Media

On December 8, 2010, a small but earnest group of association executives and consultants
gathered together at the OSAM Annual Convention to discuss the need to enact policies and
procedures to ensure, to the greatest extent possible, the implementation of good governance
practices. Those in attendance learned that over the past eight years or so, the Internal Revenue
Service has greatly stepped up its oversight of the governance practices of exempt organizations.
Of course, as I have noted in prior articles, the IRS has no direct authority under federal law to
assume this role. Given these efforts, which have manifested themselves in revisions to Form
990, Forms 1023 and 1024, and the auditing process, our seminar reviewed five important
policies that your association should have, both from an IRS compliance standpoint, as well as a
“good governance best practices” standpoint.
The five polices that I strongly recommend be adopted or updated by your organization are the
following: (1) a Conflict of Interest Policy; (2) a Confidentiality Policy; (3) a Whistleblower
Policy; (4) a Document Retention Policy and Records Retention Schedule; and (5) an Electronic
Communications/Social Media Policy.
Each of these policies provide important benefits to your organization. For example, members
of your board of directors as well as staff need to fully understand what constitutes a conflict of
interest and how the organization addresses instances where conflicts of interest arise. Another
example is your Whistleblower Policy. Both federal and state laws provide strong protections
for persons who are considered to be whistleblowers, and it is the organization’s responsibility to
ensure that whistleblowers acting in good faith are free from retaliation or other repercussions
that may arise when filing a whistleblower complaint. Finally, just last week the local news
reported a story about two employees from Canada who were fired from their jobs for raising
concerns on Facebook about workplace issues. An effective electronic communications policy
will educate all persons, including employees, involved with an organization as to the proper use
of social media and how to avoid instances similar to what happened in Canada.
In sum, I am concerned, and to some extent alarmed, that many relatively large and sophisticated
nonprofit organizations simply do not have many crucial policies in place which will protect the
organization’s resources and its assets. We recommend that you work with legal counsel to
conduct an audit of your organization’s governance practices to ensure that your organization is
doing all that it can to protect itself in this area. If you have any questions regarding these
issues, or any other issues relating to your exempt organization, please do not hesitate to contact
the author.