Checklist for a “Healthy” Nonprofit Organization

August 11, 2009

Maintaining a healthy nonprofit organization is essential. Not only will it help to ensure the success of your organization and your mission but also serve as a way to foster trust with supporters. I have created a checklist for nonprofit entities to evaluate the health of their organizations. This is intended as a proactive measure to help nonprofits identify and address potential issues before they become serious.

In addition, the  Pennsylvania Association of Nonprofit Organizations (PANO) has developed the Standards for Excellence Program to also provide support and education to Nonprofits to ensure the success of their mission. PANO describes the mission for the program, "To assist organizations in the implementation of the Standards for Excellence Code and Program in order to expand management capacity and demonstrate credibility in the communities served. "

  • Are you incorporated as a Pennsylvania nonprofit corporation?
  • Do you have up-to-date bylaws?
  • Do you have an up-to-date "Conflict of Interest" policy for officers and board members?
  • Do you have business income unrelated to you non-profit purpose?
  • If a charity, do your organizing documents:
    • bar the organization from participating in political campaigns?
    • provide for the distribution of assets upon dissolution?
    • prohibit any director, officer, trustee, etc., from benefiting from net earnings?
    • limit the organization to charitable purposes?
  • If a public charity, do you:
    • receive a substantial portion of your support from government sources, publically supported charities or the general public?
    • maintain a continuous, ongoing program to solicit funds?
    • limit unrelated business income?
  • If a private foundation, do you:
    • have any investment income or place limits on business holdings per year?
    • prohibit self dealing between the organization and related parties?
    • require annual distributions of income?
    • limit expenditures to those that further the organization’s purpose?
  • Have you applied for and/or received tax-exempt recognition from the Internal Revenue Service?
  • Do you file a from 990 with the PA Department of Revenue annually?
  • Do you bar distributions to the founders of the organization or substantial contributors or individuals whose compensation depends on the organization’s revenues?
  • Do you enter into joint ventures with "for profit" businesses?
  • Do you have money in a non-interest bearing account?