Principles and Practices

for Nonprofit Excellence

Role in Society

Nonprofit organizations provide unique opportunities for individuals to combine their energy, talents and values for community improvement and enrichment. Nonprofits are obligated to understand their role as entities that engage and inspire individuals and communities for public benefit, and to conduct their activities with transparency, integrity and accountability.

Governance

A nonprofit’s board of directors is responsible for defining the organization’s mission and for providing overall leadership and strategic direction to the organization. Each nonprofit board should: 1) actively set policy and ensure that the organization has adequate resources to carry out its mission; 2) provide direct oversight and direction for the executive director and be responsible for evaluating his/her performance; and 3) evaluate its own effectiveness as a governing body, as a group of volunteers, and as representatives of the community in upholding the public interest served by the organization.

Planning

Organizational planning sets the overall direction, activities and strategies a nonprofit employs to fulfill its mission. Nonprofits have a duty to engage in sound planning, define a clear vision for the future, and specify strategies, goals and objectives for plan implementation. Planning should incorporate input from constituents and should be intentional and ongoing to successfully position the organization to achieve its goals.

Transparency and Accountability

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.

Fundraising

Nonprofit organizations provide opportunities for individuals and institutions to voluntarily contribute to causes of their choosing. Nonprofit fundraising should be conducted according to the highest ethical standards with regard to solicitation, acceptance, recording, reporting and use of funds. Nonprofits should adopt clear policies for fundraising activities to ensure responsible use of funds and open, transparent communication with contributors and other constituents.

Financial Management

Nonprofits have an obligation to act as responsible stewards in managing their financial resources. Nonprofits must comply with all legal financial requirements and should adhere to sound accounting principles that produce reliable financial information, ensure fiscal responsibility and build public trust. Nonprofits should use their financial resources to accomplish their missions in an effective and efficient manner and should establish clear policies and practices to regularly monitor how funds are used.

Human Resources

The ability of an organization to make effective use of the energy, time and talents of its employees and volunteers is essential to accomplish the organization’s mission. Nonprofit organizations should place a high priority on exercising fair and equitable practices that attract and retain qualified volunteers and employees. Nonprofits have an obligation to adhere to all applicable employment laws and to provide a safe and productive work environment. Each nonprofit organization should establish specific policies and practices that promote cooperation and open communication among employees, volunteers and other constituents so that they can effectively work together to advance the organization’s mission.

Civic Engagement and Public Policy

Nonprofit organizations play a central role in the democratic process by providing a means for individuals to deliberate on public policies and decisions that affect them. To the extent possible, nonprofit organizations should engage constituents in public policy and advocacy activities as a means to fulfilling their missions and promoting community interests. Open communication and consultation between policy makers and constituents of nonprofit organizations contribute to well-informed policies and the effective implementation of them.

Strategic Alliances

The effectiveness of nonprofit organizations depends on successful relationships with other community institutions. Regardless of form — partnership, collaboration, cooperation or coordination — these relationships, or strategic alliances, can serve a variety of purposes, including resource sharing, policy influence and improved operational efficiency. They strengthen both the capacity of individual organizations and the sector as a whole. Nonprofits should be open to strategic alliances and, when appropriate, should partner with other organizations to strengthen their capability to achieve desired results. Nonprofits should initiate and promote cooperation and coordination between a variety of entities to avoid unnecessary duplication of services and to maximize the resources available to the communities they serve.

Evaluation

Nonprofit organizations have proven to be highly effective at a wide variety of tasks that benefit society. An essential responsibility of every nonprofit organization is to assess the impact of its actions and to act upon this information. The public has a stake in nonprofit performance and is entitled to information regarding organizational results. Nonprofits should regularly measure their performance against a clear set of goals and objectives. They should share this information with their constituents and the public and use it to continually improve the quality of their processes, programs and activities.

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Copyright (c) 2005 by the Minnesota Council of Nonprofits. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by means electronic or mechanical without the written consent of the Minnesota Council of Nonprofits.

Principles and Practices

Click on the links below to jump to the different sections of The Principles and Practices for Nonprofit Excellence.

• Introduction
• The Principles
• Role in Society

• Governance

• Planning

• Transparency and Accountability

• Fundraising

• Financial Management

• Human Resources

• Civic Engagement and Public Policy

• Strategic Alliances
• Evaluation
• Advice for Users
• The Origins of the Principles and Practices

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Principles and Practices for Nonprofit Excellence