Best Practices


Effective, sustainable programs are the result of strong organizations.

The Art and Science of Management


Through our 65+ years of work in the nonprofit sector, the Community Foundation has come to understand that in order to manage operations and high-performing programs to effect community impact, an organization has to have a knowledgeable and capable staff, strong leadership, value for innovation, a clear vision and—perhaps most important of all—a sound strategic plan.

We’ve identified key factors that drive an organization’s success, including board and staff engagement, sound fiscal health, mission driven operations and, of course, commitment to excellence. The Foundation team has documented best practices in organizational management in six key areas of operations.

Six Areas of Success


Each section below outlines characteristics of effectiveness for each of the six areas of focus—illustrating for nonprofits, donors and others the Foundation’s point of view when reviewing a nonprofit organization’s request for funding.

At the Community Foundation, we believe that high-functioning nonprofits develop, implement and evaluate their organization via written and periodically updated strategic or business plans. After all, an effective strategic plan sets the direction and establishes priorities for the entire organization. It provides a mechanism that aligns organizational staff and resources toward achieving organizational goals and programmatic outcomes. And it facilitates both internal and external organizational communications, simplifying decision-making with regard to specific goals and priorities.

Effective strategic plans should entail the following characteristics:

  • Clear goals, measurable objectives and annual work plans with assigned staff and/or board responsibilities
  • Planning that takes into account and includes resources—costs and staff capacity—necessary to achieve objectives
  • Evidence of an environmental scan, which includes assessing stakeholder and community needs and SWOT (strengths, weaknesses, opportunities and threats) analysis
  • Planning that covers a longer period of time (generally at least two or more years) and includes quarterly, semi-annual or annual written assessment by staff and board to measure organizational progress toward goals
  • Stakeholder participation, including input from staff, board and consumer/clients throughout development

Resources

The Community Foundation believes effective nonprofits require strong and wise leadership. A board of directors does more than serve the organization’s interests and needs. As volunteer leaders, they’re also responsible for oversight, fund development, building capacity and organizational vision. The board of directors has the fiduciary responsibility to ensure the organization’s resources are used in a reasonable, appropriate and legally accountable manner. The staff leader of the organization serves at the direction of the board.

The following characteristics are best practices for nonprofit governance:

  • A file or official record book maintained for board meeting minutes
  • Written job descriptions and clarity of roles and responsibilities to ensure transparency, the absence of impropriety and delineation of accountability
  • An orientation and training for board members
  • Written policies and procedures in place to ensure legal compliance and ethical integrity
  • Annually board member signatures on a conflict-of-interest policy and confidentiality agreement
  • Term length and term limits are outlined in the organization’s by-laws
  • Annual performance assessment of board and its executive director
  • Personal financial contributions from board members to the organization

Board Diversity and Inclusion
With a focus on strong leadership, the Foundation believes that a nonprofit board that is inclusive of diverse members, who reflect the community that it serves and represent various life experiences and cultures, can only benefit an organization seeking to fulfill its mission.

The following are the Foundation’s working definitions of the terms:

  • Diversity is the state of variety and includes characteristics in people that may include, but are not limited to: age; ability and disability (mental, learning, physical); beliefs and values; cognitive style; economic background; education; ethnicity; gender and gender identity; geographic background; language(s) spoken; marital/partnered status; physical appearance; political affiliation; profession; race; religious beliefs and affiliation; sexual orientation; thoughts and opinions
  •  Inclusion is the continual process of embracing the diversity that individuals bring to an organization. In an inclusive environment, individuals are comfortable expressing their ideas and creativity, and are aware of their value added to the organization. Inclusive environments are supportive, engaging, empowering, welcoming and collaborative

The following are best practices for nonprofit governance specifically related to diversity and inclusion:

  • Board members have reached consensus about the value and benefits of expanding the diversity of the board
  • Board members have discussed ways to identify and address discriminatory and non-inclusive behaviors
  • Board members have developed an inclusive culture and inclusive board dynamics
  • Written policies and procedures are in place to ensure diversity in the board membership
  • Collectively, the board has the skills needed to successfully lead the organization
  • The board includes individuals who can represent the interests of the population served by the organization

Resources

The Community Foundation believes highly functioning nonprofits are essential to the region’s quality of life. This requires dedication, outstanding leadership, knowledgeable staff and an organizational culture designed to promote continued professional development. A nonprofit organization’s human resources include paid staff members, as well as volunteers who support programs, operations and governance.

Effective management of human resources is essential to the success of a nonprofit organization and includes the following best practices:

  • Written personnel policies distributed to all staff and volunteers
  • Current written job descriptions for each position, both staff and volunteer
  • Annual written performance reviews of all staff (including the executive director) that include a personal conference with their supervisor
  • Professional development opportunities, either internal or external, available to all staff each year
  • Staff meetings held at least once a quarter
  • Written policies that address diversity, legal compliance and compensation and benefits
  • Staff that’s representative of the community and clients/audience served
  • Succession plans for staff leadership positions
  • Required annual completion of confidentiality agreement and conflict-of-interest form for staff
  • Evidence of staff accountability appropriate to the organization’s size and structure

Resources

The Foundation believes that highly functioning nonprofits clearly understand their financial stewardship responsibilities. Accountability, transparency, the implementation of best practices regarding budget building, revenue development, expense and investment management and annual, independent audits are key to continued philanthropic support.

Effective fiscal management is critical to the development, growth and success of a nonprofit organization and includes the following best practices:

  • Preparation and adherence to an annual budget
  • Budget that reflects priorities designated in the strategic plan
  • Quarterly reports comparing budgeted vs. actual balances
  • Board of Directors finance committee that meets at least quarterly and reviews agency budget to actual reports and interim financial statements
  • Annual independent financial audit that conforms to generally accepted accounting principles (GAAP) for organizations with budgets over $250,000, or certified financial statements that conform to GAAP for those with budgets less than $250,000
  • Process for the Board of Directors to receive and review financial statements prepared by the auditor or independent financial reviewer in compliance with GAAP
  • Cash flow planning and sufficient cash to meet current obligations
  • Accurate and timely completion and filing of IRS Form 990
  • Diversity within an organization’s funding sources
  • Evidence of responsive or scenario planning in response to the current economic climate

Resources

The Foundation believes well managed and resourced nonprofits are essential to the region’s quality of life. And one of the best approaches to accomplishing this is to leverage resources and partner with stakeholders. Organizational partnerships are defined as cooperative, collaborative relationships that exist between two or more independent nonprofits to increase administrative efficiency and/or programmatic impact through shared, transferred or combined services, resources or programs. The varying types of partnerships are described as follows:

  • Cooperation: Mutually beneficial administrative and program relationships that may include sharing information, clients, space and other resources. Also includes relationships in which organizations agree to work on projects together
  • Coordination: Deeper relationships built upon compatible missions, joint planning, division of roles and resources and consistent communication channels in which accomplishments are mutually acknowledged. Partners recognize the value in the relationship and begin to develop a supportive partnership infrastructure
  • Collaboration: The deepest of organizational relationships, where documented expectations and a structure to achieve goals beyond those any individual partner could achieve are in place. Organizations have established long term, ongoing operation of coordinated or cooperative activities and have demonstrated continuity and long-standing trusting relationships

Successful organizational partnerships include:

  • Established working partnerships with other organizations in the community that have been in place for more than one year
  • Establishment of common goals, pooling resources, joint planning, implementing and evaluating services and evaluating services and procedures
  • Up-to-date memoranda of agreements or similar documents
  • Different types of partnering organizations, e.g. with corporations, government agencies or religious institutions
  • Both programmatic and operations-focused relationships
  • A process for reviewing the results and impact of the relationships on an annual basis

Resources

Strong program management ensures that the core programs are in alignment with the organization’s vision and mission, as well as ethical practices. Customer, client and/or consumer needs and input are evaluated regularly and are included in program and organizational planning and management practices. Staff and team members should have a clear, defined mission and lines of authority in order to get the job done.

Successful program management includes the following characteristics:

  • Written goals and a budget for each major program that align with the organization’s current strategic plan
  • Tracked quantities of services provided by each program
  • Identified outcomes for each program and indicators to measure progress against its strategic plan
  • Measured results against outcomes in strategic plan
  • Mechanism in place to periodically (e.g., monthly, quarterly, annually, etc.) obtain and document consumer comments on each program
  • Consumer input solicited in making program revisions
  • Evidence of responsive changes to programming based on the community’s needs
  • Ease of access to programming by stakeholders
  • Written policies and rules related to consumers, such as confidentiality, client rights and responsibilities, fee structures, payment guidelines, hours of operation and eligibility criteria
  • Distribution of written guidelines on the organization’s policies and rules to consumers, as applicable

Resources

Ready to get started on your Organizational Profile? Just go to our online portal now.

Begin the Journey