Nonprofit Governance: A Checklist

Nonprofit organizations are expected to show they are worthy of the public’s trust. It’s up to an organization’s board to maintain the highest standards of accountability, transparency, and good governance.

Volumes have been written about best practices for nonprofit governance. The following is a list of key policies, procedures, and guidelines in four broad areas that board members should fully understand and enthusiastically support.


  • Code of ethics. This is a written document that spells out the organization’s values and provides a code of conduct for everyone who works for the organization. The code of ethics should be shared with all board members, staff, and volunteers on a recurring basis.
  • Conflict-of-interest policy. This document spells out the procedures to be followed to ensure that conflicts of interest (or the appearance of conflicts of interest) within the organization and the board are managed appropriately.
  • Whistleblower policy. This policy ensures that the organization will not retaliate against an individual who provides information about suspected illegal practices or violations within the organization and that the individual’s confidentiality will be protected.
  • Document retention and destruction policy. This document outlines the procedures the organization has put in place to protect its business records and other important documents and to ensure that the organization stays in compliance with state and federal document-retention laws.

Effective Governance

  • Review of governing documents. As the organization changes and evolves, the board should review — and update as needed — the organization’s articles of incorporation and other governing documents. Making the organization’s governing documents available to the public will enhance transparency.
  • Size and structure of the board. There are no hard and fast rules for board size and structure. State law establishes a minimum number of board members. Beyond that, size should be determined by the needs of the organization and such factors as workload, legal mandates, diversity needs, etc.
  • Board compensation policy. Not all organizations compensate board members. Those that do should have a written policy that addresses compensation, and the amount paid should be reasonable and similar to what comparable organizations pay.

Financial Oversight

  • Review of financial statements. The board must ensure that accurate and current financial records are being kept and review the organization’s financial statements on a regular basis (such as quarterly). Some boards form subcommittees to oversee the organization’s finances (e.g., a finance committee and an audit committee if an independent audit is conducted) and then report to the full board.
  • Review Form 990. Board members should have an opportunity to review, discuss, and ask questions about the organization’s annual Form 990 before it is filed with the IRS.
  • Expense reimbursement. Published IRS guidelines require that documentation and receipts be provided for reimbursement requests for purchases over a certain dollar amount. Boards will want to make sure the organization does not pay any expenses for spouses, dependents, and others who accompany a staff person conducting business on behalf of the organization unless that person is also conducting business for the organization.

Responsible Fundraising

  • Fundraising policy. Having a formal, written policy is a good idea. The policy should establish that solicitation materials and communications with donors will clearly identify the organization and be truthful and accurate.
  • Gift acceptance policy. A gift acceptance policy should reflect the nonprofit’s specific exempt purpose. It should define the types of assets the organization will accept, establish guidelines for the forms of gifts the organization will accept, and outline the organization’s role in administering gifts.

IRS Materials