Checklist for Non-Profits: Help Your Organization Be More Effective

Introduction

All businesses, private as well as non-profit, are facing big challenges in today’s economy, for example rising energy costs, more competition for available resources, higher prices for materials, and a changing workforce. Non-profits are particularly struggling to survive as government, corporations, and community members reduce grants and other gifts to try to balance their own budgets. What gives a non-profit its edge to stay afloat in today’s economic reality? Now, more than ever before, it is critical that non-profits pay attention to how the organization is managed to weather this latest economic storm.

What makes for an effectively managed non-profit? This checklist can serve as a useful and concise reference for Boards of Directors and non-profit leaders seeking to improve overall organizational performance. We will look at the five areas, and within each area, I have created a checklist (in the form of questions) for evaluating your effectiveness. Bear in mind, these areas are not in order of importance, as they are all critical for an effective non-profit organization.

  1. Governance and Leadership
  2. Financial Viability and Transparency
  3. Employee (and Leadership) Development
  4. Stakeholder Satisfaction and Support
  5. Organizational Flexibility, Resiliency, and Sustainability


Governance and Leadership

Jim Collins says, “A great organization is one that delivers superior performance and makes a distinctive impact over a long period of time.” He believes that you can only do this if you “get the right people on the bus.” In a non-profit organization that starts with the Board of Directors and CEO or Executive Director. The Board governs the organization and the CEO or Executive Director carries out the strategies to achieve the mission and vision. This set of questions will help to evaluate whether or not you have the right people in those leadership seats setting and advancing the mission of the organization:

  1. Is the Board of Directors representative of the constituent population base? Is it diverse in talents, skills, knowledge, and social service and business experience?
  2. Does the organization have appropriate committees? Are their roles, responsibilities, and objectives clearly defined and aligned with the strategic plan? Is the committee structure frequently evaluated for effectiveness and flexibility?
  3. Does the organization have an experienced, competent, and inspiring leader? Are his or her roles, responsibilities, and objectives clearly outlined and results measured?
  4. Is there a method for evaluating the effectiveness of Board Members and top leaders?
  5. Has the organization completed a thorough assessment of current conditions, the strengths and weaknesses of the organization, opportunities it might capitalize on and conditions that could threaten it in the near or distant future? Has it identified critical issues and set priorities for improvement needed?
  6. Has the organization developed a strategic plan that provides a framework for making business decisions – with a compelling vision, clear mission, values statement, performance objectives, and specific implementation steps for moving the organization from its current level of performance to achieving its vision for the future?
  7. Have the mission, vision, values, and strategic direction been clearly communicated to all stakeholders, and is it embraced and followed on an ongoing basis throughout the management cycle?
  8. Does the Board have a method of tracking progress, focusing on key issues and critical implementation steps? (You can’t improve what you don’t measure).
  9. Do the Board President and Executive Director prepare meeting agendas and distribute several days in advance of regularly scheduled board meetings?

Financial Viability and Transparency

Even the best intentioned organizations cannot survive if they fail to take care of their financial house. Board members may mistakenly believe their only responsibilities are to make a personal donation, serve on a committee, and make sure the program is providing quality service. In fact, their responsibility encompasses so much more. They are ultimately accountable for the financial viability and responsible spending of public funds, as well as the program success of the organization. An effective board member should be asking the following questions to make sure the organization is operating in a fiscally responsible manner:

  1. Is there an effective balance between long-term debt, asset values, operation expenditures, and revenues?
  2. Are there sufficient financial reserves and a strategy for ensuring the long-term financial health of the organization?
  3. Does the organization have written financial accounting policies and procedures with appropriate checks and balances to reduce possible errors, fraud, and abuse and to ensure funding received is appropriately spent and accounted for?
  4. Does the organization have sufficient controls in place to guard against misuse of resources or abuse of non-profit status?
  5. Does the organization have in place an integrated fundraising program (including a board-giving program and training for development personnel and board committees)?
  6. Are there guidelines in place for appropriate reporting to the various federal, state, and local funding/regulating bodies?
  7. Do Board members receive timely financial statements and sufficient information to help them understand how the organization is functioning? Do they receive written proposals in advance of meetings?
  8. Are financial results and internal controls audited annually?
  9. Does the organization have a system for assessing assets for renewal and replacement over time?

Employee and Leadership Development

Organizations are only as effective as the people who carry out their mission – the employees. Many non-profits have a hard time finding the funds to educate and develop their employees since so many funds are restricted to specific programmatic efforts. It is critical to the survival of any organization to have committed, satisfied, well-developed employees. This can be very challenging for a non-profit since you are relying on recruiting people to a position that often pays less than the same or similar private sector jobs. Jim Collins says it really isn’t a matter of how much you pay, but “who” you have on the bus. Specifically, he says, “Get the right people on the bus, the wrong people off the bus, and the right people into the right seats.” This is where an organizational culture of empowerment and employee engagement becomes critical.

  1. Has the organization established and reinforced a culture that embraces change, strives for continual improvement, and empowers employees to be engaged in problem solving strategies?
  2. Are recruiting and employee selection practices consistent with company values and behavioral expectations?
  3. Are employees given opportunities for professional and leadership development?
  4. Do employees clearly understand what the company expects of them? Are their roles and responsibilities (and deliverable results) written down? Do employees have results-driven performance goals? Is there a method for measuring their results?
  5. Is there a clearly articulated set of behavioral expectations for employees and a method for evaluating expected behaviors?
  6. Does the organization have managers who recognize and reward employees for their contributions? Contrary to a popular private sector belief, rewards do not always have to be monetary.

Stakeholder Satisfaction and Support

One very important role of a non-profit CEO or Board Member is serving as the organization’s ambassador, advocate, and representative to the community. There must be a clear understanding at all levels of the purpose of the organization, the services and support it provides, the constituents it serves, and the messages to be conveyed. . A very important decision for any Board is to appoint a spokesperson who can clearly articulate those messages appropriately.

  1. Has the organization clarified the level of program support it will provide to constituents and is it aligned with the mission?
  2. Has the organization given stakeholders an opportunity to communicate their needs and expectations of the organization and is there a method of measuring stakeholder satisfaction?
  3. Does the organization actively involve stakeholders in decisions that will affect them?
  4. Does the organization actively leverage technology appropriately to balance it with the need for human interaction?


Organizational Flexibility, Resiliency, and Sustainability

A flexible, resilient and sustainable organization requires that governance, leadership, and staff work together to anticipate and avoid potential problems. They must be proactive in assessing, identifying and determining acceptable tolerance for risks. This requires proactive planning for effective future governance and leadership of the organization. It also requires good counsel in legal, regulatory, security, and fiduciary matters.

  1. Has the organization conducted a vulnerability assessment for potential hazards
  2. Is there a plan to proactively manage potential risks and be sure the organization is adequately protected against loss, including natural disasters, employee bonding, contractual agreements, and Board liability?
  3. Does the organization have policies and procedures in place to ensure adequate turnover and renewal of the board?
  4. Is the organization proactive in identifying and recruiting diverse prospects with needed skills and connections to fill vacancies on the Board of Directors?
  5. Does the organization have a succession process for replacing key leaders who leave unexpectedly?
  6. Does the organization have a well-coordinated public relations effort focused on building the “brand” reputation?

 Non-profit boards and leaders shoulder an enormous responsibility in planning for the future of the organization, ensuring that programs and services are provided appropriately and impactfully, and overseeing the financial health of the organization. Any one of these areas, if left unexamined and unaddressed, can completely derail a non-profit organization. Using the above questions as a checklist to evaluate your non-profit organization can help transform it from a good to a great organization that can survive the ups and downs of an uncertain economic environment.

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