By Zachary Kester, JD, LLM, CFRM
Many leading nonprofit organizations and experts laud “best practices” to set the bar high in terms of transparent, prudent and ethical operations across many areas.
These go beyond the minimum legal and accounting requirements and purport to set a strong foundation of compliance with laws and regulations related to fundraising, licensing, financial accountability, human resources, lobbying, and political activity. If the nonprofit sector is to continue to succeed, it will require broad public support and confidence, which these practices are designed to build.
While best practices, such as those recommended by the Minnesota Council for Nonprofits “place a high priority on exercising fair and equitable practices that attract, retain and actively engage qualified employees,” are laudable, they can be difficult to implement.
The large list presents a major challenge for organizations with limited resources and is impractical to implement in many circumstances. Best practices are sometimes inflexible and unyielding. Even large and sophisticated nonprofit organizations struggle to implement best practices across the board. Having the human resource staff spend time writing detailed job descriptions, while effective, isn’t always practical with pressure to limit indirect or overhead expenses.
This difficulty has given rise to the myth that “best practices” are essentially impossible to put into practice and perhaps even a waste of time for an organization to pursue. Until very recently, I subscribed to this myth.
Recently, an Indianapolis-based nonprofit organization that serves children were subjected to an agency evaluation by a major funder. During the evaluation, that agency knocked its review out of the park.
In every area, it had implemented best practices. Every time the evaluators had a question, the organization’s managers, executives, and board members had an answer, and not just any answer, but one that showed substantial foresight and compliance with relevant best practices. Every manager and officer of the organization was on the same page and headed in the same direction. It was truly impressive.
The organization and each individual associated with the nonprofit put success and agenda of the organization ahead of personal successes or agendas. The agency representatives were forthright and transparent in their answers to questions posed to them by the funders, and that transparency brought credibility rather than judgment.
In fact, I was so impressed that I have a meeting with the CEO to learn exactly how the agency implemented best practices. Maybe the CEO will share the secret to success with me.
I previously subscribed to the myth that “best practices” are essentially impossible to implement, and perhaps even a waste of time for an organization to pursue. Based on what I saw last month, I am now a believer. It is not only possible to attain that level of operational excellence but worth pursuing.
Myth busted.
Charitable Allies is a 501(c)(3) charity that serves the legal and administrative needs of nonprofits in Indiana and beyond.
