Nonprofit Accounting Basics

Policies and Procedures

Board Member Compensation

There is no federal law that prohibits nonprofits from compensating their board members but some states may forbid compensation for board service.


Bylaws form a legally binding document that outlines the organizational authority levels, how the board functions, and how it is structured.

Code of Ethics

One of the most constructive and proactive ways a board can send a message that its organization is committed to accountability, responsiveness, and stewardship is to draft a code of ethics to guid

Compensation Philosophy

Salaries and compensation packages are determined as part of employment negotiations.


One of the legal obligations for board members is a duty of loyalty. One aspect of this duty expects board members to keep confidential issues confidential.

Conflict of Interest

What is conflict of interest?

A conflict of interest arises when a board or a staff member is in a situation where his decision making may be impaired by personal, financial, or other busin

Decision Making Policy Example

ORG Decision-making Policy

To promote making good decisions, ORG adopts the following principles:

Decision-Making Policy & Procedures for Small and Midsize Nonprofit Organizations

Nonprofit organizations are routinely faced with making decisions of varying magnitude and impact.

Drafting a Gift Acceptance Policy

A gift acceptance policy explains an organization’s position on accepting both cash and non-cash gifts and outlines any prohibitions on the type of donor or donations to be accepted by the organiza


An endowment refers to a fund or funds that are generally kept permanently. Their interest income provides for the overall operations of the organization.

Example Criteria for Major Decisions: A Strategy Screen

  • The proposed action must align with the organization’s core mission.
  • The proposed action must serve all or a substantial subset of the organization’s

Examples of Decision-Making Procedures

  • Define the decision to be made.
  • Set a specific deadline by which the decision needs to be made.
  • Identify who should be involved in the process and whether board approval will b

Gift Acceptance

A gift acceptance policy allows the board to define the parameters and guidelines for eliminating controversial or risky donations. Unwelcome donations might include gifts that:


Investment policies

Investment policies refer to policies the board has defined and/or approved guiding how the various organizational funds should be invested.

Personal Giving

If your organization does not rely fully on earned income or government grants or contracts, it most likely is involved in raising funds from individuals, foundations, and/or for-profit corporation


Every nonprofit needs operational guidelines for staff and the board. The purpose of the policies is to serve as a guide for actions and behavior and as a reference for ethical decision making.

Policy Development Outline for Small and Midsize Nonprofit Organizations

The following steps are designed to prompt responses that can become the components of a gift acceptance policy that can serve as a guideline for staff and board.  


Operational reserves

Operational reserves are funds an organization accumulates over the years by operating with a surplus.

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