Best Practices for Executive Directors and Boards of Nonprofit Organizations

These best practices identify nine areas in which an organization’s competence is critical for success. Below, each competence is linked to suggestions for getting your organization to   the “best practice” level. There is inevitably overlap between some of these competency areas as no single area is unique or isolated from others. In order to achieve competence in one area, other competencies are often required as well. The bibliography at the end of this document lists some excellent resources your organization can use to achieve the best practices. Additional nonprofit best practices resources are available at the Bellingham Public Library.

Core Competencies
I. Board of Directors/Governance
II. Human Resources Management
III. Financial Management
IV. Strategic Planning
V. Collaboratives/Partnerships
VI. Outcomes and Quality Improvement
VII. Information Technology Management
VIII. Fundraising
IX. Marketing

Board of Directors/Governance
A. The Board determines the organization’s mission, sets policy, and assesses and approves programs
and services that are appropriate to that mission.
Best Practices Suggestions for Achieving Best Practices
1. Board annually reviews the organization’s mission.
1.1 The Executive Director, Board and other leadership
define, focus on, and annually review the
organization’s mission and purpose.
2. Board sets and monitors policies and attends to
emerging policy issues.
2.1 The Board sets and reviews organizational policies
to ensure specific outcomes and organizational
safeguards are achieved.
3. Board reviews reports on programs and services
that demonstrate links to organization purpose
and tracks progress toward desired outcomes.
3 .1 The Executive Director, Board and other leadership
regularly review programs and services to ensure
that they are tied to specific outcomes.

B. Board membership is well managed.
Best Practices Suggestions for Achieving Best Practices
1. Staff support the Board and its committees in
order to maintain interest, commitment, and
productivity of members.
1.1 Executive Director and Board leadership find ways to
sustain maximum Board attendance, through
development of compelling agendas and
presentations, recognition and appreciation of
service, and incentives to participation.
1.2 Executive Director and Board leadership develop a
well-defined structure of effective Board committees
and outside advisory committees which have a clear
purpose and task.
1.3 Executive Director ensures that there is consistent
staff support for Board committees and other
activities.
2. Board members receive orientation regarding
Board member responsibilities, legal
requirements, and conflict of interest.
2.1 Executive Director and Board leadership understand
legal requirements and restrictions and communicate
those effectively to the whole Board.
2.2 Board leadership develops and when necessary
implements procedures for removal of non-compliant
Board members.
3. Board members receive orientation and continuing
education
3.1 Board leadership and Executive Director ensure that
there are regular orientations and ongoing training
opportunities for Board members, in areas such as
team building, communication skills, fundraising,
meeting management, public relations, marketing,
and leadership and succession development.
C. The Board ensures that the organization is in compliance with regulations affecting nonprofit
organizations and has sound risk-management practices.
Best Practices Suggestions for Achieving Best Practices
1. Executive Director provides the Board with
information and consultation regarding risk
management practices that apply to the
organization.
1.1 Board leadership defines and applies the various
bylaws and regulations (funding, program, health,
audit, personnel and facility) that affect the
organization’s risks.
1.2 Executive Director and Board leadership identify
appropriate types of liability and other insurance and
benefit plans to meet the organizations needs,
including facility management, professional services,
personnel, health care, Employee Assistance
Programs and D&O coverage.

D. The Board holds itself accountable for raising money.
Best Practices Suggestions for Achieving Best Practices
1. Board members are responsible for raising money
and there are structures and support through
which members may fulfill that responsibility.
1.1 Board leadership and Executive Director orient all
new and current Board members to their role in fund
development.
1.2 Board leadership develops a strategy for increasing
Board involvement in fund development.
E. The Board ensures effective fiscal management.
Best Practices Suggestions for Achieving Best Practices
1. Board reviews financial reports that are accurate,
easy to understand, and timely.
1.1 Executive Director ensures effective staff support to
the finance committee, including the provision of
reports that meet the committee’s needs for financial
information.
1.2 Board leadership defines Board roles in fiscal
management and oversight, and identifies which
Board members have the skills to provide that
oversight.
2. Employees and volunteers are able to make a
confidential report regarding suspected financial
impropriety or misuse of organization resources.
2.1 Board leadership ensures that there is a procedure
for confidential reporting of suspected improprieties.
F. The Board represents the organization in the community.
Best Practices Suggestions for Achieving Best Practices
1. Board members actively solicit input from the
communities and constituencies they represent.
1.1 Executive Director and Board leadership develop
processes for soliciting input from constituencies
served and represented by the organization. (See
also Strategic Planning)
2. Board members represent the organization to
government, business, other agencies, funders,
constituencies, and the community at large.
2.1 Executive Director ensures there are mechanisms for
involving the Board in community outreach, in such
areas as civic, political, governmental and community
activities relevant to the needs of the organization.

G. The Board represents the interests of the community to be served and brings the proper balance of
expertise to the organization.
Best Practices Suggestions for Achieving Best Practices
1. Board membership provides the skills required by
the organization and reflects the community
served.
1.1 Board leadership, such as a nominating committee,
defines the criteria for strategically selecting Board
members, based on experience, organizational
needs and community representation.
1.2 Board leadership develops a process and timeline for
Board recruitment based on the above criteria and
needs.
H. The Board ensures that the public has reasonable access to information about mission, activities,
Board membership and basic financial data.
Best Practices by Organizational Leadership Suggestions for Achieving Best Practices
1. An annual report to inform the public is produced.
1.1 Executive Director and staff leadership prepare
elements necessary for an annual report.
1.2 Executive Director and staff leadership communicate
key organization information in writing in a way that is
understandable to the public.
2. Orderly records are accessible to the public. 2.1 Executive Director organizes all appropriate
documents in a file accessible for public review.
I. The Board recruits, hires, sets salary, and evaluates the performance of the Executive Director and
oversees succession of that position and other key staff.
Best Practices Suggestions for Achieving Best Practices
1. Board performs annual review of Executive
Director performance and sets goals for coming
year.
1.1 Board leadership ensures that effective Executive
Director evaluation process is in place and
implemented.
2. A written policy is maintained regarding Board
oversight of the ED and succession of key staff.
2.1 Board leadership identifies steps for succession
appropriate to organization and writes a policy for
Board approval.
3. The Board designs and implements process for
hiring new ED when necessary.

J. The Board maintains a good relationship with organization staff.
Best Practices Suggestions for Achieving Best Practices
1. Board understands and maintains the policymaking
role of the Board.
1.1 Executive Director and Board leadership identify
strategies for helping Board members understand
appropriate roles with respect to organization
management, staff and operations, including possible
conflicts of interest.
2. Board and staff communicate about organization
and program issues.
2.1 Executive Director and Board leadership use effective
coaching and communication strategies for building
and sustaining positive Board/staff relationships.
II. Human Resources Management
A. The organization treats employees, volunteers and clients fairly and equitably.
Best Practices Suggestions for Achieving Best Practices
1. Personnel policies and procedures are in
compliance with state and federal laws, are
reviewed regularly, and continue to meet the
needs of the organization.
1.1 Executive Director and Board leadership review
current personnel policies and make changes as
needed to improve compliance with state and federal
requirements and to keep current with organizational
needs.
2. A performance review process measures
employee performance against organization
outcomes and professional standards,
incorporates self evaluation, promotes positive
interaction between employee and supervisor, sets
measurable goals that are tied to organization
outcomes, and supports the employee’s
development
2.1 Executive Director and Board leadership understand
the benefits of a sound performance review process
and its effect on the organization.
2.2 Executive Director and management staff apply the
elements of an effective performance review
process, including standards of performance, selfevaluation,
positive interaction between the
employee and supervisor, measurable individual
goals that are tied to the organization’s outcomes,
and employee development.
2.3 Executive Director, management staff and Board
leadership tailor an effective performance review
instrument to meet the organization’s needs.
2.4 All organization supervisors conduct performance
reviews in a way that ensures employee
understanding, gains employee acceptance, and
promotes a desire to improve and develop.
3. Employee information and records are kept
confidential.
3.1 Executive Director informs all staff regarding
employee confidentiality rights.
3.2 Executive Director develops a policy regarding
access to employee records.

B. The recruitment and hiring process brings to the organization people who have the skills needed to do
the job and who will be compatible with the organization work environment.
Best Practices Suggestions for Achieving Best Practices
1. Programs have accurate and clearly written job
descriptions that are tied to program outcomes.
1.1 Supervisors draft or update job descriptions that
clearly describe the work to be performed and show
a link to program outcomes.
2. A recruitment process is in place that attracts
people with the appropriate type and level of
experience to perform the work.
2.1 Management staff analyze the market for a particular
position and design a recruitment and selection process
that will attract people who are most likely to be suited for
the work and for this agency.
C. The organization makes the most effective, efficient and productive use of human sources through
appropriate job assignments.
Best Practices Suggestions for Achieving Best Practices
1. Assignments are appropriate to organization and
program priorities and the level of expertise,
availability, and work style of the individual.
1.1 Executive Director and management staff conduct an
analysis of current staffing and assignments, and
identify ways to improve productivity taking into
consideration potential benefits and drawbacks of
making changes.
2. There is appropriate cross-training of staff to
increase motivation and productivity.
2.1 Management staff identify where cross-training would
be useful and makes it available to staff as possible.
D. Employees understand and promote the organization’s mission and strive to contribute to its
outcomes.
Best Practices Suggestions for Achieving Best Practices
1. Employees are aware of the organization’s
mission and outcomes and understand the link
between their work and the accomplishment of
those outcomes.
1.1 Executive Director and Board leadership articulate
organization’s mission in a way that is motivating to
staff and communicate the link between work
objectives and the mission.

E. Employees and volunteers receive the information, training and feedback they need for optimal job
performance.
Best Practices Suggestions for Achieving Best Practices
1. Employees receive orientation to the
organization’s mission, outcomes, and strategic
plan.
1.1 Executive Director and management staff design and
implement an orientation presentation that introduces
new employees to the organization’s mission, values,
outcomes, and strategic plan.
2. Training needs of employees and volunteers are
identified, as are ways to make that training
available.
2.1 Executive Director and management staff design and
implement a method for identifying training needs of
supervisors, employees and volunteers from various
sources of information about their knowledge or job
performance.
2.2 Executive Director and management staff analyze a
variety of methods of delivering training to employees
and volunteers and select the method appropriate to
the specific people, situation, and topic.
3. Supervisors understand their supervisory role and
have the necessary skills to manage other
employees.
3.1 Executive Director and management staff ensure
that all supervisors receive ongoing supervisory
training so they have the necessary tools to manage
other employees.
4. Employees and volunteers receive individualized
coaching regarding his/her job duties.
4.1 All supervisors recognize own communication style
and how that style impacts and interacts with the
communication styles of others.
4.2 All supervisors apply coaching skills appropriately to
match the individual needs of each person whose
work s/he supervises.
4.3 All supervisors use communication skills necessary
for effective coaching: active listening, questioning,
assertive communication and goal setting.

F. The organization supports healthy, productive relationships among all employees, volunteers and
Board members.
Best Practices Suggestions for Achieving Best Practices
1. A conflict resolution policy and system for
resolving conflicts among employees, volunteers
and Board members is in place.
1.1 Executive Director and Board leadership analyze and
improve policies and procedures for handling
grievances and conflicts among employees,
volunteers, and Board members.
2. Supervisors receive training regarding the
mediation of conflicts among employees and
volunteers who report to them.
2.1 Everyone develop understanding of perceptions of
and reactions to conflict and the impact of unresolved
conflict on an organization’s productivity. Everyone
understand their own personal role and responsibility
to resolve conflicts in as productive and professional
a manner as possible.
2.2 All supervisors learn to diagnose workplace conflicts
early and determine whether to intervene and the
type of intervention appropriate to the problem:
individual meeting, mediation, small group problem
solving, or systems analysis.
2.3 All employees and Board members use
communication and problem solving skills necessary
for conflict resolution: neutrality, active listening,
assertiveness, analysis of factors leading to conflict,
negotiation of solutions.
2.4 All supervisors apply steps of conflict resolution
policy when necessary.
G. Effective communication systems and practices are used throughout the organization.
Best Practices Suggestions for Achieving Best Practices
1. There is a system for communicating organization
information to employees and volunteers.
1.1 Executive Director and management staff analyze
and improve current communication system for
conveying to employees and volunteers information
about changes in policies, procedures, requirements,
and job duties that affect their work.

H. Employee job satisfaction is high and employee turnover is relatively low.
Best Practices Suggestions for Achieving Best Practices
1. Employee turnover rate in comparison to similar
agencies is monitored.
1.1 Executive Director or HR staff calculate employee
turnover rate and compare with similar agencies.
2. Exit interviews are conducted to assess trends in
reasons for leaving.
2.1 Executive Director or HR staff design exit interview
procedures
3. There is a high level of employee satisfaction and
retention.
3.1 Executive Director or HR staff work to determine
areas for improvement in personnel policies,
compensation strategies and employee satisfaction
to achieve optimal employee retention rates.
III. Financial Management
A. The organization generates sufficient revenue to support organization’s administration and program
services
Best Practices Suggestions for Achieving Best Practices
1. Direct and indirect costs are monitored, including
allocation of staff time to program, administration,
evaluation, and fundraising activities
1.1 Executive Director and management staff analyze
current and potential costs for program,
administration, evaluation, and fund raising.
1.2 Executive Director and management staff analyze
current and potential sources of revenue and
prepares or oversees preparation of a fund
development plan.
2. A system exists for tracking revenue and expense
streams to comply with government reporting
requirements, funder’s expectations and to
effectively manage organization’s finances.
2.1 Responsible financial management staff understands
requirements and potential for any fee for service or
sales activities.
2.2 Responsible financial management staff implements
any billing methods appropriate for the organization.
3. The organization engages in cost effective fund
development activities.
3.1 Responsible fundraising staff conducts cost/ benefits
analysis of any fund raising events or campaigns.

B. Annual budget is tied to outcomes, is in alignment with available resources, includes staff input, and
supports programs, administration, evaluation, and fundraising.
Best Practices Suggestions for Achieving Best Practices
1. The Board approves, monitors and revises as
necessary an annual budget that is tied to program
outcomes and supports operations and evaluation.
1.1 Executive Director and responsible financial
management staff ensure financial management
systems which includes: selecting and monitoring
financial tracking systems, tracking key costs of
operation, reviewing and revising the chart of
accounts, and effectively managing payroll.
1.2 Executive Director and responsible financial
management staff monitor internal reporting
information which includes: structuring appropriate
financial reports, controlling the frequency of financial
reporting, and selecting the appropriate accounting
method.
1.3 Executive Director and responsible financial
management staff understand the optimal budgeting
process including incorporating effective budget
management techniques into day-to-day operations,
analyzing determinants of costs and allocations,
getting staff input into the budgeting process, and tie
outcomes to specific budget categories.
2. Board approves budgets that contain realistic
projections of revenue and expenses.
2.1 Executive Director and responsible financial
management staff involve staff in the budget
development process as well as in the monitoring
process so that they have a clear understanding of
the connections between the budget and their
program areas.
3. A method is established for budget planning and
monitoring at the program level.
C. The organization files all the appropriate legal and financial documents as required by law.
Best Practices Suggestions for Achieving Best Practices
1. A system exists that ensures the filing of all legal
and financial documents, and updating as required
1.1 Executive Director and Board leadership understand
and comply with government regulations related to
type of documents to be filed and timelines for filing.
1.2 Executive Director and Board leadership understand
underlying conditions for a review or an audit and the
necessity for timely audits and positive findings to
ensure availability of future funding streams.