Every nonprofit should strive to cultivate a culture of accountability and transparency. Accountability and transparency are demonstrated by diverse practices, including:
- Being honest in solicitation materials and truthful and clear in communications with donors about how donors’ gifts will be or have been used;
- Being transparent about who is accountable for the nonprofit’s expenditures; adopting expense policies, such as a travel expense reimbursement policy, requiring prior approval and limiting expenditures to what is reasonable and necessary;
- Posting financial information about the nonprofit on the nonprofit's website;
- Having a conflict of interest policy that all board and staff are aware of and review regularly;
- Adopting an executive compensation policy to ensure that the full board is aware of and approves the compensation of the executive director/CEO;
- Publishing financial information on a nonprofit’s website, such as a copy of the organization’s application for tax-exemption, IRS Form 990, audited financial statements and annual reports, as applicable;
- Ensuring the regular review by the board of current financial statements;
- Adopting internal controls, to ensure accountability;
- Responding appropriately to requests for copies of financial reports, as required by the IRS.
- Read more about the requirement to share copies of certain documents with the public when asked. This is referred to as the “public disclosure” requirement.
- Use an on-line tutorial from the IRS to teach your board or staff about the IRS public disclosure regulations
- FAQs about IRS public disclosure requirements
Other important aspects of creating a culture of transparency and accountability include adopting an internal complaint procedure for staff and volunteers, a whistleblower policy and a retention and destruction schedule for documents, including email messages, in accordance with state laws for whistleblower protection and document retention.
Read all about whistleblower and document retention policies as well as other governance policies.
