Deal flow management software for non-profit organizations

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have you ever had a situation come up where you really didn't know what to do sure we all have knowing what to do in any given situation is definitely an advantage when the scenario involves your non-profit however the last thing you want is to find yourself needing a policy when you don't already have one in place [Music] hi I'm Greg McRae founder and CEO of foundation group and welcome back to our 501c3 University Channel where we strive to make non-profit compliance understandable our team at Foundation group has worked with thousands of non-profits over the years and one of the unfortunate things we often see though is an organization with no policies in place to guide governance or other important activities or if they do have policies they were borrowed from another non-profit and they don't even know what they have in there not a good way to operate you need good policies you need to know what's in them and you need to use them consistently here's six you really need number one a conflict of interest policy now we're kind of starting with the biggest one first a good conflict of interest policy is the first among equals when it comes to essential policies to have and to follow while not legally required the conflict of interest policy is one of the most asked about and referenced by the IRS even your annual form 990 asked numerous questions about whether or not your non-profit has one plus how and when your board members are required to review and sign off on it so why is a conflict of interest policy such a big deal well a big part of the reason is that the IRS has strict expectations that your non-profit is designed to benefit your community not you personally or anyone else for that matter the IRS calls this endearment or private benefit when your nonprofit provides personal profit or other preferential benefit to an Insider and if you're wondering those are bad things a good conflict of interest policy assuming you follow it will help prevent those bad things from happening it should lay out expectations for conduct by and between officers directors key employees related individuals and the non-profit itself it should also spell out specific procedures to follow when there is a conflict of interest including how those with a conflict are to give notice to others that such a conflict exists for example if your non-profit is potentially going to do business with a company owned by your executive director what's the procedure for dealing with the conflict a situation like this occurred on a private school board that I served on a few years ago the school was planning to build a new restroom and concessions facility at the football field one of my fellow board members owned a commercial construction business and was among the contractors who put in a bid on the project when it came time to review the bids and pick the contractor per our conflict of interest policy he recused himself from both the discussion and the vote a key point is that his bidding and even potentially winning the contract didn't violate any endurement or private benefit rules and the reason it didn't is that he wasn't given preferential treatment he had to submit a bid just like everyone else did and he wasn't present for the discussion or the vote and our conflict of interest policy was there to guide our actions all along the way all right we're ready for number two a whistleblower policy your whistleblower policy is related to your conflict of interest policy in some ways ideally if your organization is conducting activities the right right way your whistleblower policy can sit in a file and never have to be opened this policy is designed to instruct and protect those with knowledge of wrongdoing for example let's say a staff member becomes aware that one of the key employees with bank account access is writing checks to herself for expense reimbursement contrary to internal procedures as well as contrary to logical best practice The Whistleblower policy should describe how the staff member is to address the issue to leadership as well as protect that person from any recrimination from having exposed the practice now admittedly this is a subject that makes some people uncomfortable but this is another policy that the IRS specifically asks about on form 990 and the sarbanes-oxley Act made adopting a whistleblower policy a matter of regulatory requirement the bottom line is best practice says you need it to protect your people and the law says you need it because it's expected that your non-profit has it number three the records retention and destruction policy this is yet another policy that form 990 asks about therefore you should consider this one essential it's also another one required by sarbanes-oxley okay sidebar if you're wondering what the heck this sarbanes-oxley thing is you may remember the corporate and accounting Scandal involving the company Enron back in the 1990s if you don't look it up it was a mess and even ended up taking down one of the largest accounting firms in the world plus a whole lot of people went to prison nasty stuff sarbanes-oxley is the legislation that addressed many of the shortcomings in the law that allowed for that mess to happen in the first place all right back to the main point part of being transparent and accountable is good records retention at a bare minimum a non-profit should be keeping records for at least five to seven years in most cases it should be substantially longer and even if it wasn't required by law it should be logical that important data is retained the types of Records to be retained include board meeting minutes tax documents and other regulatory filings donation records contracts on and on your policy should specifically state which documents to keep and for how long the Destruction part of your records and retention and destruction policy policy should outline specifically how your nonprofit must go about disposing of any records once the retention period has elapsed here's the thing to keep in mind though about all of this there is rarely a reason to keep paper copies in this digital world anymore so it's not like you're filling up file cabinets and bankers boxes anymore it's very easy to just keep it all and properly organize it digitally now I'm not encouraging you to become a digital hoarder but you never know if you're going to need it right either way you've got your policy in place to guide your actions number four employee compensation policy this policy provides your non-profit with a consistent approach to determining salaries wages and benefits for your employees now some nonprofits have a policy that only addresses executive compensation but we feel it's better to address how everyone gets paid I've said this before on other videos but the IRS requires non-profit employee compensation to be reasonable now this is a poorly defined and subjective subject suffice it to say that salaries wages and benefits should be considered in line of experience job requirements similar organizational pay and financial ability to pay by the organization and that leaves a lot of wiggle room to be sure best to create an overall compensation policy that dictates how each employees pay from part-timer to executive director is to be determined what are the comps to be used who or what committee is making these decisions how are pay raises evaluated all important stuff number five gift acceptance policy now this one may sound silly to you at first blush if someone wants to give your non-profit a donation you take it right not necessarily A gift acceptance policy May deal with gifts of money but more typically it's to address in-kind gifts such as land buildings Vehicles food clothing things like that getting these kinds of donations May sometimes be more hassled than they're worth sometimes there's legal ramifications to accepting an in-kind gift such as taxes or licensing the idea is to think ahead about what types of gifts your non-profit wants or needs it's okay to accept in-kind gifts but it's best to have a plan what to do with it once you get that car donated and yes this is another policy that form 990 asks about we're finally at number six a fiscal management policy now financial management and control are two of the most critical responsibilities of any non-profit you gotta have tight controls on cash flow and transparency comes with that a good fiscal management policy can help it should outline how money is handled from gift to bank to expenditure who makes deposits who can spend money who can have a company credit card can money be spent without pre-approval from the board or a committee how many signatures on a disbursement check can the same person write checks and reconcile the books hint on that last one the answer should be no they can't I cannot stress enough how important Financial controls are not only does it provide the necessary guard rails to protect and Steward the organization's limited resources it also protects the people involved from accusations of improper con assuming the rules are followed it also provides your donors with confidence that their financial support is well managed these six policies are really must-haves now there can be others that are equally valuable and we may get into a few of those down the road as a follow-up you know it's very easy to think of policies and procedures as just one more hoop to jump through either document to prepare then file away and forget but good policies are a critically important part of operating a successful non-profit as my father-in-law was famous for saying expect the unexpected be prepared by having a solid set of operating policies that will protect your organization and its people and its resources thanks for watching now go serve your community hey do me a favor and don't navigate away just yet we would really appreciate it if you would click the like button as it really helps get our content recommended to more people subscribe if you haven't already because we have great content coming your way on a regular basis finally you can click the little bell icon to be notified of new content when we post it to learn more about Foundation group you can always visit us on the web at .501c3.org thanks and we'll see you next time [Music]