Philosophy: A nonprofit board is responsible for determining and monitoring the mission of the organization and the strategy that supports it. Regular reviews of the nonprofit’s mission and strategy assure that resources are used responsibly and that the strategy is consistent with accomplishing its mission.

Standard: The Board of Directors at least annually reviews the nonprofit’s mission and supporting strategies, which connect to a longer-term plan that reviews program effectiveness and community impact.

     Philosophy: The governing documents of a nonprofit formalize many of the policies, procedures and structures that demonstrate effective governance. By regularly reviewing the organization’s governing documents, a board assures relevance and alignment with current practices.

Standard: The Board of Directors reviews the nonprofit’s bylaws and other governing documents at least every three years.

Philosophy: The nonprofit sector plays a unique and critical role in our society, including providing an avenue for individual involvement to better society and offering equal access to opportunity and services. As such, an inclusive nonprofit seeks and embraces diversity in all its forms and is responsive to the changing demographics of the larger society. By striving to be diverse and inclusive, a nonprofit strengthens its ability to achieve its mission by bringing together individuals with varied experiences, perspectives and skills.

Standard: The nonprofit completes a written assessment to:

• Identify the community and constituents served by the organization in meeting its mission;
• Evaluate whether the composition of the organization (including, for example, board, staff, volunteers, donors, vendors and partners) reflects the diversity of the community it serves.

Using the written assessment, the nonprofit determines how it can best serve the broadest possible constituency given the organization’s mission.

Philosophy: An effective Board of Directors is engaged in the nonprofit’s mission and possesses a sound knowledge and understanding of its operations and finances. A process to orient and to assess the board’s effectiveness is important to a nonprofit’s success. A nonprofit should plan for the future and regularly use board evaluation tools to plan and manage succession and assess capacity and expertise to govern effectively.

Standard: The nonprofit provides an orientation to new board members within one year of initial election that includes a review of board roles and responsibilities. In addition, the board annually assesses its effectiveness and capacity to govern.

Philosophy: A well-governed nonprofit uses a deliberate board nominating process that does not perpetuate the status quo. This provides a way to recruit members with new and different expertise, as circumstances change, and allows for greater participation by the communities served.

Standard: No elected voting member of the board serves for more than five years without standing for re-election. Organizational bylaws set a certain number of consecutive terms that can be held by a board member or provide for a limit on the number of consecutive years served.

Philosophy: A nonprofit’s board is responsible for the organization’s mission and programs. It is important that a board meets regularly to assure that it is able to make informed decisions.

Standard: The Board of Directors meets at least four times per fiscal year with a quorum, and maintains written minutes for each board meeting and each meeting of any committee with authority to act on behalf of the board.

Philosophy: The ability of a board and its officers to act independently is compromised when key officer positions are simultaneously held by the same person and there is too great a presence of paid staff on the board.

Standard: Not more than one voting member of the board is a paid staff person of the nonprofit. No paid staff person serves as board chair, and no board member serves as both board chair and treasurer simultaneously.

Philosophy: Voluntary board service affirms that the nonprofit exists to provide a public good and not to personally benefit an individual or group of individuals outside the scope of its mission. Most donors and nonprofits expect that board members will serve without compensation. A nonprofit also should take steps to ensure that any expense reimbursements for board service are reasonable. 

Standard: The nonprofit does not compensate board members for board service other than reimbursement of reasonable expenses directly related to their board service.

Philosophy: An important duty of a nonprofit’s board includes regular discussion of chief executive goals and setting the annual compensation of the chief executive. Annual goal setting and year-end assessments against the goals establishes trust and understanding and identifies strengths and areas of opportunity in leadership development. Likewise, it builds public trust to assure that compensation decisions are carefully considered and that pay is reasonable.

Standard: The Board of Directors annually sets performance goals with the chief executive or management company and assesses the individual or management company against those goals and other relevant criteria. The board, or a committee to which it has delegated compensation authority, obtains and reviews compensation data for comparable positions and considers whether the compensation is reasonable. Only individuals free of a conflict of interest in the compensation decision may participate. The compensation deliberations are documented in meeting minutes.

Philosophy: The board should take responsibility for the accuracy and transparency of a nonprofit’s annual financial filing.

Standard: The board conducts a timely review of the complete IRS Form 990 and all attachments.

Philosophy: A board’s deliberations should be independent and free of bias from board members or key employees who may have a personal interest in the outcome.

Standard: The nonprofit addresses director, officer and key employee conflicts of interest through a written policy that prohibits an interested party from approving or voting on a conflicted transaction and requires annual disclosure of potential conflicts. The nonprofit consistently enforces compliance with the policy.

Philosophy: To demonstrate accountability to donors and constituents and to prevent abuse, a nonprofit should provide a means for reporting on perceived or possible illegal practices or violations of organizational policies.

Standard: The nonprofit maintains a policy and communicates procedures for the reporting and investigation of complaints about perceived or possible illegalities, questionable practices or policy violations. The policy provides for the confidentiality of the individual who reports the complaint and protects him/her from retaliation by the organization.

Philosophy: Proper protection and destruction of important organizational documents is symbolic of a nonprofit’s dedication to governance and accountability. A nonprofit should ensure that its document retention practices comply with legal requirements.

Standard: The nonprofit maintains a policy describing the retention and destruction requirements for its key governing, legal audit and financial documents.