Running head: MANAGEMENT OF NONPROFITS 1
MANAGEMENT OF NONPROFITS 5
Management of Nonprofits
January 5, 2019
Legal and Ethical Responsibilities
Nonprofit organizations, just like any other organization, are tied to certain legal and ethical responsibilities which the board must ensure that they are met. The organization must seek legal registration before commencement of any project or program (Renz, 2016). The government must be aware that the organization exists and seeks financial aid from donors and the public at large. Annual reports must be provided to the government and the public as a way of showing transparency in the operations of the organization (Berman, 2015). Nonprofits are required to publish their financial reports at the end of each financial year and ensure that all the stakeholders have access to the publications (Zietlow et al., 2018). The reports show the donations collected over the year, the projects funded, the list of donors, achievements and the unaccomplished programs. The reports are also an indication that the organization is committed to bring the anticipated social change through seeking financial aid from donors. Legal and ethical compliance ensures that the organization avoids unnecessary lawsuits from individuals and even the government.
The operations of nonprofit organizations are guided by well-stipulated policies and guidelines that the board should adopt. The code of ethics policy is one of the most crucial and ensures that the directors, donors and the employees are in a position to report instances of unethical behavior and also states that there will be no retaliation regarding any reporting on the pursuant of the policy (Zietlow et al., 2018). The funds collection policy stipulates the procedure for conducting fundraisings in the organization and how donors will be sourced (Berman, 2015). There is also the spending policy that dictates the way the organization will be spending all the funds collected and how the listed beneficiaries will be allocated the funds. The gift acceptance policy guides on the type of gifts and donations that the organization receives and the procedure of making the donations. The policy helps to minimize inconveniences to donors.
Nonprofit organizations rely on the generosity of donors for financial assistance and the funding of all their projects and programs. The board members have various responsibilities bestowed on them regarding fundraisings that are conducted (Zietlow et al., 2018). They should draft written agreements on how the donations received will be utilized. Such helps to build relationships with the donors and also to win their trust and loyalty (Berman, 2015). The board members should ensure that there is accountability in the way the fundraising programs are arranged and conducted. They should also ensure that there is transparency in the way the funds collected are spend in the projects of the organization. Sourcing of funds and any other form of assistance from the potential donors and ensuring maximum openness is a sensitive area that most organizations cannot effectively manage.
The organization’s board is also responsible for overseeing the financial performance of the firm. The board should ensure that the there is establishment and compliance with the proper financial controls and systems (Bryce, 2017). The board is also responsible for all budget approvals in the organization. The financial health of the organization should also be evaluated regularly and communicated to all stakeholders (Berman, 2015). The analysis of the financial health of the organization ensures that the board can easily tell the sustainability of the organization and the ability to fund all the projects and programs.
Renz, D. O. (2016). The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations. Walter de Gruyter GmbH & Co KG.
Zietlow, J., Hankin, J. A., Seidner, A., & O'Brien, T. (2018). Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons.
Berman, E. (2015). Performance and productivity in public and nonprofit organizations. Routledge.