Essential Policies For Nonprofit Organizations
It is important to have all of the required essential policies for nonprofit organizations in place from the very beginning.
Every organization has their must have legal documents, but does your organization have the Essentials?
As you are either setting up your nonprofit organization, or running a multi-million dollar nonprofit one thing rings true, the business needs never end.
Most organization especially nonprofits, are simply just trying to survive. Remembering and finding time to establish current policies can simply be an impossibility.
From trying to gather up the needed financial support, finding support staff, volunteers, donations, special events, fundraisers, the daily tasks never end and only increase with time.
It is not until we get notified of an IRS audit or get involved with an insurance liability claim, that we finally stop and revisit all of the items we forgot to finish.
Essential Policies For Nonprofit Organizations: Legal Documentation
If, or shall we say when your nonprofit organization, is selected for an Internal Revenue Service (IRS) audit will you be prepared for success? IRS audits happen to most businesses and nonprofit organisations. They are usually the result of a specific triggering event such as payroll issues, or the unlucky result of your nonprofit being randomly selected out of a hat.
Regardless of what triggered the IRS audit, no one is prepared for such an inspection and the audits only add to the stress and extra time required to satisfy the auditor request.
Here are a few essential policies for nonprofit organizations to have in place:
- Conflicts of interest Policy – Outside organization and the IRS want to know a nonprofit is not violating any laws by using the monies received for other operations outside of the nonprofit. Perspective board members who operate a similar business which create a conflict of interest, should be prohibited from business relations with the nonprofit and disallowed from votes that create the possibility of a conflict. Nonprofit are prohibited from operating for the benefit of private interests. Establishing a conflict of interest policy requiring board members to disclose any business dealings, helps prevent a conflict of interest related to the operations of the nonprofit and any board members. It is the responsibility of the IRS to ensure board members who run the nonprofit organization, have the best interests of the organization in mind.
- Written Whistleblower Policy – Many lower level employees or volunteers can feel intimidated, to bring up issues and concerns related to a perceived illegal activity or misuse of company assets. Establishing a whistleblower policy assures your staff and volunteers can bring forward any concerns without fear of retaliation. A good whistleblower policy, will outline the appropriate steps of how to confidentially take action.
- Proper document retention – The IRS establishes clear rules on maintaining your legal documents for a specific period of time. A document retention policy, will establish a clear expectation of all documents that are required to be saved and for how long. This will further help protect the nonprofit organization from mishaps based on an employee or volunteer claiming to not know.
- Keep accurate and current board meeting minutes – Many nonprofit organization fail to maintain the proper meeting minutes. IRS auditors will request a copy of the board meeting minutes for the year being audited. All major decisions made by the board such as contracts, organizational changes, salaries, job descriptions, and expenditures that are subject to board approval must be clearly documented. Any long held religious beliefs should be clearly outlined in your meeting minutes as well.
- Review accuracy of Form 990 on an annual basis – The Form 990 is the mostly likely culprit to triggering an IRS audit. it represents the activities and financial standing of the nonprofit organisation. Church Insurance Companies also review your Form 990 when considering offering coverage. This helps underwriters so find any items that could be cause of concern for a future claim. Make sure the information on your Form 990 is completely accurate and representative of your current organization.
If your nonprofit is involved in an IRS audit and you have done your best to stay above board, I would not stress over the audit. Most auditors are simply trying to correct an honest mistake they found, and will use it as learning experience. Having the essential policies for nonprofit organizations in place ahead of time, will only help further protect you and reduce unwanted stress. Do your best to be prepared now, for the day when the IRS come knocking on your door.
Essential Policies For Nonprofit Organizations: Insurance Coverage
As your nonprofit grows, there will be additional insurance coverage for nonprofits that you will want to add if you didn’t purchase them on day one.
Most nonprofit organizations, purchase the bare minimum when they first open their doors. They are quick to inform their nonprofit insurance agent, they will purchase the rest at a later time. We have found that the majority of nonprofits, never revisit their insurance coverage until after their first claim.
It is only after their first claim, they discover how little insurance coverage for nonprofits they have, when the insurance company issues out a denial of coverage.
What insurance coverages should a nonprofit have in place?
- General Liability Insurance
- Workers’ Compensation Insurance
- Directors and Officers Insurance
- Employment Practice Liability Insurance
- Business Auto Insurance
- Abuse and Molestation Coverage
- Professional Liability Coverage
- Crime Policy
- Employee Theft Coverage
- Employee Benefits Liability Insurance
- Umbrella Policy
- Group Health Insurance
The list of coverages can seem endless and expensive. The good news is many nonprofit insurance companies will offer a complete package deal. This helps drive down cost. For most nonprofit organization, this are the perfect insurance solution. Having all of the needed insurance coverages is part of your essential policies for nonprofit organizations.
Build Your Essential Policies For Nonprofit Organizations With US
Integrity Now Insurance Brokers is here to help obtain all essential policies for nonprofit organizations. Because we specialize in insurance for churches and nonprofit organizations, we have the needed experts in place.
If you don’t have the essential policies for nonprofit organizations in place, you could face unlimited financial consequences. Have the correct insurance in place today, will save you millions of dollars in the future.
Reach out to one of our church insurance agents and request a quote today. They will review your essential policies for nonprofit organizations, to help you make sure you didn’t leave anything out.