorized to approach prospective committee members based on the prior approval of the board chair.A committee meeting can be called by the chair of the committee or by the chair of the full board. Each committee will be made up of a minimum of three and maximum of eight members approved by the board chair. A majority of the committee members shall constitute a quorum for any decision of the committee.The board will set the goals of the committee, while the committee will set its own strategies for reaching those goals.Prior to the first meeting of the committee, the board chair, the chief executive, and the committee chair will meet to review the goals and expectations set by the board and this mittees will meet at least every other month, alternating with full board meetings. The chair of the committee will report in writing the progress and activities of the committee at the following board meeting.The board chair and the chief executive can sit on any committee ex officio. They will be copied on all committee correspondence. Staff persons present at a committee meeting will be present to assist because of knowledge of the actual day-to-day operations. An important job of the head of the committee is to protect the staff from being assigned tasks appropriate to the committee. The chief executive is responsible for communicating to staff members their role in committee deliberations.A committee will not enter into any contractual obligations on behalf of the mittee Creation PoliciesIntroductionMost boards form committees to facilitate the board’s work between meetings — this is how the work gets done. It is also a way to engage board members individually in the board’s work outside of meeting attendance. (See specific charters below.)For several years, the trend has been to limit the number of standing committees and instead form task forces that have a specific purpose for a specific timeframe. When the task is accomplished, the task force is disbanded. This brings a welcome flexibility to the board’s work.Key ElementsCommittees should not replicate the staff’s activities. Be clear about what is board work and what is staff work. The most common committees are executive, governance, finance, and audit committees. Not all boards require an executive committee, however. Indicate who can form committees and who nominates the members and committee chairs.Practical Tips Don’t include detailed charters for the committees in the bylaws. Create separate job descriptions that are easy to fine-tune as needed.Sample #1This short statement simply gives the board the power to form committees when needed.The board may, by resolution adopted by a majority of the trustees, establish one or more committees.Sample #2This bylaws clause states which standing committees must be in place and gives the board the power to form others.The board shall appoint the following standing committees: an executive committee, a finance committee, a governance committee, and a development committee. The board may appoint one or more other committees. The executive committee shall consist of the officers of the corporation and have such powers as the board may specify.In addition to the provisions for standing committees, the board of trustees, by resolution approved by a majority of the entire board, may appoint from among the trustees one or more committees, of one or more members (which may include persons who are not trustees, provided that at least one member of each committee shall be a trustee and that any act of any committee which has members which are not trustees shall be advisory, shall not bind the board or the Corporation and shall be subject to board approval)Sample #3This comprehensive policy clarifies the structure and duties of the mittees: In addition to the executive committee, there shall be the following standing committees:Policies and Procedures: The policies and procedures committee shall develop, review, and keep current the policies and procedures for XYZ. Fundraising: The fundraising committee shall investigate and access resources for funding of XYZ.Finance: Oversee the fiscal well-being of the organization.Nominating: The nominating committee shall be responsible for identifying and recruiting members for the board of trustees and developing a slate of officers each year. Special Committees and Task Forces: Special committees and task forces shall be established by the chair on an ad hoc basis to respond to specific needs or issues as deemed necessary. They shall be dissolved when the issues have been appropriately addressed or resolved. Upon such dissolution a formal report of the committee shall be submitted to the board of trustees and maintained in the ABC office.Structure of Committees: Accurate minutes shall be kept of all committee meetings. The minutes shall be distributed to all in attendance and to the chair.All committee chairs, when an issue so warrants, will have the opportunity to report on the committee during each board meeting.An annual report of the committee shall be made by the chair at the annual meeting of the board of trustees.The chairs are further responsible for such duties as outlined in the ABC policies.The Executive Director shall serve as an ex-officio member of each committee.Limits of Authority. Notwithstanding any provision in these bylaws to the contrary, no committee of the board of trustees shallmake, alter or repeal any bylaws clause of the corporation;elect or appoint any officer or trustee, or remove any officer or trustee; amend or repeal any resolution previously adopted by the board of trustees; nortake any action, make any decision, or speak for the board of trustees unless explicitly authorized by the board of trustees.Board of Trustees Authority. The board of trustees, by resolution adopted by a majority of the entire board of trustees, mayfill any vacancy in any standing committee;appoint one or more persons to serve as alternate members of any committee, to act in the absence or disability of members of any such committee with all the powers of such absent or disabled members of a committee;abolish any committee at its pleasure; orremove any members of a committee at any time, with or without pensation. Members of any committee shall not receive any fee, salary or remuneration of any kind for their services to XYZ, provided however, that committee members may be reimbursed for reasonable expenses incurred with approval of the board of trustees upon presentation of vouchers.Suggested Resource BoardSource. The Committee Series. Washington, DC: BoardSource, ernance Committee Job DescriptionsIntroductionA growing trend among nonprofit boards is the establishment of a governance committee that deals with a range of issues around board development and performance. This committee is often responsible for assessing the board’s current composition and identifying needs, developing board member and officer job descriptions, creating a recruitment plan and timeline, identifying and cultivating prospective members, and coordinating officer elections. In addition, the governance committee may be responsible for broader board management issues, such as reviewing board policies, board self-assessment, and a board action plan.Key ElementsThe governance committee is the board’s mechanism for looking after itself. As such, its work is vital to the health of the board and the entire organization. It should ensure that the board is providing leadership and oversight to the organization and that individual board members are carrying out their duties. This committee has evolved from the traditional nominating committee and is sometimes known as the board development committee or committee on trustees. Framing it as a governance committee, rather than a nominating committee, addresses the need to consider recruitment as one critical step in a larger board building process.Many governance committees have the difficult task of deciding how to handle the poor performance of individual board members. This will occur naturally when their terms come up, and it may also happen along the way. Because these are often sensitive issues, they are best handled in this kind of smaller work group setting and with active involvement by the board chair and chief executive.Practical TipsIn the committee charter or job description, define the committee’s role as the coordinating group for overall board performance.In the committee charter or job description, articulate the committee’s coordinating role in board recruitment and, as appropriate, board policies and procedures related to composition. For example, clarify whether board members (and officers) are elected individually or as a slate. Or, consider providing authority for this committee to handle difficult issues related to individual board member performance.Indicate what other aspects of board education fall into the governance committee’s purview, such as officer job descriptions, orientation, educational items on board meeting agendas, and board retreats.The committee may also be charged with addressing board structure and performance, such reviewing the current committee structure, leading the board self-assessment process, and updating bylaws.Sample Governance Committee Job DescriptionsThe sample governance committee descriptions range from short and general to more comprehensive and explicit.Sample #1 This short sample clearly defines the committee’s purpose as recruiting and educating board ernance Committee Job DescriptionThe governance committee is commissioned by and responsible to XYZ board to ensure board effectiveness, maximum participation and performance; to recommend new board members in a timely fashion; to ensure board policies are being observed; to implement board development and growth opportunities throughout the year; to ensure all board members receive orientation; and to annually recommend a slate of officers to the board for approval.Sample #2 This sample articulates the committee purpose and outlines the recruitment ernance Committee Job DescriptionThe primary responsibilities of the governance committee are to identify, recruit, and nominate persons to serve as members and officers of the board and to provide development opportunities for board membership. Identification of well-qualified candidates will result from a carefully planned process designed to obtain influential, knowledgeable, and representative leadership from the organization. The major steps in this process areDetermining what is needed to strengthen the boardPutting together a list of prospective nomineesDeveloping a tentative slate of nomineesRecruiting candidates who are willing to serveDeveloping a final slate of nomineesFor a variety of reasons, vacancies may occur on the board during the period between elections. When these occur, it is the responsibility of the governance committee to recommend a suitable candidate for appointment by the board to fill the vacancy.Sample #3 This charter defines the composition of the committee and assigns the committee responsibility for reviewing individual board member ernance CommitteeThe governance committee shall be composed of __ to __ members of the board, appointed by the chair. The chair may not serve on the governance committee. The governance committee shall elect its chair. The governance committee shall nominate officers and candidates for membership on the board. It shall analyze regularly the performance of members of the board and consult with those not performing adequately. The governance committee shall review the attendance of any board member who misses __ board meetings in one year or otherwise fails to meet requirements established for directors, and make recommendations to the board whether such board member shall be removed or retained. Further, the governance committee shall be responsible for board members’ training, orientation, and recognition on a regular annual schedule.Sample #4 This more comprehensive job description outlines five areas of responsibility related to board ernance Committee Job DescriptionThe governance committee is responsible for ongoing review and recommendations to enhance the quality and future viability of the board. The focus of the committee revolves around the following five major areas:1. Board Role and ResponsibilitiesLeads the board in regularly reviewing and updating the board’s statement of its role and areas of responsibility, and the expectations of individual board membersAssists the board in periodically updating and clarifying the primary areas of focus for the board — the board’s agenda for the next year or two, based on the strategic plan2. Board CompositionLeads in assessing current and anticipated needs for board composition, determining the board’s knowledge, attributes, skills, abilities, influence, and access the board will need to consider in order to accomplish future work of the boardDevelops a profile of the board as it should evolve over timeIdentifies and presents potential board member candidates and explores with each candidate his or her interest and availability in board serviceNominates individuals to be elected as directors of the boardIn cooperation with the board chair, meets annually with each board member to assess his or her continuing interest in board membership and term of service. Works with each board member to identify the appropriate role he or she might assume on behalf of the organization.3. Board KnowledgeDesigns and oversees a process of board orientation, including information prior to election as a board member and information needed during the first cycle of board activity for new board membersDesigns and implements an ongoing program of board information and education for all board members4. Board EffectivenessLeads the periodic assessment of the board’s performance; proposes, as appropriate, changes in board structure, roles, and responsibilitiesProvides ongoing counsel to the board chair and other board leaders on steps they might take to enhance board effectivenessRegularly reviews the board’s practices regarding member participation, conflict of interest, confidentiality, etc., and suggests improvements as neededPeriodically reviews and updates the board’s policy guidelines and practices5. Board LeadershipTakes the lead in succession planning, taking steps to recruit and prepare for future board leadershipNominates board members for election as board officersSuggested ResourcesLakey, Berit M. The Board Building Cycle: Nine Steps to Finding, Recruiting, and Engaging Nonprofit Board Members. Washington, DC: BoardSource, 2007. Lakey, Berit M., Sandra R. Hughes, and Outi Flynn. Governance Committee. Washington, DC: BoardSource, 2004.Financial Committees Job DescriptionsIntroductionThe financial committees of a nonprofit organization are truly at the heart of the public’s trust. The full board has the ultimate responsibility for and fiduciary obligation to the organization; it also has the authority to delegate specific tasks to a single or multiple financial committees. Common financial committees include finance committees, audit committees, and investment committees. The appropriate committee structure depends on several factors, including organizational size, financial complexity, sources of income, and regulatory oversight.Key ElementsFinance Committee: The finance committee is responsible for monitoring the organization’s overall financial health. Its core duties include overseeing budgeting and financial planning, safeguarding the organization’s assets and reviewing its insurance coverage, reviewing and proposing internal controls and fiscal policies, anticipating financial problems, and ensuring that the board receives accurate and timely financial reports.Audit Committee: When feasible, a separate audit committee provides a nonprofit with better checks and balances. The audit committee’s principal responsibilities are to hire an independent auditor, review the audit report with the auditor, and ensure that appropriate internal controls are in place. This is not a policymaking body; rather, its role is to help the board carry out its fiduciary duties.Investment Committee: For nonprofits with considerable reserves, a separate investment committee offers additional guidance and oversight of the organization’s assets. The committee’s purpose is not to provide professional investment advice and services, but to establish guidelines, hire and evaluate professional advisors, and monitor investment performance.Practical TipsWhen recruiting board members, keep in mind the need for financial proficiency. Not every board member needs to be a financial expert, but each board needs some members with specialized skills and knowledge — such as accounting, taxes, investing, and financial planning — to guide the board’s oversight and to communicate complicated financial issues to the rest of the board.Particularly in the beginning of an organization’s lifecycle, one committee may be responsible for all financial oversight. As the nonprofit’s fiscal activities become more complicated, consider creating separate committees. These specialized committees often require more professional expertise and technical skills from board members.For those organizations with a single financial committee, be sure committee members understand when they are wearing the budget, financial oversight, investment, and audit hats.In the wake of the Sarbanes-Oxley Act of 2002, some state laws require that organizations with certain budget levels have a separate audit committee with independent and financially literate members. Whether the audit committee is established as a standing committee or on an ad hoc basis, it is recommended that its membership be different from that of the finance committee. (See Part I: Ethics and Accountability for information about other Sarbanes-Oxley related policies; also see Part V: Finances and Investments for sample policies related to fiscal oversight.)When an organization has accumulated sizable reserves, manages a significant planned giving program, or has an endowment, create a separate investment committee. For organizations with limited investments, investment oversight is often part of the finance committee’s charge.Sample Financial Committee Job DescriptionsThe included job descriptions — except for the first two — separate the finance, audit, and investment committees and address a variety of duties that range from brief to more specific. Sample #1 This all-purpose list of finance committee responsibilities, especially appropriate for a small organization without staff, includes budgeting, financial reporting, the audit, and investment management.Finance CommitteePrepares yearly budget and oversees organizational financial planning, including the strategic planApproves the allocation of funds and payment of billsEnsures the preparation of accurate, timely financial reports, and reviews such reports with the board to explain budget deviations and make recommendationsReviews internal financial controlsReviews budgets of special projects or committees as appropriateReviews, on an annual basis, the sources of funding for the organizationArranges for an annual audit of the financial operations, reviews audit report with the auditor, and reports the results to the boardRecommends to the board the investment of disposition of funds and reports to the board on a regular basis the conditions of such investmentsSees to the preparation of all tax forms and licenses as required by lawEnsures that the organization is adequately insuredSample #2 This committee job description provides a basic framework for a combined finance and audit committee.Finance and Audit Committee Job DescriptionThe finance and audit committee coordinates the board’s financial oversight responsibilities by recommending policy to the board, interpreting it for the staff, and monitoring its implementation. The committee also provides board oversight of the organization’s financial audit.The finance and audit committee monitors the organization’s financial records; reviews and oversees the creating of accurate, timely, and meaningful financial statements to be presented to the board; reviews the annual budget and recommends it to the full board for approval; monitors budget implementation and financial procedures; reviews internal financial controls; monitors budget assets; monitors compliance with federal, state, and other reporting requirements; reviews the organization’s insurance coverage; and helps the full board understand the organization’s finances.The finance and audit committee also ensures that the organization has an independent audit of its financial statements annually, recommends the independent auditors for full board approval, receives the audit report and any other reports relating to the audit or to the assets and collection management practices of XYZ, and periodically reports the auditor’s findings and recommendations to the board.The finance and audit committee shall consist of not fewer than __ board members. The members of the finance and audit committee shall be elected for __-year terms by the board at the annual meeting. Committee members should have a strong background in accounting, finance, or business. The board treasurer should chair this committee.Sample #3 This short job description separates basic financial oversight duties from audit and investment responsibilities.Finance Committee Job DescriptionThe treasurer of the organization serves as the chair of the finance committee. The committee shall be responsible for the planning, monitoring, and evaluation of the organization’s funding, financial management, facilities, assets, risks, and insurance programs. The committee shall work with the chief executive and the director of finance in developing long-range financial and capital plans; reviewing annual budgets and financial reports; and recommending internal controls and other financial policies to the board. The committee shall perform such other duties as may from time to time be required by the board. Sample #4 This more comprehensive job description defines the role of the finance committee in terms of planning and oversight. Note that it does not involve the board in managing the finances on a daily basis.Finance Committee Job DescriptionThe finance committee is responsible for assisting the board in ensuring the organization is in good fiscal health. The work of the committee revolves around the following six major areas:Ensure that accurate and complete financial records are maintained.Monitor income and expenditures against projections.Review and recommend financial policies to the board, including ensuring adequate internal controls and maintaining financial records in accordance with standard accounting practices.Ensure that accurate, timely, and meaningful financial statements are prepared and presented to the board.Present quarterly or monthly financial statements to the board.Budget and oversee financial planning.Propose for board approval a budget that reflects the organization’s goals and board policies.Ensure that the budget accurately reflects the needs, expenses, and revenue of the organization.Safeguard the organization’s assets.Review proposed new funding for financial implications, recommending approval or disapproval to the board.Ensure that the organization has the proper risk management provisions in place, including appropriate insurance coverage for the organization and for the board.Help the full board understand the organization’s financial affairs.Ensure that the board as a whole is well-informed about the organization’s finances. Take measures to educate the board on areas that need further explanation.Ensure compliance with federal, state, and other requirements related to the organization’s finances.Ensure that the organization maintains adequate insurance coverage.Ensure that the IRS Form 990 or any other forms required by government are filed completely, correctly, and on time.Sample #5 This short committee job description, which assumes a separate audit committee, outlines specific duties of the committee in hiring and working with the auditor.Audit CommitteeThe audit committee ensures that the audit is put out for bid every five years, approves the audit, and serves as the liaison with the audit firm, instructing the firm on issues to monitor and debriefing the board on its reports. The committee, or its delegate, meets annually, in private, with the auditor. The committee meets with the full board and recommends that the board review and approve the annual audit and the annual IRS Form 990. The treasurer chairs this committee.Sample #6 This job description provides a more specific list of responsibilities for a separate audit committee.Audit Committee Job DescriptionResponsibilitiesReviews the adequacy of the organization’s internal control structureReviews the activities, organizational structure, and qualifications of the internal audit function (if applicable)Reviews the scope and approach of the audit proposed by the independent auditorConducts a post-audit review of the financial statements and audit findings, including any significant suggestions for improvements provided to management by the independent auditorReviews the performance of the independent auditorReviews the independent auditor’s fee arrangementsRecommends appointment (or reappointment) of the independent auditorMonitors compliance with the organization’s code of conduct and conflict-of-interest policyReviews, with the organization’s counsel, any legal matters that could have a significant effect on the organization’s financial statementsReviews the findings of any examinations by regulatory agenciesReviews the policies and procedures in effect for the review of executive compensation and benefitsIf necessary, institutes special investigations and, if appropriate, hires special counsel or experts to assistPerforms other oversight functions as requested by the full boardReporting ResponsibilitiesReports to the full boardMaintains lines of communication with management, the independent auditor, and the internal auditorCommittee OrganizationIn the charge, the governing boardEstablishes the committee’s sizeLists qualifications for membershipSuggests frequency of meetingsSample #7 This thorough committee charter describes the role and structure of the audit committee in great detail. It is most suitable for organizations with complex financial systems, revenues from multiple sources, and/or numerous funds to manage.AUDIT COMMITTEE CHARTER — [YEAR]Membership. The audit committee shall consist of at least __ members of the board, none of whom shall be employees of XYZ or receive, directly or indirectly, any consulting, advisory, or other compensatory fees from XYZ. The chair of the committee shall not contemporaneously serve on XYZ’s investment and finance committee. The board may invite nonvoting advisors to attend meetings of the committee, make recommendations, and/or implement procedures and policies under the supervision of the audit committee. No such advisors may be employees of XYZ or receive any consulting, advisory, or other compensatory fee from XYZ. Members should be able to read and understand relevant financial statements. Purposes. To assist the board in its oversight responsibility relating toThe accounting and financial reporting (including Form 990 tax filing) of XYZ, including the integrity of XYZ’s financial statementsXYZ’s financial control and XYZ’s compliance with legal and regulatory requirementsThe outside auditor’s qualifications, independence, and performance Duties and Responsibilities. The duties and responsibilities of the audit committee, in addition to the general tasks and responsibilities that, in its judgment, will contribute most effectively to the purposes of the committee, includeTo be directly responsible for the appointment, compensation, oversight of the work, and termination of XYZ’s independent auditor. The auditor will report to the audit committee, which will receive and consider all required communications from the auditors and will act as liaison with the board. With regard to auditor independenceTo consider at least annually the independence of the outside auditor, taking into account the auditor’s performance of any non–audit services, and obtain and review a report from the auditor describing any relationships between the auditor and XYZ, the provision of non–audit services, or any other relationships that may adversely affect the independence of the auditorNon–audit services should not be provided to XYZ by the auditor without committee approvalIf XYZ’s [senior financial staff member] worked for the audit firm on XYZ’s audit within the last year, the auditor will not be considered independentWithout regard to performance of the auditor, to review every five years the desirability of changing audit firms, and require, in any event, that the lead engagement partner be changed at least every eight years, with the understanding that the prior engagement partner can be reinstated after two yearsWith regard to XYZ’s financial statements To review and discuss with management and the auditor the audited financial statements of XYZ including, among other things The auditor’s judgment as to the quality of XYZ’s accounting principles and underlying estimates, including significant financial reporting issues or adjustments and judgments made in connection with the preparation of the financial statements All critical accounting policies and practices used within XYZ and any discussions with management about such policies and practices Any schedules of unadjusted differences from the auditThe timeliness and quality of initial drafts of financial statements The continued appropriateness of accounting principles or practices and their consistency with nonprofit and foundation normsManagement representation letters and other substantive correspondence between management and the auditorTo report to the board the completion of the review of the annual financial statements and any related significant discussionWhile the committee has the responsibilities and powers set forth in this charter, it is not the committee’s duty to plan or conduct audits or to determine that XYZ’s financial statements are complete, accurate, and in accordance with generally accepted accounting principles. Management is responsible for the preparation, presentation, and integrity of XYZ’s financial statements and for the appropriateness of the accounting principles and reporting policies used by XYZ. The independent auditors are responsible for auditing XYZ’s financial statements. With regard to internal controls, to review periodically with management and, if deemed necessary, with the auditors, the adequacy and effectiveness of XYZ’s internal controls, including any significant deficiencies in internal controls and significant changes in such controls reported to the committee by the auditor or management. To receive and consider communications from the auditors as to Any serious difficulties encountered in dealing with management affecting the performance of the auditAny instance of fraud or illegal acts of which the independent auditors are aware With regard to regulatory mattersTo review procedures to ensure compliance with tax law pertaining to XYZ’s tax status, including payout requirementsTo review a written communication from the chief executive and [senior financial staff member] that they have reviewed the Form 990 tax filing, confirming that the form does not contain any untrue statements or omit any material facts, that the financial information presented fairly represents XYZ’s financial condition for the period covered, that it was filed in a timely manner, and that they are maintaining internal controls designed to ensure that material information related to XYZ’s tax filing be made known to themTo review a written communication from the chief executive and [senior financial staff member] confirming that they have, to their knowledge, ensured that XYZ has complied in all material respects with the requirements and prohibitions in its governing documents and articles of incorporationTo obtain regular updates from the chief executive and [senior financial staff member] and XYZ’s legal counsel regarding compliance matters (including systems for monitoring compliance with laws and regulations, management’s investigations and follow-up, and findings of any regulatory agency) and verification that all regulatory compliance matters have been considered in the preparation of the financial statementsTo review annually XYZ’s conflict-of-interest policies and make recommendations to the board for change, if appropriate, and to review procedures to ensure compliance with XYZ’s conflict-of-interest policies as well as any violations or exceptions To review and approve a formal confidential process that allows employees to report any inappropriateness within XYZ’s financial management, and that prevents retaliation against employees or others for any such reportsOutside Advisors. The audit committee shall have the authority to retain separate legal counsel or other advisors at XYZ’s expense as appropriate to assist it in the performance of its functions. Meetings. The audit committee shall meet at least twice a year at such times and places as the committee shall determine. The committee shall meet separately in executive session periodically with management and with the independent auditor.Sample #8 This job description lists the basic responsibilities of a separate investment committee.Duties of the Investment CommitteeDraft investment policies for the organization.Hire and oversee performance of a professional investment manager.Set performance goals for the portfolio.Follow closely the markets and their development.Follow new regulations and judicial interpretation of investment-related rules.Plan scenarios for unforeseen situations affecting invested assets.Consider all morally responsible investment concerns.Report to the rest of the board.Sample #9 This concise job description assigns the monitoring and reporting of investments to a separate investment committee and acknowledges the role of outside investment professionals.Investment CommitteeThe investment committee (“committee”) is comprised of the chief financial officer, __ board members, and __ non–board member(s), who serve at the pleasure of the board. It shall be the responsibility of the committee to Supervise the overall implementation of XYZ’s investment policies by XYZ’s executive staff and outside advisorsMonitor and evaluate the investment performance of XYZ’s fundsReport regularly on XYZ investment matters to the boardGrant exceptions as permitted in these policies and recommend changes in approved policy, guidelines, and objectives as neededExecute such other duties as may be delegated by the boardWhenever these policies assign specific tasks to the committee, the policies assume that the actual work will (or may) be performed by XYZ’s chief financial officer or other designated staff members, subject only to the committee’s overall supervision.The committee is specifically authorized to retain one or more investment advisors as well as any administrators, custodians, or other investment service providers required for the proper management of XYZ’s funds. The committee may utilize an advisor as an investment consultant to advise and assist the committee in the discharge of its duties and responsibilities. In that regard, the advisor may help the committee toDevelop and maintain investment policy, asset allocation strategies, risk-based fund objectives, and appropriate investment management structuresSelect, monitor, and evaluate investment advisors and/or investment entitiesProvide and/or review quarterly performance measurement reports and assist the committee in interpreting the resultsReview portfolios and recommend actions, as needed, to maintain proper asset allocations and investment strategies for the objectives of each fundExecute such other duties as may be mutually agreed uponIn discharging this authority, the committee can act in the place and stead of the board and may receive reports from, pay compensation to, enter into agreements with, and delegate discretionary investment authority to such advisors. When delegating discretionary investment authority to one or more advisors, the committee will establish and follow appropriate procedures for selecting such advisors and for conveying to each the scope of their authority, the organization’s expectations, and the requirement of full compliance with XYZ’s investment policies.Suggested ResourcesFry, Robert P. Who’s Minding the Money: An Investment Guide for Nonprofit Board Members, Second Edition. Washington, DC: BoardSource, 2009.McLaughlin, Thomas A. Financial Committees. Washington, DC: BoardSource, 2004.Development Committee Job DescriptionsIntroductionThe development committee is often charged with planning and implementing the organization’s fundraising program in concert with the professional staff. The development committee follows the basic premise of other board committees: to establish policies for decision making, to engage the board in developing strategy, and to monitor implementation. In addition, development committees often get involved directly in implementation — in this case, making personal contributions, soliciting funds, opening doors to other potential individual and institutional donors, and coordinating special events.Key ElementsNonprofit organizations often have a preferred term for development — from resource development to fundraising to advancement — that reflects nuances in their approach to activities that generate non-fee-for-service income for the organization.A development committee ensures that appropriate fundraising policies exist and defines the role of individual board members in fundraising. Some development committees may also undertake the task of training fellow board members on the essentials of fundraising.Some individual and institutional donors are most effectively cultivated by a peer or professional contact. The development committee can often gain access or initiate contact more readily than staff to such prospective donors.The development committee (and in turn, board members) work closely with staff. Committee composition may include non-board members, ranging from staff to volunteers. Regardless, all board members should be directly involved in fundraising (See Part VI, Section 1 for more information on the board’s role in fundraising).Practical TipsThe organization’s mix of income sources and its development plan should guide the board in determining if it needs a development committee and, if so, the scope of its activities and who should be involved in them.Because fundraising is an organization-wide effort that requires board leadership, staff planning and execution, and considerable volunteer effort, be sure to clarify whether the development committee is a board-level committee or an organization-wide committee (or both).Depending on the scope of the organization’s fundraising program, consider forming subcommittees that are responsible for the various kinds of activities appropriate for the organization, such as capital campaigns, special events, or planned giving.Sample Development Committee Job DescriptionsDevelopment committees, in particular, need clear charges that are customized to an organization’s circumstances. The sample committee job descriptions, while all relatively straightforward, provide for a range of different ways for the board to delegate responsibility for fundraising oversight and implementation.Sample #1 This charge to the development committee provides a broad framework for board oversight and involvement in fundraising activities.Charge to the Development CommitteeThe role of the development committee is to ensure that the organization’s total development program is in concert with the organization’s strategic direction and needs. The committee serves as the mechanism by which board members and other volunteers are involved in the fundraising process. The development committee is charged with focusing the organization and its board on fundraising. This includes constant attention to the strength of the mission and case for support, the organization’s accountability, the involvement of constituencies with the institution, the resources required to carry out the mission, plans for cultivating and soliciting the needed private funds, fundraising involvement, and demonstration of good stewardship.Sample #2 This job description frames the committee’s work as engaging individual board members in fundraising activities at different levels.Fundraising Committee Job DescriptionThe fundraising committee leads the board’s participation in resource development and fundraising. The committee is the board’s central source of information about the fundraising climate in general, and about the status of the organization’s fundraising activities in particular. The committeeWorks with the staff to develop the organization’s fundraising planDevelops policies, plans, procedures, and schedules for board involvement in fundraisingHelps educate directors about the organization’s program plans and the resources needed to realize those plansFamiliarizes directors with fundraising skills and techniques so that they are comfortable with soliciting contributions on behalf of their organizationSets minimum guidelines for directors’ contributions and then solicits those contributionsPlays a strong role in identifying, cultivating, and approaching major donors (individual and planned gifts, foundation, and corporate)Prior fundraising skills and experience or a desire to develop such are important qualifications.Sample #3This committee job description establishes two development committees. The first committee, comprised of board members only, focuses on fundraising policies and board member participation in fundraising activities. The second committee, which is not accountable to or representative of the board, enlists other stakeholders in fundraising.Charge to the Development Committee of the BoardThe development committee ensures that the organization has appropriate policies and guidelines for accepting gifts and donor solicitation. Its role is to encourage individual board members to participate in fundraising activities. It works closely with the development staff to build board members’ capacities and to identify suitable involvement opportunities. All members of the development committee should also be members of the larger organizational development committee. There may be a special working group within such a committee that works to mobilize board involvement around a capital or special campaign.Charge to the Organizational Development CommitteeThe organizational development committee serves as a tool for the development staff to implement the fundraising plan. The committee gets actively involved in the various fundraising programs that the staff has outlined and organized. The organizational development committee consists of key board members, other volunteers, donors, and development staff (key program staff also help plan and implement the development program). Responsibilities will include direct involvement in fundraising.Sample #4This list of general development committee responsibilities outlines the various ways the committee provides fundraising guidance and support to the organization, the board, and staff.Development Committee Job DescriptionThe development committee works with the board chair, the chief executive, the chief development officer, and other development staff to provide valuable input for developing the fundraising plan and engaging the entire board in fundraising. The committee’s responsibilities include the following:Ensuring that the case for support is strong, current, and based on the organization’s mission and goals; and distinguishes the organization from others in the fieldHelping to develop policies for board and staff action related to gift solicitation and recognitionDeveloping expectations for financial contributions from the board, and providing leadership by making their own gifts (both outright and planned gifts)Helping to educate the board about environmental factors affecting fundraising among the organization’s constituencies (e.g., current events, other organizations’ activities, economic factors)Involving and motivating other board members and volunteers in cultivation and solicitation of giftsHelping to develop strategies for involvement and cultivation of major gift prospects (i.e., individual, foundation, and corporate)Helping to evaluate potential prospects for increased contributionsSoliciting gifts at levels required for annual, special, and planned giving programs Participating actively in special events and providing leadership for capital campaignsDeveloping and signing solicitation and acknowledgment lettersProviding access for staff to new major gift prospectsSample #5This list addresses the development committee’s responsibilities for a particular type of fundraising — major gifts — and it serves as a model for clarifying committee and/or board responsibilities for other specific types of fundraising activities.The Development Committee’s Responsibilities to Major GiftsIn concert with development staff:Identification: Members assist in identifying potential major gift donors based on their own personal knowledge of linkage, ability, and interest.Qualification: Members assist the organization in determining how likely a prospective donor might be to make a major gift and at what level.Development of Strategy: Members help determine specific strategies for potential major donors based on their knowledge of the prospective donor level of engagement and interests.Cultivation: Members assist in efforts to involve prospective donors more closely with the organization, inform them of potential projects, and determine approaches for solicitation.Solicitation and Negotiation: Members join soliciting teams to make personal calls with other volunteers or organizational representatives to ask for major gifts and negotiate for gift amounts and terms.Acknowledgment: Members express gratitude directly to those donors whom they have solicited.Stewardship: Members make certain that major gifts are used for intended purposes and report to major donors on the impact of their gift.Renewal: Members should support staff in determining when it might be appropriate to approach a major donor for another major gift and essentially begin the eight-step process again.Adapted From The Center on Philanthropy at Indiana University ? The Fund Raising School, 2003.Sample #6 This committee charge addresses some of the unique resource development issues related to associations.Fundraising Committee ChargeAdvise the board on fundraising goals and priorities that support the association’s strategic plan and financial plan, and obtain fiscal and other support for them. Develop relationships between the association and the commercial and private sectors, and to obtain fiscal and other support from them for association programs and activities. Develop a coordinated divisional fundraising plan that encompasses the activities and goals of the budget and finance, membership, and program committees. Develop a recognition program for vendors and individuals who contribute to the association cash, in-kind, and other gifts. Develop procedures for working with the association office for coordination of these activities.Plan and monitor activities using the association’s strategic plan as a framework.Suggested ResourcesTempel, Eugene R. Development Committee. Washington, DC: BoardSource, 2004.Sternberg, Dave, Fearless Fundraising for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2008.Executive Committee Job DescriptionsIntroductionThe structure and function of executive committees have begun to change to avoid having the executive committee as the board’s “inner circle.” Some executive committees are empowered only to stand in for the board and make decisions when the board cannot meet. Other executive committees have broader duties, such as policy development, evaluating the chief executive, or strategic planning. Still others have simplified their responsibilities to dealing only with emergency concerns and issues that pertain to the employment and performance of the chief executive. Regardless of the executive committee’s particular job description, it is important for the board to understand that the executive committee is not, ever, intended to take the place of the full board and that most decisions made by the executive committee should be ratified by the board. More and more boards realize that in today’s world, with easy and quick e-mail and cell phone access, many urgent issues that a traditional executive committee would handle are now handled by the full board through electronic communication and ratification at the next board meeting. Key ElementsLimitations on the authority of the executive committee are listed in the bylaws. Usually, an executive committee is precluded from making key organizational decisions, such as amending bylaws, removing board members, firing the chief executive, and approving major changes to the organization’s structure (such as a merger).Executive committees are commonly used to guide and assist large boards, make decisions for the board in the case of an emergency, help coordinate the work of a board with a complicated committee structure, assist work of a geographically dispersed board, and facilitate the chief executive’s access to the board. The job description should establish who is on the executive committee. Often it is comprised of board officers, committee chairs, and sometimes a few other “at large” board members.The job description should define the true purpose of the executive committee. It should also clearly define the circumstances that constitute an unmitigated emergency and when the board is unable or has no need to convene. The purpose of this clarification is to eliminate decisions that the committee makes when an issue is better handled by the full board.If the executive committee is responsible for certain board leadership tasks, they should be clearly defined. The ability of the executive committee to act on behalf of the organization without full board approval should be carefully delineated. Such special tasks may include the chief executive’s performance review, board self-assessment, and/or serving as the court of appeal. Note that some organizations delegate these tasks to other ad hoc or standing committees.Practical TipsWhile many boards find the committee to be useful, emerging trends in nonprofit governance lean towards the elimination of an executive committee, opting for a more informal leadership group of board officers with meetings on an as-needed basis. Each board must decide for itself whether an executive committee is the right thing. Remember, however, that the only credible reason to form an executive committee is to help the board do its job, which is to make sure the organization accomplishes its mission within a legal and ethical framework.Periodically, review the performance of the executive committee specifically to determine whether it is an asset or a liability to the organization. This determination depends upon a variety of factors, including the rationale that brought the committee about in the first place, the clarity of its duties and guidelines of conduct, its structure, and how well it keeps the board — its boss — in the loop.Sample Executive Committee Job DescriptionsThe committee job descriptions delegate varying degrees of authority and different kinds of activities to the executive committee.Sample #1 This brief list allows the executive committee to act on behalf of the board in emergencies.Reviews and understands the board’s guidelines on what constitutes an emergencyMeets when an emergency situation demands rapid reaction from the board and it is impossible to convene the full boardActs as the legal representative for the board during emergenciesMakes decisions for the board during an emergencyNotifies the rest of the board of the emergency as soon as possible and informs the board of the committee’s actions and decisionsSample #2 This brief sample defines the executive committee as a sounding board for the chief executive.●The committee participates in a conference call with the chief executive the first Monday of each month.Members remain available individually to communicate with the chief executive if he or she so requests.The committee serves as the primary support and sounding board for the chief executive during normal business and crisis moments.Sample #3 This job description, which is best suited to an organization with few other committees, delegates certain organizational oversight responsibilities to the executive committee.Executive Committee Job DescriptionParticipates in selection, supervision, and evaluation of the chief executive.Approves and/or assists in long-range planning.Reviews the financial status of the organization and progress towards goals, biannually.Establishes procedures for maximum utilization of board member potential, includingEvaluation of board functionsYearly evaluation of board members according to job descriptionReview of each board’s member’s activity and participationBoard development and educationRecommends new board members.Sample #4 This job description establishes the limits to the authority of the executive committee.Executive Committee Job DescriptionThe executive committee shall consist of the officers of the board and the chairs of all standing committees. The executive committee shall meet upon request of the board chair for the purpose of performing business, and may meet as often as necessary. The executive committee may exercise all the powers and authority of the board in the management of the business and affairs of XYZ between board meetings. The executive committee shall not have power to amend XYZ’s charter, bylaws, or to fill vacancies on XYZ’s board. The executive committee shall perform such other duties as may from time to time be delegated to it by the board.All action by the executive committee shall be reported at the next board meeting, except as the board may waive compliance with the requirement. The board may reconsider any action by the executive committee, and take action thereon, provided that no such reconsideration shall adversely affect the rights of third parties who have acted in reliance on action of the executive committee taken in accordance with the authority of these bylaws.A simple majority of the voting members of the executive committee shall constitute a quorum of that committee.Members of the executive committee may submit their votes on issues being considered by the executive committee either in person, by facsimile, transmissions or by electronic mail (to the extent permitted by state law).Sample #5 This charter provides a detailed job description defining the executive committee as supporting the board and as liaison to the chief executive.EXECUTIVE COMMITTEE CHARTERChargeThe executive committee is responsible for working in support of, or occasionally in place of, the full board. Scope of Authority and Lines of AccountabilityThe executive committee serves at the pleasure of the XYZ board chair and full board. Its chair is XYZ’s board chair. The committee shall consist of the elected officers (i.e., board chair, chair-elect, immediate past chair, secretary-treasurer, secretary-treasurer-elect) and chairs of the finance, governance, membership coordinating, and professional development coordinating committees. The chief executive shall serve on the committee without a vote. The committee chair is the chair of the board, who serves a two-year term to correspond with the 2-year term as board chair. Committee members serve during their tenure as officers and chairs of the finance, governance, membership coordinating, and professional development coordinating committees. The chair is responsible to report to the board all plans, activities, and accomplishments of the committee, in accordance with the following duties and responsibilities, and to formulate and recommend actions by the full board prior to implementation.Duties of the Executive CommitteeThe work of the committee revolves around five major areas:Perform policy work.Carry out specific directions of the board, and take action on policies when they affect the work of the executive committee or when the full board directs the committee to do so.Act on behalf of the board on all issues related to XYZ business between board meetings, with responsibility to report actions to the board for ratification or further board action at the next meeting.Act as liaison to the chief executive.Nurture the chief executive by providing counsel, feedback, and support when needed.Plan and conduct annual assessment of the chief executive and report the results of the assessment to the board and chief executive.Review compensation and benefits for the chief executive.Coordinate the development of a strategic planning process.Initiate the board’s involvement in establishing a strategic framework or direction.Approve and/or assist in long-range planning.Review XYZ annual performance plan focusing on progress made, or the lack thereof, in accomplishing goals on a semi-annual basis and reporting to the board as warranted.Conduct executive searches.Assume the lead in the search for a new chief executive or delegate the responsibility to a task force.Conduct the research necessary to determine an appropriate salary for the chief executive.Seek approval from the full board before terminating an existing chief executive or hiring a new chief executiveHandle urgent issues.Resolve an emergency or organizational crisis (e.g., loss of funding or unexpected loss of chief executive).Suggested ResourcesBoardSource. Nonprofit Board Answer Book: Practical Guide for Board Members and Chief Executives, Third Edition. San Francisco: Jossey-Bass, 2012. Bobowick, Marla J., Sandra R. Hughes, and Berit M. Lakey. Transforming Board Structure: Strategies for Committees and Task Forces. Washington, DC: BoardSource, 2004.Light, Mark. Executive Committee. Washington, DC: BoardSource, 2004.Job Descriptions for Other Common Committees IntroductionIn reviewing the work needed to accomplish the organization’s strategic goals and prepare for a healthy future, a board might need additional committees. Some might be standing committees, but more often these are ad hoc committees or temporary task forces. Their activities may be to carry out the board’s leadership and oversight duties, or to provide additional support and resources to the organization at more of a staff or volunteer level. Some of the common additional committees are compensation, strategic planning, and public relations. Additionally, associations often have membership committees, and foundations often have grantmaking committees.Key ElementsCompensation: Boards that are too large and unwieldy to manage the compensation process as a group may delegate oversight of the chief executive’s compensation to a special committee or task force. A smaller committee can devote its attention as needed to the often detailed process of managing compensation matters. Some compensation committees also review other staff compensation levels, set annual performance objectives with the chief executive, and facilitate the chief executive’s performance review.Strategic Planning: Strategic planning is usually a periodic activity that requires participation by board and senior staff members. The board’s role is to establish strategic direction, and the staff’s role is to flesh out goals and create a plan that will guide the organization for the next several years. A strategic planning committee or task force can help ensure that the planning process is well structured, involves the right people at the right time, and integrates all aspects of the organization. Often, a temporary committee will guide the planning process through the approval stage and put mechanisms in place for the full board to monitor progress against the munications and Public Relations: While communications and public relations are primarily staff-driven functions, board members often get involved at two levels: oversight and direct support. Board members, because of their personal and professional relationships, can be helpful in leading and supporting outreach activities. A designated committee may help develop, implement, and oversee a public relations plan; suggest strategies for how best to communicate with media and community leaders; recommend ways to involve individual board members in communication efforts; and help the board monitor its reputation.Membership: Many associations use a membership committee to engage board members in recruiting and retaining members. For associations with dedicated membership staff, a committee can help shape strategy and monitor progress for the membership program. For smaller associations with few or no staff, the board may also play an active role in defining membership criteria and benefits of membership, and recruiting new members. Grantmaking: Grantmaking committees are specific to private and community foundations that annually distribute part of their assets to public charities whose work the foundation elects to support. Particularly in smaller foundations with no or few staff members, these committees often consist of board members who meet on scheduled dates to select and approve recipients of funds. These committees follow overall grantmaking guidelines approved by the board and that reflect the mission of the foundation.Practical TipsBylaws often define standing committees (usually governance and finance and/or audit at a minimum), but should allow for the board to create additional committees and task forces as needs arise. This flexibility helps eliminate unnecessary amendments to the bylaws when a committee is formed or disbanded, or its charter is changed.As the role of the committees is to help the board get its work done more efficiently, each board should determine carefully what committees might be necessary or practical. To avoid creating unnecessary standing committees, use ad hoc task forces to address a particular need.Sample Job Descriptions for Other Common CommitteesThe sample committee charters cover functions that some boards delegate to a specific standing committee or ad hoc work group (such as compensation, strategic planning, and communications), and oversight of key program areas unique to associations (membership) and foundations (grantmaking).Sample #1 This sample states who serves on the compensation committee and gives the committee the task to evaluate the performance of the chief PENSATION COMMITTEE CHARTERPurposeThe compensation committee shall assist the board in fulfilling its oversight responsibilities relating to the compensation and benefits of the chief executive and other executive officers; and shall provide recommendations regarding management successors. MembershipThe committee shall be composed of __ or more independent board members appointed annually by the board. The board shall designate the committee chair.MeetingsThe committee shall meet twice annually, or more frequently as it shall determine is necessary to carry out is duties and responsibilities. The chair will schedule regular meetings; additional meetings may be held at the request of __ or more members of the Committee, the chief executive, or the board chair. Duties and ResponsibilitiesIn carrying out its oversight responsibilities, the committee shallDevelop a compensation philosophy and compensation policies for approval by the board.Review and recommend XYZ’s goals and objectives relevant to the compensation of the chief executive and other executive officers for approval by the board. Annually evaluate the chief executive’s performance in light of these goals and objectives, and make a recommendation to the board with respect to the chief executive’s compensation.Annually review with the chief executive the performance goals and objectives for all executive officers, and review and recommend for approval by the board the salaries of the other senior managers.Annually review the staff salaries with the chief executive to ensure that such salaries are appropriate and consistent with published compensation surveys or reports prepared for the committee by outside consultants. Review all proposed employment contracts and severance agreements with the chief executive and other senior managers and make recommendations for approval by the board.Oversee the administration of XYZ’s compensation and benefits program, including a review of deferred compensation of current and former senior managers.In consultation with the governance committee, develop succession plans for the positions of chief executive and other executive officers, and submit such plans to the board for approval. The committee and the governance committee shall share responsibility for conducting a search for candidates, evaluating potential successors, and making recommendations to the board. The committee and the governance committee are jointly authorized to engage a professional search firm. In consultation with the governance committee, review XYZ’s succession plans annually and jointly recommend to the board revisions as needed.Report regularly to the board on the committee’s activities and actions, as appropriate. The committee will maintain minutes of meetings and report to the board the results of committee meetings.Annually review the committee’s own performance, and report the results of such review to the board.Annually review and reassess the adequacy of this charter and recommend any proposed changes to the board for approval.Perform such other duties required by law or otherwise as are necessary or appropriate to further the committee’s purposes, or as the board may from time to time assign to it.This charter of the compensation committee for the National Association of Corporate Directors appears on their website. Reprinted with permission. Washington, DC: . Sample #2This job description outlines the overall responsibilities and structure of the compensation PENSATION COMMITTEE CHARTERCompensation Committee PurposeThe compensation committee (the “committee”) is established to discharge the board’s responsibilities regarding defining the overall compensation strategy for, and establishing compensation of executives of, XYZ consistent with its mission and values and applicable legal and regulatory requirements. The committee is created by resolution of the board. MembershipThe committee shall be composed of at least __ members. At least __ members shall also be members of the committee on the board. If the board chair is not a member of the committee, the chair shall attend committee meetings and vote on committee actions. The chief executive shall not be a member of the committee. Authority and ResponsibilitiesThe board grants the committee authority and responsibility toReview and approve XYZ’s compensation strategy to ensure consistency with its mission and values and applicable legal and regulatory requirements. Determine the chief executive’s compensation levels. The committee will consider, as the committee deems appropriate, performance and personnel evaluations, past compensation, comparable compensation at peer and other relevant institutions, general market conditions, and legal requirements. Approve the compensation of the chief financial officer and the senior vice president for program, considering, as the committee deems appropriate, the criteria outlined in item 2 above. Review the administration and any investments of XYZ’s compensation and benefits programs, as well as important and/or unusual employment/severance agreement provisions or other contractual arrangements, for other senior management to ensure such programs support the established compensation strategy. Approve the retention/removal of any service providers, investment consultants, or trustees. Recommend to the board the adoption of any new, or amendment of any existing, programs or arrangements. Review benchmark information provided by outside consultants to ensure that compensation is reasonable and appropriate. The committee shall have sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of the chief executive or other senior executive compensation and shall have sole authority to approve the consultant’s fees and other retention terms. The committee shall also have authority to obtain advice and assistance from internal or external legal, accounting, or other advisors. XYZ will provide the committee with appropriate funding to exercise its authority to retain consultants of advisors. Report to the board on committee activities and compensation information. Conduct an annual performance self-assessment review, including the adequacy of the committee charter, and recommend any changes to the board. Ensure basic information such as the Form 990 is provided to the board and is available to the public through appropriate means. Operations of the CommitteeThe committee chair, who shall be nominated by the committee and elected by the board and who shall be a board member, shall preside at all meetings. Meetings may be in person or telephonic and the chair shall present any findings or recommendations to the board. The committee shall meet annually and more often as needed. The committee shall have the authority to delegate to subcommittees and to XYZ staff. A quorum shall consist of a majority of the members. Minutes and/or a memorandum summarizing the discussion and decisions taken at each committee meeting shall be filed with the corporate records.Sample #3In addition to listing the overall responsibilities and structure of the compensation committee, this charter defines what constitutes total compensation.XYZ COMPENSATION COMMITTEE CHARTERPurpose of CommitteeThe compensation committee (the “committee”) discharges the duty of the board in fulfilling the board’s oversight responsibilities for determining the adequacy and reasonableness of the compensation and benefits paid to the chief executive and other employees or individuals associated with mittee MembershipThe committee is composed of the board chair (who chairs the committee) and between __ and __ independent members of the board, nominated by the board chair and approved by the board; board members receive no compensation, fees, or other benefits from XYZ. Directors who are associated with institutions that receive research grants pursuant to XYZ’s various independent committees are not disqualified from committee membership. Any disputed question regarding independence should be referred to the board for final resolution. Committee Authority and ResponsibilityThe Committee shallConduct an annual review of the chief executive’s performance and of his or her compensation and benefits in relation to the marketplace; decide on any changes in the chief executive’s compensation and/or benefits (including retirement benefits or issues relating to retirement) or in his or her employment agreement; review and comment on the chief executive’s annual performance goals; in its discretion, appoint a volunteer operations coordinator and/or a volunteer compensation advisor (neither person to have voting powers); establish the chief executive’s annual incentive plan goals, determine the measures and levels of performance for each goal, and determine what incentive plan bonus, if any, is payable each year; and annually report to the board with respect to foregoing. Identify XYZ’s disqualified persons and annually report the identity of those persons to the board. Review and approve recommendations of the chief executive for the terms of employment and total compensation of all disqualified persons. This includes incentives, benefits, and perquisites normally only available to executives. Specifically, the committee shall review and approve base salary ranges and participation and benefit levels associated with all forms of compensation. This includes, for example, approving eligibility for incentive compensation plan participation and potential incentive compensation levels; employment, severance, and retention agreements; and participation and benefit levels associated with supplemental retirement plans. The chief executive is empowered to set the compensation within the salary ranges determined and fiscal constraints imposed by the committee. The committee shall modify or terminate any program or direct the chief executive to alter or reduce a benefit level provided to a disqualified person if the committee determines that program or benefit is no longer necessary or not in the best interests of XYZ. Consider all benefits provided by XYZ to the chief executive and other disqualified persons when determining the reasonableness of the compensation and benefits.Document in a written report within [30] days of making its determination of reasonableness with respect to the compensation and benefits of disqualified persons: the terms that were approved and the date approved; the members of the committee present during the discussion and those who voted; the comparability data obtained and relied upon by the committee and how the data were obtained; and any actions taken with respect to the determination by anyone who is otherwise a member of the committee but who had a conflict of interest. The report must be approved by the committee as reasonably accurate and complete within a reasonable time thereafter and forwarded to the board for this information.Monitor XYZ’s engagement of outside contractors who are or may be disqualified persons and report any material irregularities to the board.Determine whether XYZ’s compensation and benefit plans are appropriate to market for the skills employed, and, if not, make appropriate recommendations to the board.Determine whether XYZ’s retirement annuity, retiree medical, retiree life insurance, and other such plans are properly managed and competitively appropriate to market and, if not, make appropriate recommendations to the board.At least annually report its activities and decisions to the mittee MeetingsThe committee will meet as often as it deems necessary or appropriate, either in person or telephonically or electronically, and at such times, places, and manner as its chair may determine. The chair shall prepare or approve an agenda in advance of each meeting. The committee should meet in separate executive sessions at least annually with management and any attorney, accountants, or compensation consultants it employs and, as a committee, discuss any matter that the committee or any of those persons believes should be mittee EvaluationThe committee will conduct an annual performance evaluation, which evaluates the performance of the committee in relation to the requirements of this charter and such other matters as the committee may deem appropriate. Such annual performance evaluation shall be presented to the board annually. The performance evaluation should include any recommended changes to this charter deemed necessary or advisable by the committee. The performance evaluation by the committee shall be conducted in such manner as the committee deems appropriate.Resources and Authority of the CommitteeThe committee shall have the resources and authority it deems appropriate to discharge its duties and responsibilities, including the sole authority to select, retain, terminate, and approve the fees and other retention terms of special or independent counsel, or other experts or consultants relating to compensation, benefits, or other matters, without seeking approval of the board or management. In carrying out its responsibilities, the committee may rely upon reasoned written opinions of legal counsel and of qualified legal, accounting, compensation, and valuation experts. Legal counsel may be in-house or independent. Sample #4 This basic job description outlines the basic composition, structure, and responsibilities of the strategic planning committee.Strategic Planning Committee CharterName: Strategic planning committeeAuthority: The strategic planning committee is a standing committee of XYZ and serves at its pleasure. The committee has no authority unto itself and must function and communicate through the directors and staff at XYZ.Function: The committee reviews and proposes updates to XYZ strategic plan every __ years as needed.Membership: The committee shall consist of __ to __ members, of which all will be current and former directors of XYZ.Chair: The chair of the committee shall be appointed by the executive committee and ratified by the board.Staff Coordination: The chief executive of XYZ shall serve as staff to the committee.Frequency of Meetings: The committee will meet as needed to review and propose updates of the strategic plan to the board every __ years. Sample #5 This job description defines the purpose and activities of a standing strategic planning committee.Strategic Planning CommitteePurposeThe purpose of the strategic planning committee is to promote, coordinate, and oversee planning across the organization. It will attempt to link XYZ’s programs and services with its mission, markets, and resources. In meeting the challenges of external as well as the internal environment, it will strive to display and foster strategic thinking, timely action, and adequate communication. ChargeAssist the chief executive in formulating, advancing, and communicating a vision for the future of XYZ.Coordinate the work of other groups involved in planning and integrate their products into a coherent set of action plans. Identify strategic issues and options through ongoing analysis of XYZ’s internal strengths and weaknesses in relation to its external opportunities and threats.Prepare and periodically update planning assumptions.Ascertain the need for outside planning expertise and retain consultants as appropriate.Oversee and monitor the implementation of plans to ensure that they are carried out.Promote and evaluate the continuous assessment and benchmarking of planning efforts.Oversee the work of those committees and task forces charged with responsibility for implementing policies related to strategic planning activities.Ensure adequate communication and consultation about planning issues and process with XYZ’s stakeholders.Sample #6 This sample delegates responsibility for providing guidance to and oversight of the organization’s communications activities to a committee of the munications Committee Job DescriptionThe communications committee shall be composed of no fewer than __ board members and, at the discretion of the board, up to __ non–board members. It shall be staffed by the director of communications. The committee is charged with engaging the board in developing and disseminating the organization’s messages. It is responsible forEnsuring adequate resources (e.g., staff, expenses) to implement the organization’s communications planSupporting the staff in implementing the communication plans (e.g., using approved materials in its outreach on behalf of the organization, identifying potential contacts from target audiences)Monitoring and evaluating the quality and effectiveness of the organization’s communications vehicles. Reviewing reports prepared by the staff about the impact of communications activities.Sample #7 This sample is an association public relations committee job description where committee members are association members and the committee reports to the board.Public Relations CommitteeThe public relations committee is composed of __ association members, appointed for overlapping terms of __ years each. The committee shall:Advise and recommend to the board policies, guidelines, and activities reflecting the determined needs of members to be incorporated into the association’s public relations programRepresent the association’s needs by inclusion in strategic decisions and discussions made by the board, national office, and/or public relations firm concerning the marketing and branding of the associationLiaison with chapters, other professional information organizations, and the national office director of communications regarding public relations needs; monitor public awareness needs of chapters(The directors of?public relations and information center are ex officio members of the committee and the association office contacts.) Sample #8 This job description establishes a board committee that is responsible for monitoring public policy and relations with mittee on External RelationsThe external relations committee shall be responsible for reviewing and recommending to the board policies relating to local, state, and federal legislation. It shall work to identify all major local, state, and federal activities affecting XYZ and will report to the board recommended actions that will further XYZ’s mission. The external relations committee shall be responsible for reviewing and recommending to the board policies affecting communications with the media and with the public, including donors, clients, and other stakeholders of XYZ. It shall review and consider programs that advance XYZ’s reputation and further XYZ’s mission.The committee’s responsibilities shall includeIdentifying and responding to legislative issues of interest to XYZBecoming informed about the status of appropriations and education bills in the state legislature and Congress, and analyze the impact on XYZReviewing and analyzing the discussions and actions of the board Developing and effectuating opportunities for XYZ to become more involved in congressional, legislative, and other public advocacy Building positive relationships and maintaining open channels of communication between XYZ and the board, the governor, the legislature, and other public officials and leaders at the local, state, and federal levelsFacilitating networking and collective action on issues of shared interest among peer organizationsReviewing and recommending policies pertaining to the relations between XYZ and its constituentsReviewing and recommending policies pertaining to public relations, branding, advertising, internal and external communications, news and information, and publicationsReviewing and recommending policies pertaining to the relationship of XYZ to the larger communitySample # 9 This charter outlines responsibilities of a membership committee for an association that has a national board and local chapters. Note that members of the committee need not be members of the board.MEMBERSHIP COMMITTEE CHARTERObjectivesThe committee objective is to retain existing members and bring new members into the anizationThe membership committee shall consist of a chair and at least __ and no more than __ additional members. The board chair shall appoint the chair and members of the committee. The chair will attempt to appoint an equal number of members from each state. Each state must be represented by a minimum of one member. The chair-elect may serve as the membership chair.ActivitiesProvide guidance to the association in membership retention and recruitment, and improving member services.Provide guidance to association chapters on effectively using membership recruitment programs.Ensure that lists of members are maintained and that membership directories are periodically updated and distributed.Present a written report at the annual meeting that includes a list of current members by categories and by chapter, the purge list, and a new member list as of December 31 of the previous year.Sample #10 This association committee charter defines what the membership committee will do and how. Note that members of the committee need not be members of the board, except for a designated board liaison.Membership Committee CharterObjectiveTo recruit and retain [industry] professionals as active members of the association.Goals To increase the association’s membership and improve member retention. Measurement of this goal will be based on membership as of December 31 each year. To identify the needs of the membership; ensure that the board is made aware of these needs; and implement, facilitate, and support initiatives to meet these needsMethodsTo reach the above goals, the membership committee will utilize a variety of methods including but not limited to the following:Conducting surveys to determine which services members desireRecommending new or revision of existing servicesReviewing board objectives to ensure that the membership’s wishes have been consideredEstablishing recruitment programs to target [industry] professionalsRecommending other initiatives aimed at increased membershipIdentifying reasons why past members have not renewed their membership (e.g., by analyzing survey results)The committee will submit all recommendations to the mittee MembershipMembers serve on the committee for a minimum of __ years. The committee chair is appointed for a period of __ years. The board will ensure a designated board member will serve as the membership committee liaison. Meetings Meetings will be held monthly via teleconference. Every attempt will be made to hold one face-to-face meeting in conjunction with the annual meeting. Sample #11 This sample gives the membership committee an active role in assessing the value of services provided to members, and recommending elimination or addition of member benefits. MEMBER SERVICES COMMITTEE CHARTERPurposeThe member services committee shall assist the board in fulfilling its oversight responsibilities relating to the scope and quality of XYZ services to the public and to its members, including publications, training, conferences, and educational programs. MembershipThe committee shall be composed of __ or more board members appointed annually by the board. The board shall designate the committee chair.MeetingsThe committee shall meet twice annually or more frequently as it shall determine is necessary to carry out its duties and responsibilities. The chair will schedule regular meetings; additional meetings may be held at the request of __ or more members of the committee, the chief executive, or the board chair. Duties and ResponsibilitiesIn carrying out its oversight responsibilities, the committee shallReview and evaluate the services provided by XYZ. The review should consider quality, pricing, effectiveness, and responsiveness to national and regional needs.Consider and recommend to the board the additions, consolidation, or elimination of existing services to meeting changing and diverse needs. Review and evaluate member relations and recommend opportunities to enhance the value of membership.Timely communicate to the chief executive any positive or negative feedback received from members or the public regarding pricing, content, or delivery of services.Report regularly to the board on the committee’s activities and actions, as appropriate. The committee will maintain minutes of meetings and report to the board the results of committee meetings. Annually review the committee’s own performance, and report the results of such review to the board.Annually review and reassess the adequacy of this charter and recommend any proposed changes to the board for approval. Perform such other duties required by law or otherwise as are necessary or appropriate to further the committee’s purposes, or as the board may from time to time assign to it. This charter of the member services committee for the National Association of Corporate Directors appears on their Web site. Reprinted with permission. Washington, DC: .Sample #12 This grantmaking committee charter for a community foundation clarifies the responsibilities of committee members and addresses conflict-of-interest MUNITY FOUNDATION DISTRIBUTION COMMITTEEAs its name implies, the distribution committee receives and reviews requests for discretionary grants funds from nonprofit organizations serving [community or area served by the foundation]. All proposals demonstrating promise of contributing to the welfare of the residents of this community are given careful consideration by committee members representative of and dedicated to serving XYZ. The foundation continues to receive many more worthy requests than it can support. Committee members must make judgments based on the way in which programs impact XYZ. Many citizens of this community have had their lives improved by the work of the distribution committee members who dedicate generously of their time, wisdom, and talents.Position Description and PoliciesTitle: Distribution committee memberPurpose: To review grant applications thoroughly and make funding recommendations to the XYZ Community Foundation (“foundation”) board. The distribution committee will review grant requests received by the foundation through the program and capital grant cycles. The committee will also direct the initiative grant process as needed.ResponsibilitiesAttend all committee meetings, including the initial orientation session.Review grant proposals and staff summary reports.Evaluate the viability of each proposal.Determine funding recommendations for each proposal to be presented to the board.Identify and inform the board of community needs and service gaps.Develop recommendations to the board for policies and practices deemed necessary and appropriate regarding the foundation’s distribution process.QualificationsBroad awareness of organizations and community needsCommitment to serve the entire termStaff SupportThe director of program and distribution and other staff will be available to answer questions regarding grant proposals, schedule and attend site visits, and prepare grant summary reports.A staff member will be available to take minutes at the meetings.Foundation staff will provide information regarding availability of funds for mittee SizeThe distribution committee will be comprised of no less than __ and no more than __ members. At least __ of these members will be XYZ Community Foundation board members.Term of OfficeBoard members serving on the distribution committee may serve __ consecutive __-year terms as defined by board tenure. Community members serving on the distribution committee may serve a __-year term, renewable one time. To ensure continuity, terms will be staggered.Anyone serving an initial, incomplete term will be eligible to serve __ complete __-year terms in addition to the partial term.ChairThe chair of the distribution committee will be an XYZ Community Foundation board member.Attendance PolicyAttendance is most important. Committee members are expected to make every effort to attend the meetings. If any member is absent for __ of the regular quarterly meetings, within a calendar year, that individual’s appointment to this committee will be reviewed.QuorumNo quorum is necessary for the transaction of business at any meeting of the distribution committee.Conflict of InterestXYZ Community Foundation recognizes that distribution committee members and their immediate families are involved and play an active and vital role in the community. From time to time, potential conflicts of interest may arise for one or more committee members. It is the foundation’s policy to deal with each conflict of interest in as open and appropriate manner as possible.A conflict of interest is defined as significant involvement with institutions or grantees under discussion. “Significant involvement” is defined as: serving as an elected or appointed member of a governing board or major committee; receiving compensation as an employee or consultant; or being related to an individual grantee or to a staff member of a grantee institution. (This includes involvement now or in the past __ years.)For purposes of this policy, immediate family members are defined as the committee member’s spouse and children.Any possible conflicts shall be disclosed before discussion begins. The minutes of the meeting shall reflect this disclosure. After acknowledging the potential conflict, the committee member may briefly address the other members regarding this matter. The committee member may also answer pertinent questions since personal knowledge on the issue may be of assistance to the other members in reaching their decisions. The committee member, however, will abstain from advocating or voting on this issue.Ethics and ConfidentialityAll communications with XYZ Community Foundation from grant seekers regarding grant requests shall be made through the office of the program director. No contact shall be made with individual directors or committee members outside of the site review process.Discussions and deliberations held by the distribution committee members in all foundation meetings shall be confidential. This includes information gleaned from grant applications, site visits, and information provided by staff members.All decisions of the distribution committee are confidential until acted upon by the board.Sample #13 These grantmaking committee expectations provide guidelines for committee members to carefully and objectively review grant applications. We expect members of the grantmaking committee toThoroughly read and understand all the materials in the agenda books.Read all the summaries of pending grant requests, and provide any comments or questions they feel would be helpful to the subcommittee member assigned to review the request.When acting as a subcommittee member, meet all the minimum performance expectations set forth for subcommittee members.Attend all grantmaking committee meetings in person (except in cases of unusual hardship when attendance may be by telephone or appointment of a proxy).Carefully and thoughtfully consider each grant request proposed for funding, and each other matter brought before the grantmaking committee.Actively participate in grantmaking committee discussions and deliberations, and wisely consider each matter on which the committee is asked to vote.Be willing to be a “continual learner” about all matters of importance to philanthropy and to the foundation, and take advantage of learning opportunities offered.Consider all matters brought before the grantmaking committee objectively and “on the merits.”Offer ideas on how to improve the strategies and processes of the grantmaking committee.Be supportive of the decisions of the foundation and its grantmaking committee.Be a team player committed to the work of the foundation.Be willing to compromise, if necessary, in order to foster a cooperative atmosphere for all the people who participate in the work of the foundation.Suggested ResourcesBobowick, Marla J., Sandra R. Hughes, and Berit M. Lakey. Transforming Board Structure: Strategies for Committees and Task Forces. Washington, DC: BoardSource, 2001.Waechter, Susan A. Driving Strategic Planning: A Nonprofit Executive’s Guide, Second Edition. Washington, DC: BoardSource, 2010.Patterson, Sally J. Generate Buzz! Strategic Communication for Nonprofit Boards, Second Edition. Washington, DC: BoardSource, 2011.Vogel, Brian H. and Charles W. Quatt. Nonprofit Executive Compensation: Planning, Performance, and Pay Chief Executive Compensation, Second Edition. Washington, DC: BoardSource, 2010.Council on Foundations American Society of Association Executives Advisory Council Job DescriptionsIntroductionAdvisory councils are groups of volunteers typically assembled to supplement the governance activities carried out by the board or the management tasks carried out by staff. They can perform a variety of jobs — for example, assessing the need for new programs, raising the organization’s profile in the community, gathering input from stakeholders to the organization, monitoring industry or community trends, conducting program evaluations — many of which are central to an organization’s activities. Advisory councils, however, can be difficult to manage well. They have a great deal of responsibility, and little authority. These groups grapple with issues that are central to the organization, yet their membership may well consist of people who have no formal connection with the nonprofit. To ensure their success, advisory councils must be formed with a purpose and with care. And, they must be formed in a way that benefits both the group and the nonprofit it serves.Key ElementsAn advisory council needs to be as large — or as small — as necessary to accomplish its task. It could be five members or 50 members. Fundraising advisory councils might be bigger because a larger size tends to increase an organization’s reach. A group designed to provide technical expertise might be smaller.While advisory councils might not meet as often as governing boards, the number of meetings depends on the purpose of the group. Groups designed to promote special events might meet frequently during the height of planning. Others may meet only once a year, related to a particular event or to consider fiscal year-end reviews.Some advisory councils are ongoing bodies, while others have a limited term of existence defined by their charge. It is helpful to clarify whether the group is permanent or temporary, and if temporary, to fix the period if it can be determined in advance.Advisory councils are not legal bodies and cannot assume responsibility for the governance of an organization. Advisory council members normally have no legal responsibilities. They have no vested right to serve and no immunity from removal.Practical TipsA written statement of purpose helps an advisory council to identify the collective role of the group and to describe the responsibilities of individual members. Define the limits of authority and its role in making recommendations or carrying out specific tasks.The council’s goals should determine its membership, not the other way around. For a group that is designed to highlight a nonprofit’s standing in the community, perhaps an advisory council packed with luminaries is appropriate. For a group that provides technical expertise, the credentials for membership may be quite different. Clarify who appoints the members and whether members have term limits.Form must follow function — or the group will not function well. Issues like council size, composition, term limits, frequency of meetings, and meeting formats should be guided by the purpose of the council.To avoid confusion over which entity has ultimate responsibility and authority, do not call an advisory council a board. Some alternative work group names include: advisory committee, advisory council, auxiliary council, advisory or leadership task force, sponsors or friends of the organization.To recognize the efforts of the advisory council and enhance its validity, establish a formal relationship between it and the governing board. For example: designate a permanent advisory council member to serve as a liaison with the board, invite advisory council members to attend a particular board meeting, and/or include advisory council members in board/staff retreats and other special events.Sample Advisory Council Job DescriptionsThe advisory council job descriptions begin with statements of generic purpose, and then provide more detailed examples that reflect specific purposes: professional development, community engagement, and fundraising.Sample #1 This basic advisory council is designed to engage leaders in the community as volunteers to advance the organization’s mission and goals. Although it mentions specific qualifications, the wording is easily modified to suit any type of organization.Advisory Council CharterXYZ advisory council is formed under Section __ of the bylaws. The advisory council is to be comprised of outstanding persons in [education, research, community action, philanthropy], and/or persons who possess the technical or professional skills needed by the board. It is to consist of no more than __ times the number of persons on the board. Advisory council members will be invited to serve for __ years.The functions of the advisory council areAssisting the board with the promotion and accomplishment of XYZ objectivesAdvising and assisting with ___, ___, and ___ elements of our mission Sample #2 This general job description establishes an advisory council for an association that wishes to engage its members in industry-specific issues.Advisory CouncilsXYZ may establish advisory councils that directly reflect its mission and goals. Advisory councils promote opportunities for members to network and to address and influence significant issues in the profession of [education, ongoing profession educator workforce development, and the use of technology in education].All XYZ members are eligible to participate in one or more advisory councils. Each advisory council is led by a __-member executive committee, elected by XYZ membership, and tasked with linking the work of that council with XYZ’s board. Members volunteer to work on task forces to accomplish specific, time-limited projects.Sample #3 This charter defines an advisory council that is designed to serve as a link between the organization and a variety of key stakeholders.Advisory Council CharterXYZ Advisory Council’s RoleThe advisory council will consist of a diverse array of stakeholders and will provide broad vision and guidance to the steering committee and XYZ staff. The advisory council will be a key link for XYZ to stakeholder needs and priorities for XYZ programs. Moreover, the advisory council will be an important avenue for XYZ outreach. Advisory council members will provide marketing and awareness of XYZ to their own constituencies and beyond. Finally, the advisory council will afford its members the opportunity to communicate with and learn from each other.Time CommitmentThe advisory council will meet approximately [once] per year over the course of this project, with the first meeting to be held in [City, State], on [Date]. Meeting expenses, including travel and lodging will be paid by XYZ. Between meetings, members will receive periodical updates from XYZ staff and will have the opportunity to participate in electronic discussion on the Internet.Responsibilities of Advisory Council MembersAdvisory council members are expected to represent their own stakeholder group. Perhaps the simplest part of this expectation entails attending and participating in the council meetings. At each meeting, council members will be expected to review and critique XYZ performance based on progress reports supplied prior to the meeting.Advisory council members need to communicate with those they represent on XYZ issues and questions. For instance, suppose a particular council member represents [ABC] group. That person is expected to discuss XYZ issues and questions with [ABC] group and to carry the group’s perspective to council meetings and discussions. The representative is also expected to share advisory council decisions and concerns with [ABC] group. In other words, the council member serves as a communications link between the stakeholders he or she represents and XYZ.In addition, the council will be asked for input on how XYZ funds for [DEF] should be distributed. Council members will be asked to review drafts of requests for applications and provide guidance on gatherings such as [the biennial conference and critical issues projects].After the second year of this project, the council will be asked to review the progress of components that make up XYZ and provide feedback to the staff.Advisory Council MembershipWe anticipate that the advisory council will have __ or more members. Diverse groups will be represented including [GHI] institutions; [JKL] professionals; [MNO] federal and state agencies; and [PQR] industry. Initially, the council to XYZ will include the same individuals as served on the [STU] council for the past __ years. After the second year, the council will establish a rotational schedule so individuals will not be making an unending commitment. Sample #4 This statement of purpose focuses the advisory council on fundraising on behalf of the organization.Statement of Organization and Purpose for the Advisory Council of XYZPurposeTo help the board and chief executive of XYZ in the solicitation of gifts and grants from individuals, corporations, and foundationsMembershipThe number of members of the group shall be no more than __. The chief executive and board chair of XYZ shall serve as members of the advisory council.SelectionDuring the initial year, members should be elected by the board and, thereafter, by the established membership of the group.Term of OfficeA council member serves a __-year term. To enable new people to join, a member is typically elected to a maximum of __ consecutive __-year terms but is eligible to serve successive terms after the second term at the discretion of the electing body. To ensure continuity in the council’s work, terms will be staggered, requiring that on the initial council, one-third of the members will serve one-year terms, one-third will serve two-year terms, and one-third will serve three-year terms. One- and two-year terms will not be counted in limiting consecutive group service to two three-year terms.Member ResponsibilitiesEach group member is expected toAttend a minimum of __ meetings per year.Actively participate in the functioning of the council.Be available for individual consultation to the chief executive.Occasionally accompany a director, officer, or staff of XYZ for personal solicitation of selected prospects.Write or sign letters endorsing XYZ’s solicitations.OfficersA chair, a vice chair, and a secretary shall be the officers of the council.The chair shall be invited to attend all regular meetings of the board of directors.The chair shall preside at all meetings of the council.Staff supportThe chief executive of XYZ shall act as executive secretary to the council.Suggested ResourceAxelrod, Nancy R. Advisory Councils. Washington, DC: BoardSource, 2004. Committee Chair Job DescriptionsIntroductionIt is often said that if a committee has a good chair, then it is a good committee. The committee chair ensures that members have the information needed to do the job, and oversees the logistics of the committee’s operation. The committee chair is responsible for linking the work of the committee back to the full board with reports to the board chair. Committee chairs are often, but not always, members of the board.All committees have a chair. The general expectations for the committee chair position tend to be similar, regardless of the specific type of committee. Key ElementsJob descriptions for committee chairs often define the role as group leader of the committee and liaison with the full board.Depending on how structured the board is, committee chair job descriptions may outline particular expectations, such as creating an annual action plan and reporting regularly to the board.Form should follow function when it comes to committee chair job descriptions. Depending on the committee’s purpose, the chair may fulfill different leadership functions. And, much will also be influenced by the level of staff support.Practical TipsThe committee chair is, or should be, held accountable for the committee’s performance. This requires that the committee have a clear charter, specific goals, routine monitoring, and even periodic evaluation.The role of the committee chair is a pivotal one, not only for guiding the committee’s work but also because committee chairs may be potential board chairs. Consider appointing someone to chair a committee to see how that person functions in a leadership position and/or to provide leadership training.Sample Committee Chair Job DescriptionsThe committee chair job descriptions range from general to specific, depending on how much latitude the committee chair has, the level of staff support, and the degree of autonomy that the board has granted the committee.Sample #1 This succinct job description integrates the basic purpose of committees with the core duties of committee chairs.General Responsibilities for XYZ Board Committee ChairsIn order to take effective action, XYZ’s board requires in-depth study, information, and recommendations. Each committee assists the board in carrying out its policy-making, planning, and review functions by keeping the board informed and making recommendations in a defined area.To support and expedite the work of the board, each committee/task group performs certain tasks, as requested by the chair, as well as the ones listed below. The chair of the committee is responsible for the following committee tasks:Meet at intervals as needed to facilitate completion of all tasks.Provide accurate, comprehensive minutes.Recommend changes in current XYZ policies and recommend new policies when necessary.Address issues that have been referred from other committees/task groups, or have resulted from board action(s).Identify and track external trends in the committee’s area of work to ensure XYZ’s use of best practices.Prepare and present to the board written reports related to its work and specific recommendations with supporting rationales at a time indicated by the chair.Sample #2 This brief job description defines the general responsibilities for committee chairs in terms of guiding the committee’s internal operations.General Responsibilities for Committee ChairsIn addition to duties of a general board member, committee chairs will handle the following primary responsibilities:Determine the size of the committee and recruit committee members.Set the committee’s agenda based upon the input of other committee members and the board.Determine annual goals and objectives for the committee within the expectations set by the board.Determine which agenda items can be decided upon within the committee and which agenda items require the input of the board.Present pertinent information about committee progress to the board in monthly written reports, to be submitted to the board chair no later than one week prior to the board meeting date.Work in collaboration with other appointed board committees.Handle or delegate all administrative tasks associated with the effective coordination of the committee. These tasks include but are not limited toCommunicating consistently with committee members (at least once a month)Securing space for committee meetingsReminding committee members about meeting times and locationTaking meeting minutesSending committee meeting minutes to the board secretary no later than one week after the committee meeting and before the next board meetingSample #3 This sample, which assumes strong staff support, defines the committee chair’s responsibilities to the organization, to the committee, and to the mittee Chair Job DescriptionThe committee chair will perform the following responsibilities, with the assistance of a staff liaison as so noted by an asterisk (*):Committee Chairs ShouldSelect committee members for approval by the chief executive.Ensure any changes in membership of the committee are appropriately communicated.*Prepare a plan of work for the coming year.*Operate within the approved annual operating committee budget.Monitor the program of work and expenditures.*Notify the chief executive regarding expenditures.*Serve a __-year term, with the option to be reappointed for an additional __ years. Attend all meetings.Conduct committee-specific orientations for new committee members.*Facilitate Committee WorkPlan committee meetings and agenda.*Lead committee meetings.Assign tasks to committee members.Maintain records and relevant information.* Move members toward participation and decision making.Monitor the committee’s progress.* Resolve conflicts among committee members.Arrange for the committee to evaluate its work at the end of each program year — or at the completion of its task — to determine whether it did what it set out to do, and what worked and what didn’t municate with the Full BoardAccept and support the committee’s charge.Serve as the liaison between the committee and the chief executive, the board chair, and the full board.Ensure that appropriate reports are submitted to the board, and keep the board chair and the chief executive informed about the committee’s progress.*Evaluate committee efforts and communicate accomplishments to the committee and to association leadership.Report to the board quarterly on progress of projects.*Sample #4This job description frames the committee chair’s responsibilities in terms of strategy, coordination, facilitation, and communication.The committee chair is appointed by the board chair attends all committee meetings serves on the executive committeeResponsibilitiesProvide Strategic Direction and OversightEnsure that the committee fulfills the charge of the board chair and program objectives as approved by the board.Evaluate the work of the committee with other committee officers, the board chair, and the chief executive in concert with the organization’s strategic plan.Coordinate with Committee Members and StaffWork with the chief executive and board chair to decide who should serve on the committee.Delegate responsibilities to other committee members and encourage their full participation.Work with XYZ staff to achieve committee goals and objectives.Work with XYZ staff to develop committee budget and monitor activities within budget limits.Facilitate the Work of the CommitteeCall and preside over meetings of the committee.Invite the chief executive and board chair to attend committee meetings.Set the agenda for committee meetings.Record decisions and recommendations made by the municate to the Full BoardReport at the board’s regularly scheduled meetings (and otherwise as necessary) regarding activities, work-in-progress, accomplishments.Make recommendations to the board.Sample #5 This list of responsibilities outlines specific expectations of and procedures for committee mittee Chair RESPONSIBILITIESAt time of appointment, committee chairs will receive direction from the board chair and regular lines of communication will be established.Annually, the chairs will develop a committee-specific action plan implementing the organization’s strategic plan and submit it to the board’s liaison for approval. The action plan delineates goals, objectives, tactics, time frames, and costs.The chairs will develop a budget to support the committee plan and submit it to the budget and finance committee and subsequently to the board for approval.The chairs will submit committee reports when requested by the board chair, written reports for each board meeting, and a written annual report to be presented to the membership.The chairs will send minutes of committee meetings to committee members and distribute to the board, committee chairs as appropriate, and mittee chairs may be requested to attend XYZ board meetings.Following each board meeting, the chairs will be sent a copy of the meeting minutes for review and action if required.The chairs may request the use of a telephone credit card to be used for XYZ committee work with the approval of the board.The chairs will review and revise committee procedures annually. The committee procedure manual must be submitted to the policy committee for review. A copy of the committee procedure manual will be maintained at XYZ’s business offices.Chairs will obtain approval of the board chair or designee of committee communications prior to their presentation to the membership.The chairs are responsible for the annual evaluation of the committees, utilizing the criteria approved by the board. This will include the chair evaluating the committee members and the committee members evaluating the chair.Suggested ResourcesBobowick, Marla J., Sandra R. Hughes, and Berit M. Lakey. Transforming Board Structure: Strategies for Committees and Task Forces. Washington, DC: BoardSource, 2001.Wertheimer, Mindy R. The Board Chair Handbook, Third Edition. Washington, DC: BoardSource, 2013.Part X: Mission-Related IssuesAssociationsProxy VotingQuorum for Membership MeetingsNotice for Membership MeetingsAccess to Records for Membership OrganizationsFoundationsDiscretionary GivingMuseumsDeaccessionSpace RentalsProxy Policies for AssociationsIntroductionMost trade and professional associations (as well as other membership organizations) hold member meetings during which the members elect board members. Because it can be difficult or impossible to gather all members in one place to carry out voting in a legal manner, many membership organizations rely on proxies during member meetings to elect new board members and officers. Allowing proxies in the boardroom is not a desired practice, however. It can have a detrimental effect on board attendance, board deliberation, and decision making. When voting by proxy, board members are not sharing perspectives and are making decisions without due process. Key ElementsA proxy is a form of power of attorney. A proxy can refer to a person who has the authority to act, usually in a voting capacity, for another person. It can also refer to a document that gives an individual the right to vote for someone else. Its main purpose is to allow an absent member to express his or her opinion.A limited proxy, usually in writing, must indicate the meeting or the specific issue for which it is intended, define the timeframe during which it is valid, include the signature of the member granting the proxy, and be revocable by the member executing it. The person who has been given the proxy has a fiduciary duty to respect the wishes of the absent member.As long as comprehensive information on the candidates is distributed to all members and the process is allowed by state laws and is clearly defined in the bylaws, mailing out proxies is an acceptable method to keep the membership active.Practical TipsForm a tellers committee to increase confidence in the proxy system and to follow clear guidelines for counting proxies.Share the voting rules with all members to avoid unnecessary missteps.Sample Proxy PoliciesSample #1This broad proxy is provided by the board for the members.A proxy vote may be used by a member in good standing for a period of 30 days prior to the membership meeting to vote on any motions made at the annual membership meeting. Such proxies shall be in a form designated by the board, shall show the member’s region group affiliation and shall be on file with the Association at least 10 days before the meeting. Proxy forms will be available on request from the Association office. Proxies shall not be used for the election of officers.Sample #2This policy is intended for a condominium owners’ association and closely follows the permitted allowances in the Common Interest Ownership Act.The Common Interest Ownership Act (CIOA) authorizes unit owners, unless prohibited or limited by the declaration or bylaws, to vote at a meeting in person; by proxy; or, when a vote is conducted without a meeting, by electronic or paper ballot. Unless a greater number or fraction of the votes in the association is required by CIOA, other law, or the declaration, a majority of the votes cast is the decision of the unit owners. CIOA establishes the following rights and limitations concerning proxy voting, unless the declaration or bylaws provide otherwise:Votes allocated to a unit can be cast by a proxy duly executed by a unit owner (the proxy can direct how a vote is cast or it can be “undirected” and allow the person who is given the proxy to decide how to vote).If a unit is owned by more than one person, each unit owner may vote or register a protest to the votes by the other owners of the unit through a duly executed proxy. A unit owner may revoke a proxy only by actual notice of revocation to the person presiding over an association meeting. A proxy is void if it is not dated or purports to be revocable without notice. A proxy terminates one year after its date, unless it specifies a shorter term. Someone may not cast votes representing more than 15 percent of the votes in the association pursuant to undirected proxies (CGS § 47-252). CIOA specifies that proxy voting is among the acceptable voting methods at meetings concerning the removal of officers or directors, notwithstanding any contrary provision in the declaration or bylaws (CGS § 47-261d). Under CIOA, unless an association's bylaws provide otherwise, a quorum is present throughout any meeting of the unit owners if persons entitled to cast 20 percent of the votes in the association are present in person or by proxy at the beginning of the meeting (CGS § 47-251).Like several states, Connecticut's condominium law is modeled in part on the Uniform Common Interest Ownership Act. Connecticut's proxy voting law generally follows that of the most recent revisions to the uniform act (the uniform act has different provisions regarding how long a proxy is valid).Suggested ResourceAmerican Society of Association Executives Membership Quorum Policies for AssociationsIntroductionState laws define the parameters for member meeting quorums. As with board meeting quorums, it is possible to be stricter with the organization’s regulations but not contradict the minimum legal levels. Due to the practical challenges of bringing together sometimes thousands of members in the same location, member meeting quorums tend to be more lax than board meeting quorums.Key ElementsIndicate that presence and potential proxies count for the quorum calculations.Practical TipsCheck your state laws first and then evaluate what is a reasonable quorum for your meetings. If you allow proxy voting, your quorum requirements may be higher.Arranging your annual meetings at the same time as your annual conference provides an incentive for members to attend.In your materials, remind your members that their voting right is a benefit. Coming to meetings allows them to have a say on the future of the organization.Sample Membership Quorum PoliciesThese short policies focus on the percentage of members who must be present to reach a quorum. Sample #1This sample states who must be present at the meeting.A quorum shall be twenty-five percent of those members registered and eligible to vote as delegates and shall include one officer and two other national board members.Voting members shall consist of designated delegates or their proxies from properly constituted and affiliated youth soccer clubs in good standing with the Association.Suggested ResourcesAmerican Society of Association Executives Jennings, C. Alan. “Roberts Rules for Defining a Quorum.” Your state statutes: Membership Meeting Notice Policies for AssociationsIntroductionState laws normally cover membership meetings and may provide regulations for notices, quorums, proxies, and other voting procedures. These laws vary considerably so it is important to be familiar with your own state laws.It is common to tie annual meetings to the organization’s annual conference. This is because members are more likely to attend an event when it offers opportunities for professional development in addition to taking care of business matters. Key ElementsMembership meeting notices usually refer to the annual meeting where the regular business is carried out.Be sure to include the date of the annual meeting.It is important to spell out the manner and minimum timing of notices that will be sent to members. Practical TipsConsider the distance your members must travel to attend your meeting. Time your meeting notices to enable your members plenty of time to reserve flights and arrange their personal and professional calendars.If you have e-mail addresses for members — and your state laws allow it — discuss whether this is an acceptable way of delivering the notice.Sample Membership Meeting Notice PoliciesThese policies state how to notify members of the membership meeting.Sample #1This policy states that ballot statements must be sent with meeting notices.Due notice of all member meetings shall be given to all members at least seven (7) days, and not more than thirty (30) days prior to the date of the meeting. Such notice shall be mailed to the last known address of each member, or may be included with the member's paycheck, provided that the member has worked during the pay period for which the check is issued. The board of directors may provide for a mail ballot on specific questions submitted for a vote of the membership. In addition, at any member meeting, a written and signed vote by any absent member may be submitted if such member has been previously notified in writing of the exact motion or resolution upon which the vote is to be taken. The ballot with the motion or resolution shall accompany the notice of meeting.Suggested ResourcesAmerican Society of Association Executives Jennings, C. Alan. “Roberts Rules for Giving a Notice of a Meeting.” Your state statutes: Member Access to Records PoliciesIntroductionMost state laws regulate member access to the organization’s records, so it is important to be familiar with these statutes. In membership organizations, it makes sense for the members to have access to some records because they have the right to approve major organizational decisions. However, to eliminate unnecessary member communication regarding access, it is important to clarify access to records in a separate policy. Key ElementsSome records are universally available (public), some promote a sense of openness, and some should not be shared with outsiders. Differentiate between these records in the policy.State where various records are kept and how to access them. Practical TipsBecause many state laws are difficult to find or decipher, it is advisable to have a separate policy. Post any public records on your website. Your constituency will thank you.Members are often interested in accessing board meeting minutes and financial records. Educate staff on how to handle these requests.Sample Member Access to Records PoliciesThe samples include a simple statement and a more detailed process of sharing documents. Sample #1This short policy simply refers to the state laws and additional association rules for member access.Except for those association records which members have a specific right to access under the Act, members' access to association records is generally dealt with under an association's rules. As a result, access should be based on what the majority of members have approved, although specific arrangements may need to be made for confidential materials such as any staff or client files.Sample #2This statement, adapted from the Virginia state laws, covers records that are not to be shared.55-510. Access to association records; meetings of the board of directors.A. The association shall keep detailed records of receipts and expenditures affecting the operation and administration of the association. All financial books and records shall be kept in accordance with generally accepted accounting practices.B. Subject to the provisions of subsection C, all books and records kept by or on behalf of the association, including, but not limited to, the association's membership list and addresses, which shall not be used for purposes of pecuniary gain or commercial solicitation, and aggregate salary information of employees of the association, shall be available for examination and copying by a member in good standing or his authorized agent so long as the request is for a proper purpose related to his membership in the association. This right of examination shall exist without reference to the duration of membership and may be exercised (i) only during reasonable business hours or at a mutually convenient time and location and (ii) upon five days' written notice reasonably identifying the purpose for the request and the specific books and records of the association requested.C. Books and records kept by or on behalf of an association may be withheld from inspection and copying to the extent that they concern the following:1. Personnel matters relating to specific, identified persons or a person's medical records.2. Contracts, leases, and other commercial transactions to purchase or provide goods or services, currently in or under negotiation.3. Pending or probable litigation. Probable litigation means those instances where there has been a specific threat of litigation from a party or the legal counsel of a party.4. Matters involving state or local administrative or other formal proceedings before a government tribunal for enforcement of the association documents or rules and regulations promulgated pursuant to 55-513.5. Communications with legal counsel which relates to subdivisions 1 through 4 or which is protected by the attorney-client privilege or the attorney work product doctrine.6. Disclosure of information in violation of law.7. Meeting minutes or other confidential records of an executive session of the board of directors held in accordance with subsection C of 55-510.1.8. Documentation, correspondence, or management or board reports compiled for or on behalf of the association or the board by its agents or committees for consideration by the board in executive session.9. Individual unit owner or member files, other than those of the requesting lot owner, including any individual lot owner's or member's files kept by or on behalf of the association.D. Prior to providing copies of any books and records to a member in good standing under this section, the association may impose and collect a charge, reflecting the reasonable costs of materials and labor, not to exceed the actual costs thereof.Suggested ResourcesAmerican Society of Association Executives Your state statutes: Discretionary Giving Policies for FoundationsIntroductionSome family foundations have policies that provide board members with some funds to designate grants to their favorite charities. These donations are in addition to the official foundation grants and have multiple objectives: to soften ideological differences between board members and keep the foundation’s primary focus on the mission, to allow immediate responses in disaster or other emergency situations, and to train future trustees in grantmaking. Some of their challenges include providing indirect personal benefits for board members, taking money away from the primary foundation pool, and deviating focus from the mission to personal preferences. Key ElementsInclude a legal review to ensure personal grants are not contradicting the foundation’s mission or values.Clarify the types of organizations that are eligible to receive these grants.Specify whether a potential grantee needs to submit a written proposal.State whether it is acceptable for a family member to give a grant to a charity that has close ties to the family or has board members who are family members. Require every grantee to provide a copy of the determination letter.Based on your money pool, determine whether you will provide every board member with a set amount of money to distribute personally, whether a specific amount will be distributed among board members, or whether a percentage of your grantmaking budget will be distributed among board members. Designate who has the final say in approving specific grants.Practical TipsKeep the amounts modest. These grants should be incidental to the main purpose of the foundation.You are allowed to make restrictions! One option is to allocate a small percentage of the budget to issues or causes recommended by board members. If you allocate a certain amount of money for personal grantmaking, consider making it a percentage of the overall annual giving to ensure that the amount remains reasonable if the board grows in size. Pay attention to self-dealing. Draft a list of conditions that are not acceptable, such as financial or employee relationships with the granteeSample Policies for Discretionary Giving These sample policies provide only a few limits for the use of the discretionary funds.Sample #1This short policy simply defines the amount for discretionary grants.Discretionary GrantsThe XYZ Foundation provides $____ for each trustee for discretionary grants to support their personal charities outside of the foundation’s grant giving. Sample #2This policy stresses that personal grants should align with the general mission of the foundation.Trustee discretionary givingXYZ Foundation annually sets aside a fund of $20,000 for trustee discretionary giving.Grants from this pool should be targeted to our community and in general promote our mission. This is consistent with our overall grant making policy and helps to maximize the positive impact our foundation has on our community.Individual grants from trustees are limited to $5,000 per year. This limitation is intended to keep these discretionary grants from “competing” in size and importance with grants awarded through our formal grantmaking process.Sample #3This policy reflects the culture of the foundation.Trustees have the opportunity to direct $_____ to eligible nonprofit organizations of their choosing. While these grants may not reflect the Foundation's overall funding priorities, they do reflect the diversity and creativity of the foundation's directors. All grants must be directed to legitimate 501(c)(3) charities and reported to the board. Suggested Resources“Discretionary Grants: Encouraging Participation or Dividing Families?” National Center for Family Philanthropy Council on Foundations Deaccession Policies for MuseumsIntroductionDeaccession refers to the process of removing a piece of art or object from the museum’s regular inventory. Deaccession can be controversial as the principle runs against the very nature of a museum, which is preserving and exhibiting art and objects for today and the next generations. However, every museum has or will have items in its inventory that may no longer be relevant or add value to its collections, no longer meet the museum’s standards, require too much effort or money to keep intact or preserve properly, are a duplicate, or by order of court must be returned to the original or legal owner. Key ElementsJustify the decision to deaccess a work to avoid indiscriminate selling or disposing of permanent inventory.State who is responsible for reviewing and approving the disposal of artifacts. Demand an independent appraisal of the pieces being removed from the permanent inventory.Clarify how the funds will be used if property is sold, such as directing the revenue for acquiring new inventory. Practical TipsTo avoid a public scandal and donor anger, disclose the decision and explain why deaccession is a necessary act.Be proactive and discuss the necessity to “declutter” inventory from time to time.In the future, be careful about agreements with donors.Sample Deaccession PoliciesThe sample policies move from reasons for deaccession to detailed process guidelines.Sample #1This sample lists the reasons for deaccession.Our Museum regularly deaccessions and disposes of works of art. The term "disposal" refers to the sale, exchange, or other transfer of the work from the official inventoried collection. Purpose of deaccession:The object is no longer relevant to the mission of the Museum or has little value in the Museum's collection. The object is redundant or is a duplicate and is not necessary for research or study purposes. The object is of lesser quality than other objects of the same type that are already in the collection or that are about to be acquired. The object has been found to lack sufficient aesthetic merit or art historical importance to warrant retention. The Museum is unable to preserve the object in a responsible manner. The object is unduly difficult or impossible to care for or store properly. Sample #2This sample stresses that deaccession must benefit the mission.American Association of MuseumsCode of EthicsThe museum ensures thatacquisition, disposal, and loan activities are conducted in a manner that respects the protection and preservation of natural and cultural resources and discourages illicit trade in such materialsacquisition, disposal, and loan activities conform to its mission and public trust responsibilitiesdisposal of collections through sale, trade, or research activities is solely for the advancement of the museum's mission. Proceeds from the sale of nonliving collections are to be used in a manner consistent with the established standards of the museum's discipline, but in no event shall they be used for anything other than acquisition or direct care of collections.Sample #3This comprehensive policy sets deaccession guidelines for member museums.Policy StatementAAMD requires member museums* to develop clear written collections management policies including written collection goals and acquisition and deaccession principles, procedures and processes, as well as those that address preservation, conservation, and collection care.AAMD encourages member museums to accept into the collection only gifts of works that support the mission of the institution and to be thoughtful about accepting gifts of works with restrictions.Member museums must comply with all applicable laws, including, if applicable to the AAMD member museum, the filing of required Internal Revenue Service forms, in deaccessioning and disposing of works from the collection. Member museums should not capitalize or collateralize collections or recognize as revenue the value of donated works. In 1992, following proceedings involving the museum profession, the Financial Accounting Standards Board (FASB) established standards regarding how museums (and other entities) that are subject to FASB? may account for their collections assuming certain conditions are met. As a result, in 1993, FASB issued Statement No. 116. The Statement, as amended, provides that contributions of works of art, historical treasures, and similar assets need not be recognized as revenue or capitalized if the donated items are added to collections that are (a) held for public exhibition, education, or research in furtherance of public service; (b) protected, kept unencumbered, cared for and preserved; and (c) subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for the collection.When recommending a work to the museum’s Board of Trustees for deaccession, a member museum’s staff should provide thorough research on prior ownership history, an explanation of expressed donor intent, if any, current scholarly evaluation, and relevance to the existing collection and future collecting goals.A member museum should publish on its website within a reasonable period of time works that have been deaccessioned and disposed of.ApplicationI. Purpose of Deaccessioning and DisposalDeaccessioning is a legitimate part of the formation and care of collections and, if practiced, should be done in order to refine and improve the quality and appropriateness of the collections, the better to serve the museum’s mission.Funds received from the disposal of a deaccessioned work shall not be used for operations or capital expenses. Such funds, including any earnings and appreciation thereon, may be used only for the acquisition of works in a manner consistent with the museum’s policy on the use of restricted acquisition funds. In order to account properly for their use, AAMD recommends that such funds, including any earnings and appreciation, be tracked separate from other acquisition funds.II. Criteria for Deaccessioning and DisposalThere are a number of reasons why deaccession might be contemplated. Primary among these are:The work is of poor quality and lacks value for exhibition or study purposes.The work is a duplicate that has no value as part of a series.The museum’s possession of the work may not be consistent with applicable law, e.g., the work may have been stolen or illegally imported in violation of applicable laws of the jurisdiction in which the museum is located or the work may be subject to other legal claims.The authenticity or attribution of the work is determined to be false or fraudulent and the object lacks sufficient aesthetic merit or art historical importance to warrant retention. In disposing of or retaining a presumed forgery, the museum shall consider all related ethical issues including the consequences of returning the work to the market.The physical condition of the work is so poor that restoration is not practicable or would compromise the work’s integrity or the artist’s intent. Works damaged beyond reasonable repair that are not of use for study or teaching purposes may be destroyed.The work is no longer consistent with the mission or collecting goals of the museum. The Board of Trustees or governing body of the museum must exercise great care in revising a museum’s mission or reformulating collecting goals.The work is being sold as part of the museum’s effort to refine and improve its collections, in keeping with the collecting goals reviewed and approved by the museum’s Board of Trustees or governing body.The museum is unable to care adequately for the work because of the work’s particular requirements for storage or display or its continuing need for special treatment.III. Authority and ProcessDeaccessioning and disposal must comply with all applicable laws of the jurisdiction in which the museum is located and must observe any terms or obligations that pertain to the acquisition of the work by the museum.The final authority for the deaccessioning and disposal of works rests with the Board of Trustees or governing body or its designee.The process of deaccessioning and disposal must be initiated by the appropriate professional staff and any recommendations, with full justification, presented to the director, who will review the facts and circumstances of the proposed deaccession and disposal. As part of this process, the staff must undertake a thorough review of all records to determine donor intent, clear title, donor restrictions, and current market value. If the director determines that deaccessioning is appropriate, the proposal shall be presented to the Board of Trustees or governing body or its designee in accordance with the steps outlined in the museum’s collection policy with regard to deaccessioning.The director shall exercise care to assure that the recommendations are based on authoritative expertise.Third-party review and appraisal may be considered in the case of objects of substantial value.In the case of work(s) by a living artist, special considerations may apply.The timing and method of disposal should be consistent with the museum’s collection policy. Attention must be given to transparency throughout the process.No member of a museum’s board, staff, or anyone whose association with the museum might give them an advantage in acquiring the work, shall be permitted to acquire directly or indirectly a work deaccessioned, wholly or in part, by the museum, or otherwise benefit from its sale or trade; provided, however, that the foregoing shall not apply to a sale by a museum of its interest in a work to one or more of the co-owners of such work.If a museum is proposing to dispose of less than all of its interest (sometimes known as fractional deaccessioning) in a deaccessioned work (unless the interest to be retained is insubstantial*), the disposal should only be made to an organization? or organizations that are open to the public. Examples of the foregoing are provided on Annex A.IV. Selection of Methods of DisposalThe following may be taken into account in selecting a method of disposal:Preferred methods of disposal are sale or transfer to, or exchange with another public institution, sale through publicly advertised auction, and sale or exchange to or through a reputable, established dealer. Every reasonable effort should be taken to identify and evaluate the various advantages and yields available through different means of disposal.In the case of a work of art by a living artist, consideration may be given to an exchange with the artist.While it is understood that museums must fulfill their fiduciary responsibilities and act in the museum’s best interests, museums may give consideration to keeping a deaccessioned work in the public domain.V. Interests of Donors and Living Artists/ NotificationsMuseums should notify the donor of a work, when practicable, under consideration for deaccessioning and disposal. Circumstances may warrant extending similar courtesy to the heirs of a donor.When a work by a living artist is deaccessioned, consideration must be given to notifying the artist.VI. DocumentationWhen a work is deaccessioned, all electronic and paper records must be updated. Prior to disposal, an image should be taken of the work and retained in the museum’s records. As works are disposed of, the method of disposition, including possible consignee, new owner, sale price and location, if known, should be recorded according to the museum’s collection management policy.VII. Special CircumstancesAAMD recognizes that part of the mandate of a contemporary arts organization is to expand the definition of what constitutes a work of art, as well as to question traditional exhibition practices. Therefore, if the organization’s written policy provides for the sale of deaccessioned works, the funds derived from such sales may in exceptional cases be used for purposes analogous to the purchase or commission of works of art, specifically the creation of new works, including some that may not be collectible. Expenditure of these funds for operations or capital expenses is precluded.VIII. SanctionsIn the event a member or museum violates one or more of the provisions of this Policy, the member may be subject to censure, suspension, and/or expulsion, and the museum may be subject to censure and/or sanctions in accordance with the relevant provisions of the Code of Ethics of the AAMD, which have been amended consistent with the following:A museum director shall only dispose of accessioned works of art in accordance with the Professional Practices and the Task Force Report adopted by the members on June 9, 2010, as the same may be amended.The Code of Ethics provides that AAMD members who violate the Code may be subject to discipline by censure as determined by the Board of Trustees of the AAMD and/or, suspension and/or expulsion from the Association in accordance with the By-Laws of the AAMD.Infractions by any art museum may expose that institution to censure and/or sanctions, as determined by the Board of Trustees of the AAMD, that may, in the case of sanctions, include, without limitation, suspension of loans and shared exhibitions between the sanctioned museum and museums of which AAMD members are directors.Prior to censuring or recommending suspension or expulsion of a member or censuring or issuing any sanction against an art museum, the Board of Trustees of the AAMD shall provide to the subject director or museum the opportunity to be heard and to explain the reason for the actions considered for censure, suspension, expulsion or sanction; such presentation to be by the affected director unless otherwise determined by the Board of Trustees of the AAMD or, in the case of a museum, the director or any member of the Board of Trustees or governing board of the museum, as determined by the museum with the concurrence of the Board of Trustees of the AAMD. If the Board of Trustees of the AAMD determines to censure or recommend suspension or expulsion of a member or to censure or sanction a museum, the Board of Trustees of the AAMD shall, contemporaneously with the issuance of a censure or sanctions or the recommendation of suspension or expulsion determine and advise the affected director or museum of the process that may be followed, as the case may require, to allow the censure to be rescinded or modified, the suspension to be lifted, the expulsion to not bar a subsequent application for admission or the sanction to be lifted.IX. University and College MuseumsUniversity and college museums play a significant role in acquiring, preserving, and presenting collections. While the primary focus of the university or college is education, it must also adhere to professional standards and ethics when operating a museum.The director is responsible for the development and implementation of policy related to all aspects of the museum's collections, including acquisition, deaccessioning, and disposal, preservation, conservation, and exhibition, as well as scholarly research and interpretation. The director is responsible for ensuring that the university or college is aware of its ethical responsibilities to the art museum's collection, including issues around its deaccessioning, use, and the physical conditions under which it is maintained Deaccessioning and disposal from the collection must result from clear museum policies that are in keeping with the AAMD’s Professional Practices (see also the section on The Collection and Appendix B). Deaccessioning and disposal from the art museum’s collection must never be for the purpose of providing financial support or benefit for other goals of the university or college or its foundation. In no event should the funds received from disposal of a deaccessioned work be used for operations or capital expenditures.Policies developed by the director with regard to acquisition and deaccession should be adopted or ratified by the central governing authority of the university or college.ANNEX AExamples with respect to partial deaccessioningMuseum X owns 50 percent of a painting in conjunction with Museum Y and wants to sell its 50 percent interest at auction. May it do so under the Policy even though a private individual may buy the 50 percent interest? Yes, because Museum X is disposing of all of its interest even though that interest is less than 100 percent of the ownership interests of the painting.Museum X owns 100 percent of a painting and wants to sell a 50 percent interest in the painting. To whom may it sell the 50 percent interest? Only to a public charity, operating private foundation or governmental entity or agency open to the public.Museum X owns 100 percent of a painting and wants to sell a 100 percent interest in the painting, but retain a right to reproduce images on items in the museum store and a right to borrow the painting once every 10 years for an exhibition. May the Museum sell the painting to a private individual? Yes, because the Museum is disposing of all of its interest except for certain insubstantial retained rights.Same facts as No. 3, but the Museum wants to retain a 5 percent interest in the painting. In this situation, the Museum may only dispose of the 95 percent interest to a public charity, private operating foundation or governmental entity or agency open to the public.Museum X owns 33 percent of a painting in conjunction with two private collectors. The Museum wants to sell its share. May the Museum sell to one or both of the private collectors, or to any other private collector? Yes, because the Museum is disposing of all of its interest even though that interest is less than 100 percent of the ownership interests of the painting.Museum X owns 66 percent of a painting in conjunction with a private collector. The Museum wants to sell half of its share, or 33 percent interest in the painting. May the Museum sell to the private collector or any other private collector? No, because the Museum is selling only a portion of its interest; it must sell only to a public charity, private operating foundation or governmental entity or agency open to the public.Suggested Resources“Deaccession and Disposal in Small Museums.” Fact Sheet from Museums and Galleries American Association of Museums Space Rental Policies for MuseumsIntroductionThe main purpose of a museum’s physical setting is to display its collection and invite patrons to come and appreciate it. And those museums that don’t already own a building that houses the inventory and provides office, research, and preservation space aspire to it. Often museum spaces are desirable locations for private events, and many museums rent their spaces for such occasions. As long as this practice does not distract from the museum’s primary purpose and become a substantial revenue objective, it can be an acceptable way to bring in additional income.Key ElementsDefine for whom you are willing to rent the space: members only, individuals, nonprofits, for-profits?Are there any types of events that would not be appropriate within your premises: weddings, wine tastings, religious ceremonies? Be familiar with the discrimination laws.Reserve the right to refuse or cancel any event because of unavailability, security and safety issues, or inappropriate purpose of the event. Your reputation is on the line.Require the renter to provide verification of adequate liability insurance.Request to approve any event promotional materials if the mission of your museum is sensitive and you do not want to be perceived as a sponsor of the event. Practical TipsCheck with your accountant to determine whether rental activity will create any unrelated business income tax (UBIT). Rent income usually is not taxed, but it should not include other services.Determine whether it makes sense to invest in such things as chairs, tables, and glassware. You can charge extra for additional accommodations.Use private events as an opportunity to market your museum and recruit new patrons by making your marketing materials available to those attending private events. Sample Space Rental PoliciesThe sample policies cover simple user statements and comprehensive guidelines for acceptable use of the facilities.Sample #1This sample specifies who can rent the facilities and for what purposes. The XYZ Museum is available for rentals for affiliated and partner organizations. Priority is given to artistic events. Prior approval for an event does not mean a new event can be accepted.Museum facilities may not be used for personal events such as weddings, parties, or other receptions. No fee may be charged for the events held at the museum.Sample #2This comprehensive sample provides detailed guidelines for those who rent the space for private events.Policies & GuidelinesXYZ Museum is home to an expansive collection of artwork as well as historic sites and stunning venue space. To ensure an amazing event in our unique facilities, we have established the following guidelines:Artwork XYZ Museum features artwork of all mediums, and content will be on display during your event. While XYZ will make every effort to accommodate your event within the guidelines below, please be aware that no guarantee of the display or exhibition of future collections or work is implied. Artwork, including sculptures, installations, and framed or unframed works on the walls may be installed or de-installed without reference to any rental event.CancellationAll cancellations must be in writing. Fifty percent (50%) of the rental fee shall be forfeited should the Renter cancel. Check your contract to confirm the cancellation policy for your event.Catering & Additional Vendors A vendor list is required 30 days prior to any event, and must include contact person and information. All vendors will have access no more than three hours before the event is contracted to begin, and two hours following the event to strike their equipment and rentals. Additional time for set-up or breakdown will be billed to the vendor at a $50 hourly rate.CookingCooking is NOT permitted in any of the XYZ venues. Electric warmers such as chafing dishes are permitted. Butane, propane, sterno, and open flame are strictly prohibited in any circumstance.All supplies must be provided by the caterer including extension cords, towels, utensils, containers, bins, trash cans, trash bags, etc. All cords must be taped down with gaffer’s tape or painter’s tape that will not leave a residue.Décor & Event DesignConsideration for our museum spaces is requested when designing any event within our venues. No open flames of any kind are permitted. No hanging décor such as ribbon, light strings, etc. will be attached to walls or ceilings. No bubbles, confetti, silly string, balloons, rice, bird seed, aerosol cans, lacquer, paint, or glue guns will be allowed inside or within close proximity to the buildings. No trees, oversized shrubbery, plants, ferns, etc. are allowed in the Academy at any time. Centerpieces are to contain minimal water if necessary and must be placed the distance of its height plus a foot from any walls or artwork.Stages are to be no larger than 12×16 feet and must also be placed 4 feet off the wall of the Rotunda or within reasonable distance in the Jepson Atrium.All decor supplied from an outside source must be removed from the event area by the renter or vendor directly following the departure of the last guest from the venue. No live animals are permitted in any XYZ venues.Deliveries and Pick-upDeliveries including drop-offs such as linens, flowers, etc. must be scheduled with the Events Rental Manager at least 14 days prior to the event. Pick-ups are to occur after the event within the two hour access window unless otherwise determined by Facilities Rental Manager. Items left after the two hours are subject to a $50 per day storage charge and after ten days become property of XYZ.Event HoursEvents are scheduled to begin during non-public hours no earlier than 6pm and should end by 11:00 p.m. An additional fee of $100 will be assessed to the renter for every hour or portion of an hour after the agreed upon time.EquipmentXYZ does not provide tables, chairs, linens, glassware, china, flatware, or additional equipment for events nor will XYZ store these items for events.Fees & DepositsHalf of the rental fee due upon signing of the rental contract to book and confirm the reservation. A signed copy of the policies and guidelines is due as well.Balance of the payment is due 30 days prior to the event date. XYZ accepts rental payments in the form of checks and credit card payment. Credit card payments will incur a 3 percent processing charge.Galleries & Exhibition SpaceXYZ restricts food and drink in art galleries with the exception of the Academy Rotunda and Sculpture Gallery and the public spaces of the ABC Center. Galleries may be opened for viewing based on exhibitions and at the sole discretion of the XYZ management.There may be changes in museum and gallery displays or exhibitions from the time the venue is viewed to the event date. Changes or alterations in the museum set-up do not warrant event cancellation.Unless otherwise specified, all galleries outside of rental space will be closed during events. Tours of the galleries are welcomed during any event with compliance of the above policy and a docent charge of $20 per hour/per docent. Galleries may be kept open for a gallery fee of $100 per hour.InsuranceThe renter must supply a certificate of insurance for comprehensive general liability with minimum limits of $ 1,000,000 on an occurrence form for bodily injury, property damage and personal injury with a carrier that is acceptable to XYZ. XYZ shall be named as an additional insured, and a certificate of insurance showing proof of coverage shall be issued to XYZ 60 days prior to the event. Certificates can be obtained through the renters’ insurance company or through the museums company upon request.ParkingThere is parking along the street around all XYZ venues. Rental AgreementUpon booking XYZ facilities, renters must sign a contract and the Policies & Guidelines paperwork and return it with appropriate payment to Events Rental Manager. Set-up & StrikeNo tables, chairs, equipment, etc. may be set closer than 3 feet from any wall or artwork. If the height of the set-up is greater than three-feet, then the distance from the wall must exceed the height by one foot. Use of open flame is strictly prohibited. Set-up may not begin earlier than three hours prior to the contracted start time, and equipment strike is to take place within two hours of event end.XYZ reserves the right to designate what areas may be used within its venues. Exits and bathroom are not to be blocked and no décor or set-up may interfere in any way with the artwork on display or any guests viewing the artwork.SecurityAs part of the rental fee, interior security is provided as XYZ determines is appropriate with regards to guest count and event size. Outside security is arranged by the renter and should be conveyed to the Events Rental Manager.Suggested ResourceAmerican Association of Museums ................
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