MCN : Principles and Practices

Introduction

In 1994, the Minnesota Council of Nonprofits (MCN) became the first state association of nonprofits to develop a set of accountability principles and management practices. This revised edition completely updates those original standards while remaining true to MCN’s long-standing goal of open access to our comprehensive policies for strong public accountability.

The Principles and Practices for Nonprofit Excellence are based on the fundamental values of quality, responsibility and accountability. The ten characteristic accountability principles distinguish the nonprofit sector from government and the business sector. The 133 management practices provide specific guidelines for individual organizations to evaluate and improve their operations, governance, human resources, advocacy, financial management and fundraising.

This document has three intended purposes. The first is to provide individual organizations striving for excellence with a tool for strategic planning and operational evaluation relative to the rest of the nonprofit sector. The second is to support the growth and quality of the sector. The third is to increase public understanding of the role and contributions of the nonprofit sector.

The Principles and Practices for Nonprofit Excellence are not meant for use by funders or government to evaluate nonprofit organizations, nor are they intended as a substitute for the wisdom of directors or trustees of individual organizations. Given the blurring of the lines between the three sectors of the economy and the enormous growth of the nonprofit sector, this document is designed to support the effective functioning of our sector by recommending specific best practices.

This revised edition of the Principles and Practices for Nonprofit Excellence was developed by a committee representing the diversity of the nonprofit sector, with extensive input gathered from statewide community meetings. In revising the original version, the committee specifically sought to lay out essential characteristics that are distinct expectations of public engagement and responsiveness, not simply disclosure. The new Role in Society principle puts in the forefront practices that address what Paul Light of New York University and the Brookings Institution described as the need for nonprofits to work at excelling at their most important attributes — that is, to become more “nonprofit-like” as opposed to being more business-like or bureaucratic.

Every nonprofit organization needs a strong foundation of compliance and a broad organizational awareness of laws and regulations related to fundraising, licensing, financial accountability, human resources, lobbying, political advocacy and taxation. The Principles and Practices presume that each organization is in compliance with applicable laws, including Minnesota Chapter 317A (the Minnesota Nonprofit Corporation Act); relevant sections of the Internal Revenue Code; and other federal and state laws dealing with employment, occupational health and safety.

Minnesotans join together throughout the state to form associations and organizations of every type. The Principles and Practices for Nonprofit Excellence are of particular interest to 501(c)(3) organizations. However, the information and concepts apply broadly to all types of nonprofit organizations. Because of the sector’s diversity by size, region and activity area, each organization must determine whether or not an individual practice is appropriate for its current situation.

Nonprofit organizations are essential to the vitality of communities. They enrich quality of life, epitomize the highest societal values and strengthen democracy. Volunteers, board members and employees become involved with a nonprofit because of the organization’s public benefit mission. Therefore the continued success of Minnesota’s nonprofit organizations requires broad public support and confidence. This document publicly testifies the nonprofit sector’s commitment to excellence — always for the benefit of society.

The critical role of nonprofits in democratic societies underscores the importance of knowing how to form, govern and manage these organizations. The growth and progress of the nonprofit sector depends on developing and improving this body of knowledge. Since its founding by Minnesota’s nonprofits, MCN has provided research, education and technical assistance to strengthen nonprofit management and governance. The Principles and Practices will form an ongoing framework for MCN’s trainings, publications and other educational materials.

Note to Readers: Please be aware that certain words have particular meanings in this document: