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Defense against the dark arts: nonprofit accountability

small.jpgIn the world of Harry Potter, Defense Against The Dark Arts is a required class at the Hogwarts Witchcraft and Wizardry School, where the students learn the skills needed to defend against unsavory Death Eaters and He-Who-Must-Not-Be-Named.

Similarly, staff members at nonprofit organizations can equip themselves against unaccountability by learning how their organization's system of internal controls, human resources, and financial protections work. 

Now when you cast the spell “Expecto Patronum” (a shield of positive energy), the spell you cast will be well-crafted and effective. (My patronus comes in the form of a 4-star rating from Charity Navigator.)

As we close in on the end of the calendar year, your nonprofit organization might be scrambling to maintain end-of-year obligations to donors while simultaneously meeting the demands of their staff. This is all the more reason to be mindful of your nonprofit's accountability expectations.

Why should accountability matter to you? If you are not accountable in your organization, you are not accountable to your stakeholders. These could be external stakeholders — like your donors and the general public — but, it could also be internal stakeholders - like your board or staff.

Maintaining a clean sheet ensures that come audit time, or any sort of organizational dilemma, you can be assured you have done your due diligence for accountability. If these measures are not well-carried out, it could mean a loss of funding or even more punitive measures from the state’s attorney general or the IRS.

Some areas to be aware of are:

1. Maintain and track your receipts

Why do this? I mean, its just a receipt right? Well, it is actually the tip of the iceberg for organizations. If discrepancies exist for receipts, then that could spell bad news for your organization. When your organization is undergoing its yearly audit, discrepancies in purchases tied to grants are red flags for auditors who will then begin to pull at the thread of your organization, unraveling it quickly, and opening your organization to a much more thorough audit. Do yourself a favor and work with your accounting staff to determine how they want to receive the receipt from Ollivander’s for wand polish. (Is that a program related expense?...)

2. Understand donor relationships and gift giving policies

Some donors and the public are fond of providing gifts to organizational staff - especially ones working in development positions. “Here are a couple Galleons to get yourself something nice! Here’s a brand new Firebolt! You’ve worked so hard!” The donor-development relationship is paramount for fundraising, but some boundaries must be maintained. Keeping your organizations gift giving policy (you do have one, right?) in mind will be helpful around this year. This can vary from org to org, but, in my experience, accepting a small gift was deemed acceptable. Consult human resources and your executive staff for further clarification.

3. Learn the steps for the Human Resources dance

Much like making sure you know the waltz for the upcoming Yule Ball, you should also know how to know your way around your organization's human resources policies. How does this relate to the organization as a whole? Keep in mind that whenever a human resources issue comes to a head in an organization, it could cause a ripple effect, leading to uncertainty from external and internal stakeholders. Being aware of how human resources helps you is an important job component to understand. Strategic human resource management weaves its way through your organization and ensures that, from your organizational culture to your FMLA leave policy, all the components work in concert with one another. Know the dance moves and you will have a good time!

These are small, but easy to understand, components of nonprofit accountability. My favorite books on the topic are Nonprofit Financial Management from Charles Coe, Good Counsel by Leslie Rosenthal, and Human Resources Management for Public and Nonprofit Organizations by Joan Pynes.

You can find more information from organizations like Charities Council Review and Minnesota Council of Nonprofits. They work to provide information on accountability measures in effective nonprofit organizations. Additionally, the big three charity reviewers (GuideStar, Charity Navigator, and the BBB Wise Giving Alliance) provide guidelines on overarching goals for your organization.

Best of luck navigating the accountability realm and may the odds be ever in your favor! Wait, that doesn’t seem right…

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