The Essential Governance Documents Every Nonprofit Needs

Effective governance is the backbone of any successful nonprofit organization. It ensures that the organization operates within legal boundaries, maintains public trust, and achieves its mission efficiently. At the heart of good governance are several key documents that every nonprofit founder and board member should be familiar with. Here’s a comprehensive list of the must-have governance documents for your nonprofit.

1. Articles of Incorporation

The articles of incorporation are the foundational legal documents that establish a nonprofit organization. These documents outline the general purpose and structure of the organization, including its intent to operate exclusively for a nonprofit purpose. Here are some key points about articles of incorporation:

• Filed with the state when the nonprofit is incorporated.
• Need to be refiled if any key issues change.
• Usually follow a standard form and contain minimal detail because they are cumbersome to change.
• Must not contradict state nonprofit incorporation statutes.

2. Bylaws

Bylaws are the significant written rules that establish the governance structure of a nonprofit. They define the duties, authority limits, and principal operating procedures for the board and its members. Here’s what you should know about bylaws:

• Define the governance structure of the nonprofit.
• Include the highest-level board policies.
• Should not contain overly detailed procedures or restrictions as changes must be approved by the membership or full board.
• Should be reviewed for fine-tuning every few years.

3. Policies

Policies are crucial for guiding the operations and decision-making processes of a nonprofit. Here are some types of policies your organization should have:

• Whistleblower Policy: Protects employees and volunteers who report unethical or illegal practices.
• Gift Acceptance Policy: Defines the criteria for accepting donations to ensure they align with the nonprofit’s mission and comply with legal requirements.
• Investment Policy: Details the strategies for managing the organization’s investments to ensure fiscal responsibility and long-term financial health.
• Conflict-of-Interest Policy: Ensures that board members and staff avoid conflicts that could compromise the organization’s mission.
• Document Retention and Destruction Policy: Outlines procedures for retaining and destroying records in a systematic and legal manner.

4. Board Processes

Board processes explain how to implement policies and procedures. These documents serve as standard operating procedures and help in the smooth functioning of the board. Here are some examples:

• A separate document explaining the step-by-step process for building the board or evaluating the CEO.
• Processes for conducting board meetings, including how to prepare agendas and take minutes.

5. Job Descriptions and Charters

Clear job descriptions and charters are essential for defining the expectations for individual board members, officers, committees, task forces, and the chief executive. Here’s what these documents should include:

• Roles and responsibilities of each position.
• Expectations for performance and accountability.
• Terms of service and how members are selected or elected.

6. Agendas

Agendas guide the board’s official business meetings, ensuring that all necessary topics are covered and that meetings are conducted efficiently. Here are some tips for creating effective agendas:

• Include all items that need to be discussed or voted on.
• Provide supporting documents and background information in advance.
• Allocate sufficient time for each agenda item.

7. Documents Recording Board Decisions and Activities

Accurate and detailed records of board decisions and activities are crucial for transparency and accountability. Here are the key documents to maintain:

• Meeting Minutes: A detailed record of what was discussed and decided during board meetings.
• IRS Form 990: While not a governance document per se, it requires indication of whether the board has approved certain policies and followed specific processes when making governance decisions.

Conclusion

Having these governance documents in place is not just a legal requirement but also a best practice for ensuring the long-term success and integrity of your nonprofit. By maintaining clear bylaws, policies, and processes, you can foster a culture of transparency, accountability, and effective governance.

Remember, good governance is an ongoing process that requires regular review and updates to reflect the evolving needs and mission of your organization.