One important role of nonprofit boards is to ensure legal and ethical integrity. This includes compliance, transparency, and accountability.
Compliance means adhering to the regulations of local, state, and national governments to maintain public trust in the organization. This includes making sure the organization is properly registered.
Transparency means providing accurate information about an organization’s revenue and how it is spent. Keeping good records is critical in this effort, as is having an effective document retention and destruction policy as well as publishing an annual report.
Accountability measures including conducting an annual audit, instituting a whistleblower policy, and adopting a code of conduct. Boards must also define what constitutes a conflict of interest.
Legislators, watchdog groups, and attorney generals are likely to continue calling for greater compliance, transparency, and accountability. Rather than meeting only the minimum requirements, effective organizations typically exceed legal and ethical expectations.