Principles and Practices

for Nonprofit Excellence

Governance

A nonprofit’s board of directors is responsible for defining the organization’s mission and for providing overall leadership and strategic direction to the organization. Each nonprofit board should: 1) actively set policy and ensure that the organization has adequate resources to carry out its mission; 2) provide direct oversight and direction for the executive director and be responsible for evaluating his/her performance; and 3) evaluate its own effectiveness as a governing body, as a group of volunteers, and as representatives of the community in upholding the public interest served by the organization.

Board Composition

1) Nonprofit boards should be comprised of individual volunteers who are committed to representing the best interests of the organization and its mission.

2) To ensure broad public participation, vitality and diversity, board members should serve for no more than nine consecutive years.

3) To allow for sufficient deliberation and diversity of perspectives, nonprofit boards should consist of no fewer than seven individuals.

4) Nonprofit boards must have a chair and a treasurer, and should have a vice-chair and secretary. No one should occupy more than one officer position in the same organization at the same time.

5) If staff membership on the board is deemed necessary, inclusion should be limited to the executive director, who should not serve as the chair, vice-chair, secretary or treasurer.

Board Characteristics and Qualifications

6) Nonprofits should strive towards board representation that reflects the organization’s constituents.

7) Board members should be committed to the mission and dedicated to the success of the nonprofit.

8) Board members should actively develop an understanding of the mission, ongoing activities, finances and operating environment of the organization.

9) Board members should value diversity and understand the role of participation and inclusion in the future success of the organization’s work.

10) To demonstrate their personal stake in the organization, board members are expected to volunteer time, raise external funds and make financial contributions to the nonprofit.

Board Responsibilities

11) Board members should be provided with a clear job description, orientation to the work of the organization and ongoing training, and should fully understand their roles and responsibilities to the organization and to the public.

12) Board members should understand the content and significance of the organization’s financial statements and audit.

13) Boards should hold quarterly meetings (at a minimum) and expect regular attendance of members.

14) Board members are responsible for keeping suitably informed so they can actively participate in decision making.

15) Boards should organize committees as needed to effectively structure their roles and responsibilities.

16) Nonprofit board members are responsible to make decisions in the interest of the organization and no other party, including themselves. Each board should have a conflict of interest policy that includes a disclosure form, which is signed by board members annually, and procedures for managing conflicts of interest and handling situations in which public and private interests intersect.

17) Nonprofit board members are responsible for upholding the organization’s mission and using its resources wisely and in accordance with the law. 

18) Board members are responsible for fully understanding their legal and fiduciary obligations and carrying out their responsibilities in the following areas:

• Planning
• Policy approval
• Annual review of the executive director’s performance
• Setting of compensation structure
• Fundraising
• Financial management

19) The board of directors, led by the board chair, should annually evaluate itself through a survey to the board members and a subsequent discussion of the results with an eye toward improving governance practices.

20) Board members should receive no monetary compensation for their board duties other than reimbursement for board-related expenses.

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Principles and Practices

Click on the links below to jump to the different sections of The Principles and Practices for Nonprofit Excellence.

• Introduction
• The Principles
• Role in Society

• Governance

• Planning

• Transparency and Accountability

• Fundraising

• Financial Management

• Human Resources

• Civic Engagement and Public Policy

• Strategic Alliances
• Evaluation
• Advice for Users
• The Origins of the Principles and Practices

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Principles and Practices for Nonprofit Excellence