Precision Policies Can Protect Your Association/Non-Profit

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By Rachel Luoma, MS, CAE

Let’s face it – if I say policies and procedures, most people will stop reading this blog, another group will yawn or shudder and a few (albeit very few) people get excited.

If you are one of those people who likes details, organization and I heart policyfacts, then this blog is for you.  If you are one of those people that prefers the big picture and doesn’t fancy structure, then this blog is a must read. Below are some things that are extremely important to ensuring that your association has crucial policies in place that will guide your leadership and staff and may help prevent issues with the IRS or other government agencies.

As you may know, associations and non-profits can qualify for exemption from federal income tax based on its mission and purpose.  Please note that some associations are still required to pay taxes based on programs and services outside of their mission and vision.  This is called Unrelated Business Income Tax and I will save that for another rousing blog in the future.

Part of the annual requirement for associations and non-profits is to complete IRS Form 990 disclosing certain information about the association including extensive financial, legal and governance disclosure.  If you have never checked out GuideStar, you are missing out! You can easily create a free account and look up any association or non-profit with a 990 that has been filed with the IRS.

Guidestar Website

Nerd AlertWARNING TO MY FELLOW NERDS: You may get caught in the GuideStar abyss and spend hours looking up different associations.  Everyone else can disregard this statement.

Sorry to digress, back to the exciting stuff…

The 990 form specifically requires disclosure of whether the organization has certain policies in place.  While there are not explicit consequences provided by the IRS for not having these policies in place, a response of “no” could result in a “red flag”.  And, let’s be honest, no one wants a letter from the IRS!

What are these important policies you ask?

  • Conflict of Interest – this policy is necessary to provide a definition of your organizations conflict of interest definition, disclosure requirements and the process for managing a disclosure.
  • Whistleblower – the Whistleblower policy is intended to outline the process for disclosure of illegal practices or violations. It should outline information about reporting and most importantly, protection.
  • Document Retention and Destruction – a policy of this nature would be necessary to identify the requirement and responsibilities for maintaining adequate records and the process for storing and destruction of records.
  • Compensation – this policy is intended to create a process for determining and reviewing Chief Staff Executive compensation. The IRS 990 references both the CSE and “Key Employees” so make sure your policy includes both as well.
  • Joint Ventures – the Joint Venture policy outlines disclosure policies related to joint ventures. It also may include disclosure requirements for subsidiaries and relationships.

So, while policies may not be an exciting part of association management, they are an integral part as they provide a framework for action and an assurance to stakeholders that processes exist.  What other policies do you believe are central for associations?  Leave a comment below and share with other readers.

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Hey, I think I will write a policy on that…


For another great blog on loving policies check out this blog by the great Bob Harris, CAE

To learn more about how to review your 990, visit out


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