Nonprofits Refresh Your Corporate Documents

One simple way to make your life easier as a nonprofit leader is to always make sure your organization’s corporate policies and documents are up to date.  Nothing causes chaos quite like old policies that haven’t seen the light of day for years, but this is an unnecessary problem to face which is easily avoided and simple to fix.  Make it a point to hold regular reviews, at a Board level, of your critical corporate documents.

Corporate Documents Defined

This set of policies, procedures and filings represent the organization’s operational directives and they should cover the “what” and the “how” of your nonprofit’s basic day to day activities.  These will be unique for each organization, but many are common items across most nonprofits.  Corporate documents include;

  • Bylaws
  • Articles of Incorporation
  • Tax Exempt Determination Letter
  • Tax Exempt Application (don’t worry, it seems that hardly anyone has this)
  • Committee Charters
  • Delegation of Authority
  • Conflict of Interest Policy
  • Whistle Blower Policy
  • Document Retention Policy
  • Strategic Plan
  • Development Plan
  • Succession Plan

Definitions and templates for most of these documents are readily available on a number of sites and a couple of my favorite sites are Board Effect and National Council of Nonprofits.

Importance

These documents represent the core of what your nonprofit does and how it goes about delivering its mission.  They act as reference and instructions, providing both perspective about corporate norms as well as specific guidelines and expectations.  All Board members and senior management staff members should be well versed in these documents for two reasons.  First, the documents bound decision making and second, as living documents, they need to be refreshed from time to time.

Corporate documents help to keep efforts aligned and provide boundaries that establish corporate culture.  The documents may reflect a strong desire for avoiding risk and while implementing policies and procedures that risk avoidance mentality will work its way into the organization’s culture.

Reasons to Refresh

Things Change

There are many reasons to keep your corporate documents up to date.  First of all, your nonprofit and the environment it functions in are constantly changing.  Growth, diversification, changes in regulations and changes in leadership dynamics are a constant, so, your corporate documents must change in order to continue to function.

Slipping Through the Cracks

No matter how complete your corporate documents appear it is highly unlikely that they effectively address every situation that they should.  Policies meet reality and learning hopefully occurs, so corporate documents need to change to reflect the increased knowledge that your nonprofit has gained through experience.  A bad result is when the nonprofit learns something, but it doesn’t integrate that learning into its operations.

Orientation

As your organization changes over time, new Board members and leaders arrive.  One of the most important portions of orientation is a review of the corporate documents.  A great way to test a new Board member’s confidence is to include out of date information or old ineffective policies in your orientation processes.  A set of Bylaws I recently reviewed had an entire section on contact via fax machine and that did not build my confidence level in the organization’s operations or its embrace of technology.

Legal Protections

Directors and Officers insurance policies protect Board members and key personnel from liability, but only when they act in accordance with the organization’s policies.  So, if your Board has strayed from the original version of your bylaws or is not strictly adhering to its conflict of interest policy because it is out of date, then you, as a director or officer are opening yourself up to legal liability.

Bottom Line

Corporate documents form the core description of what your organization does and how.  As nonprofit leaders get yours in order and keep them up to date with a regular review.  Make sure you integrate changes in the organization and any regulatory updates.  Use the documents as a learning tool for those new to the organization and keep yourself protected by following your policies and updating them when necessary.

About the author:

Michael F. Cade is a nonprofit leadership pathfinder, guiding nonprofits Beyond the Numbers to solve problems, optimize operations, execute strategy and ultimately attain long-term viability and relevance.  His Framework for Fiscal Sustainability is an innovative comprehensive evaluation tool for assessing organizational health and ongoing mission readiness.

Mr. Cade has been an executive coach for over 18 years working with leaders from for-profit and nonprofit organizations.  He specializes in facilitating executive advancement and transitions and strengthening leadership competencies.

Mr. Cade speaks on nonprofit leadership and strategy topics, and has authored articles, guest blogs and podcasts. He publishes the nonprofit leadership blog  Not for Profit Beyond the Numbers

If you have questions on this or other nonprofit leadership issues, contact him at:  mfcade@nfpbeyondthenumbers.com

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