March 1, 2024
Did March come in like a lamb or lion?
Wow, Iowa weather has been completely crazy the last few days. In the last week we’ve experience all four seasons: Fall, Spring, Summer, Winter. In just a single week!
While Iowa’s weather may be ever-changing, some things never change. Such as the ten (10) specific policies that every nonprofit should adopt. Adopting a strong set of policies that provide operational, financial, and legal guidelines is one of the best things a nonprofit can do to steer and guide its board and staff.
During this month of March (2024), I’ll be explaining the policies nonprofits need to establish a solid foundation for maintaining their financial health, improving their operations, and fulfilling their missions.
A well-drafted nonprofit policy will:
- Enhance the confidence of donors and other stakeholders;
- Establish a consistent framework for decision-making;
- Improve compliance with federal, state, and local laws;
- Reduce myriad risks to its board, staff, volunteers, and donors.
The IRS requires nonprofits to file Form 990 every year. IRS Form 990 is the “tax return” which all nonprofits must file. IRS Form 990 expressly references ten (10) specific policies on its Form 990.
The IRS does not currently require nonprofits to adopt these polices. However, by expressly asking about these specific policies on Form 990, it is clear the IRS is strongly, strongly encouraging nonprofits to adopt these policies.
In alphabetical order, the ten (10) policies referenced on IRS Form 990:
1. Compensation Policy. States compensation ranges for positions, keeps job descriptions current, outlines salary administration, and establishes a process for management performance and discipline. It also explains philosophy of how compensation supports the organization’s mission.
2. Conflict of Interest Policy. Requires members with a conflict (or potential conflict) to disclose it and excludes individual board members with a perceived conflict from voting on matters in which they may unfairly benefit.
3. Document Retention and Destruction Policy. Clarifies the types of documents that should be retained, how they should be filed, and for how long, as well as describes proper deletion and/or destruction techniques.
4. Financial Policies and Procedures. Provides specific guidelines for financial decision-making, reporting the nonprofit’s financial status, managing funds, and developing financial goals. It should also outline the budgeting process, investment reporting, what accounts may be maintained by the nonprofit, and when scheduled auditing must occur.
5. Fundraising Policy. Describes provisions for compliance with local, state, and federal laws, as well as ethical practices the nonprofit follows in its fundraising efforts, including soliciting donations.
6. Gift Acceptance Policy. Different from a Fundraising Policy, it establishes how certain types of assets — specifically non-cash donations — are handled by providing protocols for their evaluation and steps for accepting or politely declining them.
7. Investment Policy. Designates who is accountable for investment decisions and offers guidance on growing and protecting investments and maintaining access to cash.
8. IRS Form 990 Review Policy. Lays out the specific steps for distribution and the procedural review of IRS Form 990 to ensure compliance and maintain tax-exempt status.
9. Public Disclosure Policy. Describes what organizational documents must be made available to the public upon request and those that will be kept internal.
10. Whistleblower Policy. Establishes a process for handling whistleblower complaints and specifically prohibits retaliation against employees reporting on credible suspicions of illegal practices or nonprofit policies.
Iowa nonprofits make transformational investments in their communities in a wide range of areas: education, animal welfare, the environment, children, and the arts, among many others. Adopting these 10 policies is an investment that nonprofits must make in themselves to successfully carry out their missions forever.
For the month of March, I’m offering a special to Iowa nonprofits. I will draft, revise, and edit, the ten (10) policies expressly referenced by the IRS on Form 990 specific to the unique mission of your nonprofit.
Questions about the ten (10) policies referenced on IRS Form 990?
My email is: gordon@gordonfischerlawfirm.com
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While Iowa’s Weather Changes, Some Things Never Do - Every Iowa Nonprofit Should Adopt Ten (10) Policies
