4 Board Governance Best Practices

To initiate our mini-series on Board Governance policies and Board Fiduciary responsibilities, we will cover some best practices that every board should follow.

Effectively supporting your not-for-profit means finding the right balance of directing board members and ensuring compliance while achieving the organization’s objectives to not only drive improvement but maintain a good ethical and legal standing. We’ve outlined four best practices to help you find this balance in both legal and compliance issues to communication and strategy.

1. Legal and Compliance: Take Detailed Minutes.

In addition to staying current with legal issues, it’s important to help other board members and the rest of the organization stay privy to your updates. One of the best ways to ensure effective communication is through board minutes. Minutes also provide crucial support for decisions that could be examined during legal proceedings or IRS examinations. It should be a part of your organization’s best practice to document all key decisions made by the board.

2. Make Your Code of Ethics Transparent.

Such annual reviews should of course line up with the organization’s code of ethics. This code provides the benchmark for the not-for-profit in self-evaluation and extends from board members to volunteers and everyone in between. While your organization’s code of ethics are not currently directly asked for on the Form 990, several questions on the Form are related to ethical concepts.

3. Exemplify Conflict of Interest Scenarios.

Just as the code of ethics should be upheld, so should your conflict of interest policies. The board should discuss and cite examples of conflicts of interest during at least one board meeting a year. The board minutes should include this discussion on how potential or actual conflicts were resolved. Best practice would be to obtained signed conflict of interest statements on an annual basis.

4. Understand Your Document Retention & Destruction Policies.

Form 990 inquires whether your not-for-profit has a document retention and destruction policy. This is one of the reasons why it’s important for your organization to have a schedule detailing which documents should be retained to comply with federal and state laws. Make this easier for your team by conducting an internal “document audit” to ensure that all records are maintained for the proper period of time. This also extends to electronic records.

For more information about board governance, contact our not-for-profit team.

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By |2019-01-21T13:29:26+00:00January 21st, 2019|Audit and Tax|0 Comments

About the Author:

Sikich LLP
Sikich is a leading professional services firm specializing in accounting, technology and advisory services. For over 30 years, Sikich has been helping clients focus on overall business growth and the components that result in building the bottom line. Sikich has more than 750 associates and has been ranked as one of the country’s 30 largest accounting firms and among the top one percent of all enterprise resource planning solution partners in the world.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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