The Standards for Excellence Code

The Standards for Excellence program is a structured approach for nonprofits to use to build capacity, accountability, and sustainability in their organizations.

The foundation of the Standards for Excellence program is the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector.

The Code contains a list of nonprofit best practices, divided into these categories:
– Mission, Strategy, and Evaluation
– Leadership: Board, Staff, and Volunteers
– Ethics and Legal
– Finance and Operations
– Resource Development
– Public Awareness, Engagement, and Advocacy

Nonprofits are encouraged to strengthen their organization by working to implement all the practices listed in the code. The Standards for Excellence Institute has tools to help, including an extensive library of educational resources.

standards for excellence codebook cover

Get the Code

View the Code below or purchase a hardcopy version of the Codebook through our online store.

Purchase hardcopy of the Code

Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector

Preamble

Nonprofit organizations in the United States help the public and are essential to our society. They help improve communities around the country and make our lives better in art, science, economics, health, culture, human services, civil rights, religion, the environment, education, and many other fields.

Public support and confidence are essential to the success of nonprofit organizations. 

People, businesses, foundations, and government at all levels support nonprofits by giving resources, time, and money.

The Standards for Excellence Institute (“The Institute”) works to improve the accountability, transparency, and effectiveness of all nonprofit organizations to help them be excellent and earn public trust. The Institute has a code with step-by-step guidelines to help nonprofit organizations be well-managed and responsible. 

The code has 6 Guiding Principles and 26 areas for ethical, responsible, and effective organizations. It is based on the legal foundations of how nonprofit organizations are run and governed. The code emphasizes values such as honesty, integrity, equity, fairness, respect, trust, compassion, responsibility, and transparency. The Institute encourages all nonprofit organizations to follow the code and work to be excellent in their management, governance, and operations.

1. Mission Strategy and Evaluation

Guiding Principle: Nonprofits are created to achieve a specific goal for the public. A nonprofit has a clear mission statement that describes its purpose. A nonprofit’s programs help it achieve that mission. The organization’s leaders focus their efforts on achieving the mission using a shared vision. These leaders try to make a positive impact in a fair, equitable, and ethical way, considering the needs of the community and those impacted by the organization’s work. The organization’s leaders make sure that the organization’s resources are used to achieve its stated purpose.

A. Mission, Vision, Values, and Impact
  1. A nonprofit has a mission statement that explains its purpose clearly and consistently, a vision statement that describes the positive impact it wants to have on the community, and a statement of shared values to guide its work for the community it serves. People who are connected to the organization, such as staff, board members, volunteers, and community members, help create the mission statement, vision, and values. The organization’s actions are carefully planned to support its stated board-approved mission.
  2. A nonprofit can explain how its mission is supported by its vision and strategic goals.

 

B. Planning Strategically
  1. Nonprofits plan for the short-term and long-term. Short-term planning is ongoing and long-term planning generally happens every three to five years. Depending on the stage of the organization’s life, nonprofits decide on their mission, set specific goals related to their mission, and evaluate how well their programs and internal culture are supporting their mission and helping the community.
  2. A nonprofit reviews its mission at least every three to five years to make sure that its mission is still relevant, and its services and programs are still needed. Considering changes in society and other important issues, nonprofits also think about the needs of the people who are most affected by the organization’s work and evaluate its approaches. Nonprofits can decide if they need to change, grow, or stop their services.

 

C. Organizational Evaluation

Each year, a nonprofit evaluates how its people, efforts, and money help it to achieve its mission and reach its goals. It also evaluates the organization’s culture and values as part of this review.

D. Program Evaluation
  1. Strong evaluation for nonprofits includes many different types of evaluation. Evaluation methods are:
  • Both qualitative and quantitative
  • Respectful of diverse cultures and include feedback from community members
  • Equitable, effective, and efficient
  • Used by leaders, staff, volunteers, and community partners to improve the organization’s programs
  • Aware of power dynamics within the organization
  • Include real and honest feedback

 

Evaluation procedures improve the efficiency and effectiveness of programs. Evaluations include input from people impacted by the mission. Evaluations are most helpful when they are honest and used by leadership and program partners to make the organization better and report progress.

E. Strategic Partnerships

A strategic partnership is when a nonprofit works with another organization, such as another nonprofit, a for-profit business, an informal group, or a government entity, for a common goal. Both organizations can benefit from a partnership. Nonprofits that have partnerships have a policy approved by their board that explains the types, goals, and scope of partnerships. 

Nonprofits consider the size, nature, and type of strategic partnership to make sure the partnership:

  • Supports the organization
  • Is carefully examined by the board and/or staff prior to the start of the partnership
  • Has a written agreement (like a memorandum of understanding or contract) if needed
  • Is reviewed every year.

 

2. Leadership

Guiding Principle: Nonprofits need good leadership to achieve their goals. Nonprofits often rely on their employees and volunteers to achieve their mission. Strong leadership is a team effort between the board and management (whether paid or volunteer). The organization decides the best leadership approach for its work. Understanding and figuring out these shared and complicated parts of leadership are important for the organization to succeed.

Board members are trusted to make sure the organization’s resources are used for its mission. Board members care about the mission and represent and understand the community they serve. The board decides the organization’s mission; creates a culture of fairness, equity, and inclusion; adopts policies and procedures for management; makes sure there are enough people and money to operate effectively; and evaluates how the organization uses its resources to achieve its mission and support the community.

Nonprofits have leaders who do the everyday work of the organization, ensure the organization is sustainable, and give information to the board. The organization’s human resource policies consider both paid workers and volunteers. The human resource policies are fair and clear, include helpful performance evaluations, and create a thriving and inclusive culture for everyone.

A. Leadership and Governance

1. Governance and Fiduciary Responsibility

a. The board is made up of individuals who care deeply about the organization’s mission, who are from the community, and who understand their fiduciary duties – being responsible for the organization’s legal and financial well-being.

b. The board creates and reviews its bylaws and policies every three to five years to make sure the organization is governed and managed well.

2. Executive Supervision, Performance, and Compensation

a. The board chooses the organization’s Executive, decides how much they are paid, and reviews how well they are doing their job in an annual evaluation. If a committee is in charge of one of these responsibilities, the full board approves its decisions.

b. The board supports the nonprofit’s Executive in leading the organization, gives them the power to make decisions, and works to make sure they are successful in running the organization.

3. Board Effectiveness

a. The board is responsible for its own work. The board reviews its own performance on a regular basis (at least every two years) to make sure it is operating effectively.

b. The board has policies that tell members what is expected of them. The expectations reflect equity and community considerations. These expectations include responsibilities like attending meetings, helping raise money, being on committees, following the organization’s values, and getting involved in the organization’s programs. Board members are responsible to each other and the community the organization serves.

c. The board has a rigorous plan for recruiting, selecting, and removing board members. This plan is equitable and helps the organization make sure it has the best mix of talent, diversity, and community representation.

d. Board policies include limits on how long a board member may serve.

e. The board is responsible for making sure that new board members are oriented to the board and the nonprofit. Orientation includes introducing new members to the board and staff and sharing information about the organization’s strategy, programs, finances, and governance. New board members also learn about the Standards for Excellence code. The nonprofit also provides training and education to help board members understand their responsibilities and expectations.

4. Succession Planning and Leadership Development

Developing leadership and managing the planned and unplanned entrances and departures of a nonprofit’s leaders are critically important. The board and Executive work together to make a plan for finding and developing new Executives and board leaders. The written plan is approved by the board. The Executive’s job description includes their role in managing the succession of staff and volunteers.

5. Board Member Independence

a. The majority of board members of public charities do not receive payment for serving on the board. They may be reimbursed for items like transportation and childcare while doing board work. When necessary to support inclusivity, the organization may also provide impacted board members modest financial support to help them participate fully.

b. The board has at least five independent and unrelated members. It is preferred to have seven or more members.

c. When an employee of the organization is a voting member of the board, the board ensures that the employee will not be in a position to hold undue power or control over the board’s decisions.

6. Board Meetings

a. The board meets at least four times a year to do the work of the board.

b. Board meetings have an agenda to make the meetings efficient, engaging, effective, and focused on the key issues. Boards keep track of what happened at the meetings and share it with all board members in the form of meeting minutes. The minutes and materials for the meetings are available to all board members.

c. Committees with decision-making powers report their actions or decisions to the whole board. These decisions are recorded in the board’s meeting minutes.

B. Leadership and Operational Management

1. Functions of the Executive

The Executive is responsible for managing the organization and making sure the work runs smoothly. The Executive is committed to the organization’s mission and has the necessary skills to manage the organization’s people and resources.

2. Supporting the Board

a. The Executive is responsible for supporting the board in its policy and oversight roles by providing accurate and timely information and resources.

b. The Executive works with the board to plan for how much the organization compensates its staff (if the organization has paid employees) and how it values the work of volunteers. The plan is fair and considers the different levels of pay within the organization. This includes looking at the compensation of the highest and lowest-paid employees and ensuring that race, gender, or other protected characteristics do not affect compensation.

3. Organizational and Financial Sustainability

The Executive helps the organization to plan for the future by considering the staff, volunteers, and money needed for the organization to be successful and achieve its goals. This is called an organizational sustainability plan. The Executive works with the board to make this plan.

4. Managing Employees and Volunteers

The Executive makes sure staff and volunteers are chosen carefully, given proper training, and treated fairly. Staff and volunteers are given a written overview of their job responsibilities, the organization’s values, and the Standards for Excellence code. Staff and volunteers are also given opportunities to learn and grow in their roles.

5. Personnel Policies

Nonprofits have written guidelines approved by the board that explain how employees and volunteers are treated and how the organization is run. These are called personnel, volunteer, or employee policies. These policies cover topics such as working conditions, employee benefits, and time off. The policies also include information about what is expected of new and existing employees and volunteers, how they will be evaluated, how they will be supervised and recognized, how they will be hired and fired (when necessary), how to handle complaints, and how information will be kept private. The Executive ensures personnel and volunteer policies are equitable, fair, and prioritize safety for everyone involved.

C. Justice, Diversity, Equity and Inclusion

Nonprofits are better at serving and involving people from all cultures, backgrounds, and abilities when they focus on diversity, equity, and inclusion in their work. Nonprofit leaders carefully assess their policies, plans, procedures, power dynamics, and the makeup of their board and staff to ensure they are inclusive and create a sense of belonging for the people most impacted by the nonprofit’s mission and work.

Leaders use this assessment to create and carry out a plan to address any issues identified by the assessment. The assessment may include seeking advice and input from community members. Leaders promote a culture of diversity, equity, and inclusion for the board, staff, volunteers, and program participants. This helps create an organizational culture where the people most affected have influence, make decisions, and can determine the organization’s direction.

3. Ethics and Legal

Guiding Principle: Nonprofits depend upon public support and confidence and must follow laws and regulations. Leaders make sure their organizations understand and follow the laws, including special types of laws (such as regulatory and fiduciary). Nonprofits also have a responsibility to do more than just follow the laws; they need to work in ethical and equitable ways. Acting legally and ethically helps nonprofits build trust and reduces misconduct. When laws are unjust, nonprofits can work to change them. Nonprofits have policies in place to make sure people taking actions are doing so in the nonprofit’s best interest and avoid actions that might cause a conflict of interest.

A. Ethics

1. Nonprofits have clear and explicit ethical principles that guide their work. The board and staff may also establish standards that reflect these ethical principles to guide their operations or programs. These standards and principles are transparent and known to all members of the staff, board and volunteers and are shared with the community served.

2. A nonprofit treats people ethically and with respect in its programs as well as in its role as an employer (if the organization has employees) and as a coordinator of volunteers (if the organization has volunteers).

3. Nonprofits have a way to solve problems and address complaints received from people in the community, those affected by the organization’s mission, and employees and volunteers. This is called a grievance procedure. The problems or complaints may include (but are not limited to) legal or ethical problems with employees and volunteers. The nonprofit has a plan for dealing with issues quickly and effectively, and has a policy against retaliation.

4. Nonprofits have policies to keep all personal information private and safe.

B. Maintaining Legal Compliance

1. Nonprofits know about and follow federal, state, and local government laws. These laws cover topics like how to report to the Internal Revenue Service (IRS), how to make sure the organization is governed well, how to treat employees and volunteers, and how to make sure the organization does not discriminate. Nonprofits must follow laws about how to handle money, keep records, and how to raise money. Nonprofits also know about laws related to how they can advocate for their causes and how they can lobby the government.

2. Nonprofits review their practices to make sure they follow all the laws that apply to them. This review happens at least every two to three years and the results of the review are shared with the board. Nonprofits also consider the purpose of each law when following it.

C. Required Public Disclosures

Nonprofits follow the laws for sharing information about the organization with the public. Organizations have at least one person responsible for ensuring compliance with these laws.

D. Reporting Misconduct and Whistleblower Protection

Nonprofits act with integrity. Nonprofits have ways for employees, board members, and volunteers to report if they suspect something is wrong or if resources are being used wrongly. This is called a whistleblower protection policy. The policy prevents the nonprofit from punishing people for reporting misconduct or wrongdoing.

E. Conflicts of Interest

1. Nonprofits have written policies in place to make sure they make decisions in the best interest of their mission. Conflict of interest policies apply to board members, staff, and volunteers who make important decisions about the organization’s resources.

a. The policy explains how conflicts of interest are handled, including disclosure and review by the board. It mentions situations or transactions that might cause a conflict of interest, including both financial and non-financial issues. The policy provides that when a nonprofit considers an activity that might be a conflict of interest for one or more board members, the board members who are not involved will review the situation.

b. As part of this policy, there are instructions for considering when someone might have a conflict of interest and how to respond to it. The policy includes a statement for the board member, staff or volunteer to disclose any relationships they or someone in their family have with an organization that does business with the nonprofit. This form is completed when the person first joins the organization and at least once a year after that.

4. Finance and Operations

Guiding Principle: Nonprofits have sound financial and business systems and make sure their recordkeeping is correct. They use their financial and other resources to help achieve their mission, uphold their values, and serve the community. They also check their accounting systems regularly to make sure they are accurate and transparent and to protect the integrity of the reporting systems. They also engage in risk management to protect the nonprofit’s mission and operations.

A. Financial Budgeting, Reporting, and Monitoring

1. The board approves the organization’s budget before the start of each fiscal year. The budget lines up with the organization’s mission, values, goals, and objectives. The organization follows this budget in its work.

2. The organization checks how well it is doing financially compared to its budget. Nonprofits make reports about their financial activity regularly and accurately. They also create internal financial statements at least every three months and share them with the board. Sometimes the organization’s actual income and expenses are different from what was planned in the budget. The board is told about these differences.

3. Each year, the board checks the organization’s budget to make sure it has enough income to pay for its expenses. The board also looks at how much of the organization’s resources are used for its programs, for administration, and for raising money.

4. For nonprofits that have more than $500,000 in income in a year, a Certified Public Accountant (CPA) will check and make sure their financial statements and accounting practices are correct in an annual audit. The board hires the auditor. The board approves the audit and receives a copy of any recommendations the auditor has made (if there are any). The board makes sure these recommendations are followed, if they apply.

B. Financial Policies

Nonprofits have written policies about how they handle their finances that are suitable for the size and complexity of the organization. These policies cover topics including how the organization controls its finances (internal controls), how it buys items and services (procurement), how it uses its available resources (unrestricted current net assets) and how it invests funds (investment).

C. Administrative Policies

Nonprofits have written policies about how they run their organizations that are approved and regularly reviewed (at least every three to five years) by the board. Nonprofits decide which policies they need based on their work, mission, and values. Nonprofit administrative policies, at a minimum, cover technology, communications, social media, and plans for emergencies and disasters.

D. Risk Management and Insurance

The staff and board know and understand the risks that could affect the organization, check for risks regularly, and have a system in place to manage these risks. This work will depend on the size and complexity of the organization, as well as the laws it must follow.

As one part of managing risk, organizations consider their need for insurance based on their activities and their financial resources. Only the board can decide not to have certain types of insurance, like liability insurance or directors’ and officers’ insurance. If the board makes this decision, it is recorded in the board minutes.

5. Resource Development

Guiding Principle: Nonprofits need resources to do their important work in the community. Both the board and staff are responsible for securing these resources. Most nonprofits get financial support from many different sources. The way a nonprofit raises money is truthful, transparent, and responsible. The organization’s resource development policies support its mission, fit with its capabilities, and respect the people it serves, while also involving donors, prospective donors, and others in the community.

A. Resource Development Plan

1. A nonprofit has a plan for getting the resources it needs. The plan includes evaluating the activities the organization uses to raise resources to make sure the activities are worth the cost (cost effective). It is best if the organization raises resources from a variety of sources. The board makes sure the resource development plan is appropriate for the organization, checks it regularly, supports its implementation, and makes sure it fits with the organization’s budget. This plan aligns with the nonprofit’s values and abilities.

2. A nonprofit’s costs for raising money are reasonable over time. On average, every year for five years, the organization earns at least three times more money from fundraising than it spends on fundraising. If an organization’s ratio of money raised to money spent on fundraising is less than 3:1, it can show that it is making progress toward this goal or explain why a 3:1 ratio is not right for them. Newer, smaller organizations (such as organizations that are less than 10 years old or have budgets under $500,000) may need more time to reach a 3:1 ratio.

B. Sources of Income

When a nonprofit organization decides what types of income to raise to achieve its mission, it considers the source of that income, how the income will affect the community and the people it serves, and if it fits with the organization’s mission. The organization also considers whether the income fits with its values, if the income is possible to secure, and if the source creates risk for the nonprofit.

C. Fundraising Activities

1. A nonprofit’s fundraising materials are accurate, honest, respectful to the community, and correctly state who the organization is, what its mission is, and how the donated money will be used.

2. The nonprofit organization keeps its promises about how it will use donations.

3. When a nonprofit organization asks for donations, it does not pressure people, and it is respectful and sensitive to the needs and interests of the people and communities it serves, as well as its donors.

D. Donor Relationships and Privacy

1. Nonprofits make sure the needs of the people and communities they serve are the most important part of their efforts to raise money. Nonprofits avoid situations where donors make gifts in ways that give the donor too much power over the organization or go against the organization’s values.

2. Nonprofits respect donors’ rights to choose how their name and contact information are used. This includes letting donors remain anonymous, allowing donors to remove themselves from solicitation lists, and allowing donors to have their name taken off any lists that are sold, rented, or shared.

3. Nonprofits follow the wishes of donors about how any kind of donation (including money, goods, property, cryptocurrency, stocks, etc.) is used.

E. Acceptance of Gifts

The organization has policies about what to do with donations it receives. These policies include how to decide if it will accept a gift from certain individuals or organizations, the process for receiving a gift, what the donation will be used for, what kinds of property it will accept, and whether it accepts a special or unexpected gift based on its mission, values, and abilities.

F. Fundraising on Behalf of the Organization

1. Nonprofits may get help from staff, volunteers, consultants, contractors, or other organizations when raising money. Nonprofits make sure everyone who helps raise money follows their policies and obeys the laws.

2. When an organization hires a consultant to help it raise money, it only uses the services of people who are properly registered with the appropriate state authority (if required) to do this kind of work.

3. To make sure people are paid fairly and equitably, to stay true to the organization’s mission, and to avoid questionable practices, the staff and consultants who work on raising resources for the organization are not paid based on a percentage of the amount of money they raise or on a commission.

6. Public Awareness, Engagement, and Advocacy

Guiding Principle: Nonprofits understand and represent the diverse needs of the people they serve by educating the public and advocating for public policies and by encouraging the board, staff, volunteers, and partners including other nonprofits and supporters, to be involved in the community’s public affairs. Being active in community affairs and elections can help an organization further its mission. Public policies are better when the interests of communities and the nonprofits that serve them are shared and considered. To do this, nonprofits communicate effectively to educate, inform, and involve the public.

A. Educating and Engaging the Public

1. Nonprofits seek advice and input from community members about how they can most successfully access and engage with the nonprofits and resources. Nonprofits offer materials and resources in ways that are culturally relevant and reflect the needs of the communities most impacted by the mission of the organization. This may include making adjustments to reading levels, ensuring language access, and providing materials in ways that are accessible to people with differing abilities.

2. Information about the organization’s mission, program activities, finances, board, contact information, and staff, is easy to find and accurate. This information is updated at least every year.

3. Nonprofits give the public a clear and useful way to contact someone who represents the organization. Nonprofits ensure any educational or advocacy information provided to the media and policy makers, or distributed broadly, is accurate and provides enough contextual information to be understood.

B. Advancing the Mission through Public Policy and Advocacy

1. Nonprofits have a written advocacy policy approved by the board that describes how they decide what positions to take, stay informed, and take action on specific issues. The board reviews and approves this policy every two to three years, or more often as needed.

2. Nonprofits try to influence public policies that are in line with their values and affect their ability to achieve their mission, on their own and by working with others.

C. Engaging in Lobbying and Public Activity

Nonprofits are allowed by law to be involved in lobbying and public policy activity. When encouraging public involvement in community affairs, nonprofits with 501(c)(3) tax-exempt status advocate within the limits allowed by the Internal Revenue Service (IRS) and state regulations and do not support or oppose any candidate or political party.

DISCLAIMER AND COPYRIGHT NOTICE:

©1998-2024, Maryland Association of Nonprofit Organizations dba Standards for Excellence Institute. All material, whether digital or printed, contained in the Standards for Excellence Institute® program materials, including the Standards codebook, educational materials and resource packets, training program materials, and other items related the Standards for Excellence program are proprietary and protected intellectual property. The Standards for Excellence Institute and its authorized Replication Partners and Licensed Consultants hold rights to use and distribute educational and training materials and resource packets. Reproduction of the educational and training materials and resource packets is permitted solely for use by the Standards for Excellence Institute, and its authorized Replication Partners and Licensed Consultants and the organizations affiliated with them, and may not be shared or distributed publicly.  The Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector may not be reproduced or transmitted in any form without written permission from the Standards for Excellence Institute of Maryland Association of Nonprofit Organizations.