Starting a nonprofit – necessary policies and procedures

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Starting from scratch with a new nonprofit organization is your chance to do it right. Doing things correctly from the beginning will save you a ton of headaches down the road. On the other hand, if this seems overwhelming, you might want to reconsider starting an organization. A nonprofit has a lot of responsibilities beyond just helping people.

In addition to the documents that are legally required like the articles of incorporation and bylaws, there are several policies you should put in place. Here are the basics that every organization should have, no matter its size:

Financial policies – how will the money be handled? How will the group ensure that there are checks and balances? Yes, you may trust everyone now, but things happen and new people will come in as the organization grows. Keep it clean and ethical with solid policies. Plus, having clear financial statements will impress funders. Blue Avocado has a fantastic financial policies and procedures template. For a smaller organizations, this sample policy from Propel Nonprofits may be more appropriate.

Annual budget – What do you expect to raise over the next year? What are your expenses? See my article on nonprofit budgeting to get started.

Board member job descriptions – what do the board members actually do? What is the actual time commitment? How does someone join the board?

Conflict of Interest policy – for all board members and management staff. This is required by the IRS but is also just good practice. Here’s a good discussion and samples. Also, this is a good basic policy.

Code of Conduct and Ethics – discussion and samples here

Donation and volunteer time tracking – how will it be tracked? Who will make sure it is done? Who will write thank you notes?

Operations Manual – Especially at the start of an organization, just a few people are doing everything. Make sure that each person is writing down what they do and how to do it, so that if they leave for any reason, the organization won’t suffer. A good way to do this is to create a calendar and write down daily, weekly, monthly and annual tasks, and then fill in the details for how they are down and where the important information can be found.

This article shares how an all or mostly volunteer organization operates best. It is easy to get mired in the details if the same people are on the board and also carrying out the operational aspects of the organization. However, with some conscious thought, nonprofit boards can divide up these duties and still move forward.

Please add your thoughts below about other critical policies and procedures for a startup nonprofit. What do you wish you had in place in the beginning?

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