Best
Practices

Essential Governance Guidelines

• The organization’s Articles of Incorporation are reviewed every three years and are filed with the Wisconsin Department of Financial Institutions.
• The organization has by-laws outlining its board governance structure including how board members are elected, term limits, and how they are removed.
• The organization has at least 3 independent board members, and members serving in the roles of: President/Chair, Secretary, and Treasurer. Any paid board members or staff do not have voting rights on the board. At least one board member has financial expertise.
• The organization contemporaneously documents minutes to meetings held or actions taken by the board and any committees of the board, and retain these minutes as part of our permanent record.
• A Conflict of Interest policy exists and board members are asked annually to disclose via a form. Anyone with a conflict abstains from voting on related matters and the abstention is noted in the minutes to the meeting.
• Board members regularly attend and participate in meetings and make an annual charitable gift to the organization that is meaningful to them.
• The organization has an annual calendar of board meetings. Our board meets at least quarterly.
• Board members are oriented on their responsibilities including vision, mission, bylaws, policies, programs and services and financials. Board members are aware of, and understand, their Fiduciary Duty to the organization.

Board members who would benefit from additional orientation or governance training may find our Board of Directors Training helpful.

Recommended Governance Guidelines

• The organization has a comprehensive policy manual that includes all of our written policies. Policies are reviewed and updated periodically. Our board members have access to all of our policies. At a minimum, our manual includes: conflict of interest, whistleblower, and record retention and destruction policies.
• The board is diverse in lived experience, expertise, and perspectives in order to plan for the future, manage risk, make prudent decisions and take full advantage of opportunities.
• The organization has a compensation policy that requires board approval of executive compensation and outlines how our executive director is evaluated annually in relation to previously agreed upon set of expectations/goals. A salary survey using relevant comparability data is completed periodically.
• Roles for board, executive director, employees are defined (usually in a job description) with the Executive Director being in charge of operations and the board focused on policy and planning.
• The board understands the Organization’s exempt charitable status and considers how decisions may impact its status.

Best Practice Governance Guidelines

• Organizations that operate in a fiscal or host-organization relationship with another organization or group have a written agreement on file outlining the roles and responsibilities of each party. This agreement is mutually approved.
• The organization has a policy on virtual meetings involving votes that ensures the ability to fully discuss issues and vote.
• The board has a process for how urgent matters are handled between meetings.
• The organization has a strategic plan that has been developed with input from our staff, board, and other community stakeholders.
• The board takes a self assessment annually reminding them of their duties.

Boards looking for a structured way to reflect on governance and operations may find the Organizational Health Self-Assessment Tool useful.

Essential Human Resources & Operations Guidelines

• All required federal and state payroll taxes are filed and paid timely, including federal and state unemployment as applicable.
• The organization has EEOC, OSHA< Wage and Hour, Employee Polygraph Protection Act posters displayed.
• Employees have filled out proper hiring paperwork including I-9, W-4 and WT-4 (Wisconsin).
• Personnel files are maintained for all current and former employees within the guidance of our record retention policy.

Recommended Human Resources & Operations Guidelines

• The organization has written personnel policies and procedures that includes procedures for: hiring, performance reviews, employee benefits and leave, grievance/whistleblower, termination, non-discrimination and ADA compliance, employee record keeping, and reimbursement. Whistleblower, discrimination, and harassment procedures are clearly defined. All staff members acknowledge in writing that they have read and have access to the personnel handbook/policies.
• The organization has a succession plan should the executive director leave.
• The organization has a disaster plan that includes backing up files off-site and how the organization will continue operations if the current location becomes inoperable.
• Each staff person is given an annual evaluation in relation to previously agreed upon set of expectations/goals.

Best Practice Human Resources & Operations Guidelines

• The organization has documented key processes to ensure easy transition of employees.
• The organization provides opportunities for employees’ professional development and training with their job skill area and also in such areas as cultural humility and personal development.
• LACF offers Professional Development & Training opportunities designed specifically for nonprofit staff, board members, and volunteers.
• Employee benefits are administered in accordance with all applicable laws and regulations, on a non-discriminatory basis, and in accordance with our personnel policy manual.
• The organization completes a compensation and benefits survey annually to ensure wages and benefits are comparable to similar organizations in the region.

Essential Financial Oversight & Risk Management Guidelines

• The organization has written financial policies ensuring adequate internal controls based on the size and functions of our organization (e.g. Dual signatures for checks over a certain threshold). Controls are designed to safeguard the organization’s assets and reduce the potential for fraud and abuse.
• The organization’s accounting records are maintained in an accounting software system in a way that supports proper checks and balances and produces financial statements on the GAAP (generally accepted accounting principles) basis or other generally accepted comprehensive basis of accounting (e.g. cash basis).
• Financial statements are presented to and reviewed by the full board at least quarterly. Financial statements include a balance sheet (statement of financial position), income statement (statement of activities), and a budget to actual comparison.
• The organization has reviewed grants, contracts, and other state and federal requirements for when/if an independent audit/review by an independent CPA is deemed necessary. The Organization understands and complies with any audit requirements that currently exist, and keeps upcoming thresholds and requirements on its radar. **Note: WI DFI requires an independent audit for charitable organizations with annual support revenue over $500k or an independent review for charitable organizations with annual support revenue over $300k.
• Donated funds are clearly categorized as unrestricted, temporarily restricted or permanently restricted in the organization’s financial statements and communications in accordance with the donor or grantor wishes/stipulations. Restricted funds are accounted for and segregated in the financial statements.
• The organization carries Directors and Officers (D&O) Liability Insurance. As deemed necessary, we carry insurance for our properties, events, and an umbrella policy in order to protect its assets.

Recommended Financial Oversight & Risk Management Guidelines

• The board approves an annual operating budget including both anticipated revenue and expenses based on our known previous activities, anticipated changes, and alignment with our strategic plan. Variances between budget and actual are explained and approved by the board with the presentation of financial statements.
• The board has set a financial reserve (unrestricted net asset) target aimed to ensure continuity of mission and services, and measures and compares actual reserves to the target at least annually.
• Vendors have completed a W-9. independent contractor status evaluated, 1099 contractors have been identified for year-end tax filings
• The organization understands the difference between an employee and an independent contractor.

Essential Marketing & Communication Guidelines

• The organization is aware of and complies with the CAN-SPAM Act (emailer’s address must be identified and the ability to opt out provided).

Recommended Marketing & Communication Guidelines

• The organization communicates their effectiveness to the community and funders. This is done typically through an annual report. The annual report includes our mission, programs and outcomes, financial information, current board members, staff, partners and donors.
• The organization participates with appropriate networks and/or coalitions.
• Board members are identified on the website.

Best Practice Marketing & Communication Guidelines

• The organization has a brand standards manual that is shared with employees that addresses both internal and external communication. It is upheld for violations to protect its brand. The plan identifies our target audiences, key messages and evaluation strategies.
• The organization has a social media policy communicated to all employees, volunteers, and board members that outlines clear rules around the use of social media and that designates one person or team to oversee such efforts.
• The organization copyrights or trademarks organizational materials as appropriate.

Essential Fundraising/Resource Development Guidelines

• If soliciting/accepting charitable contribution, the organization has a gift acceptance policy that guides our organization in the types of gifts it can accept and educates the staff and board about critical issues triggered by certain gifts. At a minimum, the policy outlines the types of gifts the organization will accept or not accept, under what circumstances gifts will be accepted or not accepted and how gifts will be recognized and recorded.
• Donors contributing more than $250 receive a written acknowledgement/receipt for contributions no later than by the end of the calendar year. The gift acknowledgement includes all relevant information as required by the IRS for proper recording of various gift types (cash vs. stock vs. in-kind, for example).
• Contributions are sought and administered in an ethical manner consistent with the Association of Fundraising Professional’s Donor Bill of Rights.

Recommended Fundraising/Resource Development Guidelines

• The organization has a fundraising plan that outlines how the organization will secure needed private contributions to meet the operating budget. The plan is realistic; it based on previous fundraising results and available capacity to implement the activities. The board was involved in making the plan and it is approved in conjunction with the annual operating budget.
• The organization has a secure database that confidentially stores all of the organization’s donor information, including contact information and complete giftmaking history.
• Volunteers’ roles are clearly defined and written, recruited, screened, and trained with background checks conducted, if appropriate.
• Feedback is provided to volunteers. Volunteers are recognized periodically and commended.

Best Practice Fundraising/Resource Development Guidelines

• Volunteer time is recorded and allocated to programs as in-kind contributions.

Recommended Program Management & Effectiveness Guidelines

• Organization regularly evaluates their programs for effectiveness and financial sustainability, ending and starting programs as appropriate.
• Organization ensures that information regarding fees and services is readily available to the public. When charging for services, nonprofits should price equitably and take into account the consequences of denial of services due to an individual’s inability to pay.

Best Practice Program Management & Effectiveness Guidelines

• Organization regularly seeks input from individuals who benefit from the mission, community groups, and the general public.

Essential Legal Compliance & Preserving Tax Exempt Status Guidelines

• No part of the organization’s net earnings are inured to the benefit of an insider (officer, director or key employees). No economic benefit to any person who is able to exercise substantial influence over the organization’s affairs (that exceeds the value of any goods or services provided in consideration) is allowed.
• The organization does not directly or indirectly participate in, or intervene in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.
• The organization does not not engage in substantial legislative activities (commonly known as lobbying).
• The organization meets the public support test for 501c3 tax exempt status, i.e. at least 1/3 (33.3%) of donations are given by donors who give less than 2% of the nonprofit’s overall receipts.
• The organization knows their IRS filing requirements (990N, 990EZ, 990 and/or 990-T) and are compliant. A copy is reviewed by the board prior to filing each year.
• The organization has a records retention policy that outlines the systematic review, retention and destruction of records (electronic or paper) received or created by the organization in connection with the transaction of organization business. The policy ensures compliance with federal and state laws and regulations to eliminate accidental or innocent destruction of records. The policy also addresses backup and recovery of essential records.
• The organization has received their Letter of Determination from the IRS indicating tax exempt charitable status
  “We have evaluated whether we are required to have a seller’s permit for items that we sell. If required, we have obtained a seller’s permit, and collect and remit sales tax to the Wisconsin Department of Revenue.
• If the organization is not required to have a seller’s permit, they periodically evaluate sales and determine if they meet the definition of occasional sales or otherwise exempt sales. See WI Pub 206 for more information.