“Best Practices” strengthen nonprofits but they can bite!

Best practices” are models for conduct and management prevalent in a field that others look to in evaluating an organization’s status. These include internal policies, voluntarily-adopted standards, professional practice and ethical standards, conditions in funding grants (government and private), accounting standards, trade association standards, insurers’ and lenders’ underwriting standards, media perceptions of right and wrong, and other commonly-recognized guidelines.   Not always clear or binding, best practices when ignored can have the same negative impact on a nonprofit as a violation of law, negligent act, or other culpable conduct.

The “best practices” movement is practically an industry to itself, given the growth of consultants, writers, professionals and managers involved in every sector, including the nonprofit realm. The origins of the term are unknown and worthy of a doctoral dissertation. And yet, they — the sometimes illusive “best practices” — surround us. Why worry?

Nonprofit organizations are increasingly scrutinized on all levels and are the subject of intense media scrutiny as well as Congressional investigations. A decade ago, leaders of charitable institutions could enter any room wearing the white hat, and a presumption of righteousness surrounded their activities. Too many instances of misconduct and illegal activity in the nonprofit sector changed everything, and today nonprofit leaders have to earn respect and special status in the community like anyone else.

Nonprofit directors are held to a higher standard than most, it is said. Yet, the standard prescribed by Texas law in §22.221, TEX.BUS.ORG.CODE, is general and forgiving:

A director shall discharge the director’s duties, including duties as a committee member, in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation.

Nonetheless, there is a familiar scenario: When a government investigator, critic, “whistleblower” or investigative reporter examines the conduct of a nonprofit organization, they look first for any violation of law or government regulation. Finding none, they look next to non-compliance with the organization’s own internal governance documents: articles of formation, bylaws, board resolutions, or formal policies. Finding none, they pore over the organization’s financial records and audits for irregularities. Finding none, they can roam among the rich field of “best practices” that can easily be found, for any subject or issue, from numerous sources. No organization can have acted in compliance with the myriad of best practices floating about.

Finally, there is a story to print or broadcast, and an accusation to toss: The organization has failed to observe best practices!


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