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Preserving
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Illinois Nonprofit Principles and Best Practices - Updated in 2008 A key part of the Public Trust Initiative is the Illinois Nonprofit Principles and Best Practices. The principles, originally published in 2005, cover a wide range of important issues -- including board governance, legal compliance, responsible stewardship, and communication -- and go beyond the federal, state, and local laws. The best practices are specific steps organizations can take to implement the principles. Recently, two factors prompted Donors Forum staff to recommend reviewing and updating Principles. First, the United States Senate Finance Committee requested that the Panel on the Nonprofit Sector, convened by the national nonprofit INDEPENDENT SECTOR, develop a national set of nonprofit best practices. With participation from a range of experts, including Donors Forum President and CEO, Valerie S. Lies, the Panel on the Nonprofit Sector completed and released their work in the fall of 2007. Second, legislative and regulatory changes, such as the Pension Protection Act of 2006 and the new IRS Form 990, have drawn attention to the issues of accountability and transparency, creating a climate for renewed interested in the Principles. In the fall of 2007, Donors Forum convened a group of foundation and nonprofit CEOs, many of whom participated in the original Public Trust Task Froce. The group was asked to review the Principles and to recommend updates based on new developments in the sector since 2005 and with an toward the recommendations of the Panel on the Nonprofit Sector. The reviewers recommended both wording updates for the sake of clarity, and some additions due to changes in the requirements for the sector. The updated Illinois Nonprofit Principles and Best Practices are available in three formats:
Also, you can download a PDF showing where changes were made.
You represent one of the more than 54,000 nonprofits in Illinois - a diverse group of organizations working hard to make a positive difference in people's lives and improve the public good. To help you do this work better,Donors Forum spearheaded the Preserving the Public Trust Initiative, a first-of-its-kind project in Illinois designed to help grantmakers and other nonprofits take specific, concrete steps to ensure adherence to the high ethical standards and strong governance principles expected of them. The first step in this statewide effort is the Illinois Nonprofit Principles and Best Practices, which Donors Forum developed by listening to the needs and concerns of nonprofit staff throughout the state. Recently, we revisited and made revisions to the principles and practices. We changed the document to reflect changes in the regulatory environment and evolving best practices in the field. In particular, Donors Forum's President participated in the Panel on the Nonprofit Sector's project to create national standards for charitable organizations and a special committee of Donors Forum representatives reviewed the Illinois Nonprofit Principles and Best Practices to align them with the national standards. The Principles cover a wide range of important
issues - including board governance, legal compliance, responsible
stewardship, and communication - and go beyond the federal, state
and local laws that are the minimum standard of expected behavior.
They are a call for all nonprofits to strive for excellence in realizing
their missions, managing resources effectively and governing well.
It is our goal that the Illinois Nonprofit Principles and Best
Practices are useful to all nonprofits, regardless of their
financial and staff resources, experience and governance structures.
To help facilitate their implementation,Donors Forum is providing
practical assistance, tools and resources. The overwhelming majority
of nonprofits that ethically and effectively fulfill their missions
inspired the Preserving the Public Trust Initiative and the Illinois
Nonprofit Principles and Best Practices. We are grateful for
all those who help nonprofits To develop the Principles, leaders from nonprofit organizations came together to address their collective responsibility to preserve the public trust. The Illinois Nonprofit Principles and Best Practices reflect their needs, questions and concerns regarding governance and management and align with relevant national standards for the sector. Preamble Nonprofit organizations - including foundations - must strive for excellence in realizing their missions, managing resources effectively and governing well. Our democracy's corporate and tax structure benefits nonprofits. In return, they serve the public by providing opportunities for assisting underserved or disadvantaged populations, volunteerism and civic engagement, and developing new approaches to solving problems. All nonprofits must:
1. The organization has a clearly stated charitable or educational mission, approved by the governing body, in pursuit of the public good. a. State the organization's purpose in the
mission. Success Stories | Sample Policies | Tools and Resources | Related Workshops 2. The role, responsibilities, selection and tenure of the governing body are clearly stated in the organization's governing and policy documents and understood by the governing body members. a. Establish written criteria and selection
process for the governing body. Success Stories | Sample Policies | Tools and Resources | Related Workshops 3. The governing body ensures that its members are competent and knowledgeable and it seeks diverse points of view and experience as needed to provide credible and effective oversight of all aspects of the organization's work. a. Ensure that governing body members have
the requisite skills and experience to carry out their duties. How-To
Tips Success Stories | Sample Policies | Tools and Resources | Related Workshops 4. The governing body regularly assesses the organization's mission and the effectiveness of the organization and its leadership in achieving it. a. Conduct a regular or periodic governing-body
self evaluation. How-To
Tips Success Stories | Sample Policies | Tools and Resources | Related Workshops 5. The full membership of the governing body is responsible for the organization, and each member acts at all times in an ethical manner and in the best interest of the organization and the public. a. Maintain policies and practices, including
a written code of ethics and a conflict of interest policy, to ensure
the governing body and staff act in an ethical and legal manner.
How-To Tips
Success Stories | Sample Policies | Tools and Resources | Related Workshops
6. The governing body and staff know about and comply with all federal, state and local laws, regulations and fiduciary responsibilities. (1) a.Educate the governing body and staff about basic
legal, accounting, audit, and tax issues as well as applicable provisions
of federal, state, local and international laws and regulations
that are relevant to the organization's activities.
d. Provide the Form 990 or 990-PF and any
990-T to the entire governing body each year or ensure governing
body members are familiar with the content. Success Stories | Sample Policies | Tools and Resources | Related Workshops 7. The governing body exercises active oversight of the financial affairs of the organization and sets policies to ensure that the organization's resources are used appropriately in furtherance of the organization's mission. a. Approve the organization's budget each year and assess financial performance relative to the approved budget.b. Maintain sufficient resources, including cash reserves, for effective administration of the organization, and if it solicits contributions, for appropriate fundraising activities. c. Ensure that expenses are reasonable and necessary and incurred in pursuit of the mission of the organization. d. Set compensation for chief executive officer, staff, and any others (including governing body members) who may receive compensation at reasonable levels, considering factors including comparable data of similar organizations, nature of work performed, and time and skills required. Document the basis for decisions. e. Maintain accurate financial records, prepare internal financial statements no less frequently than quarterly, and provide financial reports to the governing body, addressing any differences between actual revenues and expenses and budgeted revenues and expenses. f. Assure that any interim and annual financial statements, federal tax returns, and reports to state authorities fairly represent the financial position and financial activities of the organization and comply with the organization's governing documents through review by the treasurer, president, or chief executive. g. Secure an audit by an outside public accounting firm, or, at a minimum, a review of financial condition by an outside firm. (2) For organizations that have an audit, establish an audit committee; for organizations whose size or structure makes an audit committee infeasible, the audit or review should be overseen by the full governing body or portion thereof with knowledge about financial statements. Success Stories | Sample Policies | Tools and Resources | Related Workshops
8. The organization makes information about its mission, program activities and finances available to the public and communicates in a clear and timely manner with those who request information. a. Ensure all financial, organizational and program reports and educational materials are complete and accurate in all material respects.b. Make available to the public basic informational data about the organization, which should include the Form 990 or 990-PF (or a website link to copies provided by other organizations), grant guidelines, program reports, and financial statements by posting them on the organization's website. If the organization does not maintain a website, make them available upon request. c. Make available the names of governing body members, officers and staff members. d. Publish an address and the name of an individual to contact for information. Organizations that maintain offices, if feasible, also publish a phone number, office location, and office hours. e. Respond to and act promptly on complaints. f. Develop and follow organization policy defining timely response. Success Stories | Sample Policies | Tools and Resources | Related Workshops 9. Organizations that raise funds from the public or from donor institutions maintain solicitation policies that reflect the organization's mission and use of solicited funds. a. Represent the organization's policies
and practices accurately and respect the dignity of program beneficiaries
in all solicitation materials. Success Stories | Sample Policies | Tools and Resources | Related Workshops 10. Grantmaking organizations establish, follow, and clearly communicate processes for receiving, reviewing, and acting on grant applications and for monitoring and evaluating grants made. a. Make readily available a brief written statement
including:
b. Establish and maintain relationships with
grantseekers based on mutual respect, candor, understanding, and
fairness. Success Stories | Sample Policies | Tools and Resources | Related Workshops Notes: 2. Organizations should determine whether an audit is legally required (see Illinois Solicitation for Charity Act, Annual Reports of Charities). Even if not legally required, larger organizations are strongly urged to consider an audit. 3. A Donor Bill of Rights was developed by the American Association of Fund Raising Counsel, the Association for Healthcare Philanthropy, the Council for the Advancement of Support of Education, and the Association of Fundraising Professionals, and endorsed by the Independent Sector, National Catholic Development Conference (NCDC) National Committee on Planned Giving (NCPG), National Council for Resource Development (NCRD), and United Way of America. It is available on the Internet at: www.aafrc.org/choose_council/donor.html. Implementing the Illinois Nonprofit Principles and Best Practices To many nonprofit leaders, the Illinois Nonprofit Principles and Best Practices will affirm existing operating procedures. For others, some of the Principles will appear to be more challenging. Implementing the Principles will be an ongoing process, not a one-time event. While it may not be easy, this process is important because it will help nonprofits become more successful in fulfilling their missions. In addition, it is critical to demonstrate to policymakers and the public that the nonprofit sector takes seriously the issues of good governance, integrity and public trust. Nonprofit leaders are encouraged to review the Principles with their boards and management teams. To help your organization implement the Illinois Nonprofit Principles and Best Practices, the Donors Forum is providing a range of tools and practical advice. Creating the Preserving the Public Trust Initiative
stems from the mission of Donors Forum: Donors Forum is the premier
resource for networking and education, information and knowledge,
and leadership on behalf of philanthropy in Illinois. As a nonprofit
membership association of grantmakers, individual donors and advisors,
Donors Forum advances philanthropy by serving its members and by
promoting an effective and informed nonprofit sector.
Donors Forum remains grateful to the original funders of the Preserving the Public Trust Initiative: the Arie and Ida Crown Memorial, Nathan Cummings Foundation, Lloyd A. Fry Foundatino, Joyce Foundation, The John D. and Catherine T. MacArthur Foundation, Prince Charitable Trusts, and Michael Reese Health Trust. Benna B. Wilde, Chair, Donors Forum Board
of Directors Illinois Nonprofit Principles and Best
Practices - Updated in 2008 Top of Page | Back to Public Trust Initiative | Assessment Tools
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