Quick tips on a variety of subjects –

Signing and Expenditure Authority – Make sure your organization has a written policy identifying who has the authority to bind the organization to a contract and sign the contract on behalf of the organization. The policy should also identify whether there are any conditions, limitations, or restrictions on such authority. For example, the Executive Director may be delegated with the authority to approve and sign contracts so long as they remain accountable for operating within the Board-approved annual budget and/or have specific approval by the Executive Committee or the Board to expend an amount associated with such contract.

Sharing Power – If certain authority and responsibilities are delegated to more than one person, make sure your organization has a written policy addressing how such authority can be exercised. For example, if there are two co-CEOs, does a CEO-level decision require both to agree? What if they fail to reach an agreement? What if only one of the co-CEOs is available? What strategies can be adopted and investments be made to help such relationship be productive and not adversarial? How much more challenging will it be to fill one person’s role if they leave? In this example, the Board or a Board committee should work with the co-CEOs to agree upon answers to these questions that they believe will work best for their unique circumstances. See Shared Leadership: A Lawyer’s Perspective (NPQ).

Individuals as Independent Contractors – Before a nonprofit contracts with any individual to provide services to the organization as an independent contractor, it must make sure that such individual is not required to be classified as an employee. Note: (1) getting it wrong can be very harmful to the organization and potentially to the nonprofit leaders responsible for the error, no matter how well-intentioned; and (2) if the services are those typically carried out by an employee of a similarly situated nonprofit, in some states, that’s enough for such individual to be an employee and have all the rights of an employee, regardless of whether they freely signed an independent contractor agreement. The number of hours worked may have no significance in the classification. Conferring with an employment attorney is the best solution, when possible. Regardless, make sure you get this right!

Quasi (Board-Designated) Endowments – The full Board should understand the differences between an endowment, which is generally subject to specific laws and restrictions regarding spending, and a quasi-endowment, which generally is designated by the Board (or a Board committee), and not the donor, to act as an endowment fund. A quasi-endowment fund is generally not subject to the same spending restrictions applicable to an endowment fund, which leaves is up to the Board to release any internal restrictions against spending. Board members must be careful not to make any misstatements about the organization’s inability to spend from a fund it labels an endowment fund when the fund is actually a quasi-endowment fund. This knowledge may also free up prudent decisions to invest quasi-endowment funds in program-related assets, mission-related investments, or fundraising infrastructure.

Advocacy and Mission – The Babies in the River parable teaches us the importance of addressing root causes, and not just immediate needs, for change to be made in advancement of an organization’s mission. Advocacy for policy change, which may be low-risk and not involve any lobbying, can be the most effective way to further the mission sustainably over the long-term. Organizational leaders should consider investment and budget/resource allocation priorities accordingly. See A Deeper Examination: Nonprofit Advocacy.