Transparency and Accountability

Principles and Practices for Nonprofit Excellence
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Principles and Practices for Nonprofit Excellence

Nonprofits have an ethical obligation to their constituents and the public to conduct their activities with accountability and transparency. Nonprofits should regularly and openly convey information to the public about their mission, activities, accomplishments and decision-making processes. Information from a nonprofit organization should be easily accessible to the public and should create external visibility, public understanding and trust in the organization.

Accountability

  • A nonprofit must comply with all legally required reporting procedures.
  • A nonprofit has an obligation to responsibly use its resources toward its mission and to benefit the community. The organization’s board should approve its financial audits, while the executive director and principal financial manager should attest to the audits.
  • A nonprofit has a responsibility to establish and regularly determine clear performance measurements and to share those results with the public.
  • Each nonprofit has a responsibility to adhere to the established industry standards that apply to its particular activity area.

Accessibility

  • Boards of directors should provide information to the public that describes their decisions and decision-making processes. They should make meeting agendas and descriptions of significant decisions available to those who request them.
  • A nonprofit should provide its constituents with ongoing opportunities to interact with the board and management regarding its activities.

Public Information

  • A nonprofit should produce an annual report (either printed or Web-based) that contains information on its activities and performance. The annual report should include:
    • An explanation of the organization’s mission, activities and results;
    • An explanation of how individuals can access its programs and services;
    • Overall financial information, including income and expense statement, balance sheet and functional expense allocation; and
    • A list of board members, management staff and contributors.
  • Each nonprofit organization must also make certain data available to the public, including:
    • IRS Form 990 for the previous three years, including clear statements of program service accomplishments in Part III; and
    • IRS Form 1023, Application for Recognition of Exemption.
  • A nonprofit should provide multiple means for contacting the organization to request information or provide input.

Solicitation of Community Input

  • Nonprofit organizations are encouraged to hold public meetings to gather and distribute information about their approaches, goals and effectiveness in carrying out their missions.
  • Nonprofits should openly gather and exchange information on lessons learned and best practices with other nonprofits to promote overall effectiveness and accountability within the sector.
  • Nonprofits should actively work with other organizations to avoid duplication of services.

Fairness and Equity Practices

  • Information regarding fees and services should be made readily available to the public. When charging for services, nonprofits have an obligation to price equitably and to take into account the consequences of denial of services due to an individual’s inability to pay.
  • Nonprofit employees should have a mechanism for reporting misconduct which protects the individual making the report from any punitive repercussions.
  • Nonprofits should ensure non-discriminatory service to their constituents.
  • Nonprofits should ensure confidentiality to their constituents.
     
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