Why You Should Set Nonprofit Board Policies

Nonprofits often grow organically, beginning with a charismatic founder and a good idea. As they evolve and the board begins to take shape there is inevitably a debate over the adoption of official policies and procedures.

On one hand, no one wants to over complicate things. Board members are friendly and trust one another, the organization has few assets, and the work of the board is already more than can be handled in one meeting. Why not wait until something becomes an issue to make a change?

Waiting for a conflict or trigger event to force a decision can negatively affect the impact and vitality of your board in several ways:

Whatever policy is then created will be influenced by that specific set of circumstances.

The immediate conflict will dictate the policy instead of the policy dictating the resolution. A policy should work across the board, regardless of specifics.

It may be too late.

Not having a policy to protect whistleblowers may deter a volunteer or fellow board member from coming forward. Policies are a way of taking a stand about the values of the organization. Protecting whistleblowers, promoting diversity, and valuing transparency can all be codified into official policies.

Time may not be on your side.

Most boards do not move as quickly as one may like. What might seem like a simple vote of allocating funds may turn into a multi-meeting debate. Having an existing policy around conflicts of interest can prevent delays and provide clarity.

Policies set expectations. Board members need to know the rules in advance or else they can’t be held accountable. A small nonprofit board should at least have a Code of Ethics, Board Meeting Attendance Policy, Conflict of Interest Policy, and Whistleblower Policy. A media relations policy, private investment policy, document retention policy, and others may be added depending on the specific nonprofit. Each year ESC helps dozens of nonprofits figure out how to optimize their boards by adopting policies, procedures, and practices tailored to their specific situation.