Getting an annual physical is one important step to assessing personal health. In the same way, non-profit organizations should take some time annually to ensure they have a solid base in order to protect the organization and maintain focus on their charitable purpose. The following 4 areas should be reviewed annually.
- Current Mission of the Organization
In order for a mission statement to be effective, it should include the organization’s purpose or cause, and the services and activities it provides and performs to support the purpose or cause. It should also include the fact that the organization operates under a non-profit status. When writing a mission statement, it is important to keep in mind the organization’s brand and marketing so that the mission statement can be used to support and build the brand.
- Strategic Plan
The organization’s strategic plan should include details regarding the mission statement, fundraising plans and communication plans. The strategic plan should be updated on a regular basis (or annually) in order to lead the organization’s growth, ensure the needs of the organization are met, and to support its mission. In addition, the strategic plan should be used as a resource to show donors and prospective donors the success of the organization, operation and growth goals of the organization, and the prudent spending of donor funds.
- Organizational Infrastructure
The organization should build and maintain a solid infrastructure. Just as a house cannot be built on quicksand, the organization must have a solid foundation in order to be effective in fulfilling its mission as well as to maintain a good reputation in the community and with donors/prospective donors. Components of a solid infrastructure include:– Strong Corporate Governance
Strong corporate governance includes having an effective board with the right mix of members that meet on a regular basis and work with management to move the organization forward.– Established By-Laws
By-laws should define the size of the board and the responsibilities of the directors and officers, and address conflicts of interest and other governance issues.
– Articles of Incorporation
Articles of incorporation, which are filed with the state, include the legal name of the organization, the registered agent, the office address and tax exemption information.
– Proper Registration with State Authorities
Most states require non-profit organizations to register with the state in order to solicit funds. Also, many states allow the organization to apply for sales tax exemption when purchasing items to be used toward the non-profits mission.
Well organized records are critical for non-profit organizations as they are required for compliance with governmental regulations, board meetings, audits and tax filings. The better the organization’s record’s the more transparent the operations.
Ideally, not-for-profit leadership should review these areas on an annual basis in order to maintain a well run organization. The Keiter Not-for-Profit team would be happy to discuss any of these best practices in more detail should you want more information.
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As a co-founder and board member of a local not-for-profit organization, Amy is familiar with the special issues not-for-profit organizations face. At Keiter, Amy works with not-for-profit organizations including religious-based entities, endowment funds, private foundations and voluntary health and welfare organizations. She assists clients with designing and implementing fund accounting systems, endowment accounting, accounting for contributions and investments for not-for-profits, and OMB Circular A-133 reporting. Read more of Amy’s insights on our blog.
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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.