When you’re starting a nonprofit organization, you gotta have a code.
Medical doctors know they must “first, do no harm”, Superman stands for “truth, justice, and the American way”, Spider-man understands that “with great power comes great responsibility”, and even the criminal Omar from The Wire only robs from other criminals, and never from “civilians”.
People in nonprofit organizations also live by a code, but all too often, they haven’t consciously spelled it out. Nevertheless it exists, and it breaks down (like the Man of Steel’s) into three parts:
Maybe, I’m showing my age when I say that sounds kind of “square”, but this code is actually really useful, so I want to take a close look. These three items are often called the three duties of fiduciary responsibility. (“Fiduciary” means a duty or obligation to act in the best interest of another person or institution.) I prefer to think of it as the nonprofiteer’s code. Let’s take a look at each piece, and remember this code applies to you as a founder, but also to your board members and anyone who works for your nonprofit.
Taking care means you’re not going to haphazardly run the nonprofit. Instead, you’ll be careful, cautious, and reasoned as you do your work. For you board members it means they aren’t just signing up to show their support. They’re actually going to come to meetings, be prepared, and make an effort to understand how the nonprofit operates. That is, no one is asleep at the wheel.
Loyalty means that you put the nonprofit first whenever you’re making decisions about it. This is why there needs to be a solid conflict of interest policy in place. You and your board and everyone making decisions for the organization should disclose anything that appears to be a conflict, and be ready to step out of the room when some decisions are being made. All people have competing interests in their lives, and it’s important to prioritize the organization when you’re wearing you nonprofit hat.
Obedience is the part that seems to rub a lot of people the wrong way. Essentially, it means follow the rules, whether they be national laws, state regulations, or the requirements outlined in your organization’s bylaws. Many people who start nonprofits are trying to change society and find that a lot of unnecessary rules get in their way. But in theory, these rules exist to enforce the duties of care and loyalty. These rules include things like requiring that you keep proper records and review the operations of the nonprofit on a regular basis. It’s mostly common sense stuff, even if a little tedious at times. Even if you take issue with some of them, this part of the nonprofiteer’s code means you’ll follow the rules in order to uphold these responsibilities.
It also means you’re operating the nonprofit for its specifically chartered purpose and not some other reason, no matter how beneficial. All this can be a bit complicated, and it requires a reasonable effort to understand what all the requirements are.
Put together, these three pieces aim to ensure that the resources your organization collects are being used to support the good work your organization was created to achieve. That means, you can use this code to help guide the decisions you make and the actions you take as you do your work.
So, if you’re struggling with a difficult decision as you pull your nonprofit together, try thinking about how to honor each part of this nonprofiteer’s code.
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