Putting Integrity into Practice: The Importance of a Code of Ethics for Your Nonprofit

You know your nonprofit operates ethically and with integrity. But even the most mission-driven organizations can benefit from a formal code of ethics to demonstrate. Your nonprofit’s commitment to ethical conduct to help prevent fraud. This also serves as a guide for decision-making, and to reassure donors and stakeholders of your commitment to transparency and accountability.

From Values to Action

First, distinguish between a mission statement and a code of ethics. A mission statement defines your nonprofit’s purpose, values, and goals. A code of ethics outlines how you, your staff, volunteers, and board members put those values into action daily. While it may seem redundant to have both, a code of ethics turns aspirational values into clear, practical behaviors expected of everyone in your organization.

Begin by reviewing your strategic plan and mission statement to identify the core principles unique to your organization. Then, look at other nonprofits in your sector to see which shared values they emphasize, which may include:

- Fairness and Justice: To ensure all individuals and groups are treated equitably and respectfully.

- Commitment to Community: To actively support and improve the well-being of the communities you serve.

- Public Accountability: Uphold your responsibility to stakeholders and the broader public.

- Legal Adherence: Comply fully with laws and regulations applicable to your sector.

Think, too, about industry-specific ethical considerations. If your work requires licensing, ensure your code addresses compliance with professional standards. Additionally, incorporate practical workplace standards like cooperation and punctuality, as these contribute to your nonprofit’s overall image and organizational culture, even if they’re not directly related to ethics.

Key Areas to Cover

The type and size of your nonprofit will influence the depth and breadth of your code of ethics. Nonetheless, most organizations should cover several core areas:

- Mission and Purpose: Reinforce the nonprofit’s dedication to its stated mission and goals.

- Governance and Legal Compliance: Ensure the organization operates within legal boundaries and upholds good governance principles.

- Conflicts of Interest: Establish policies on conflicts, such as transactions involving board members, to maintain objectivity and transparency.

- Responsible Fund Stewardship: Emphasize prudent management of resources, ensuring funds are used as intended.

- Transparency and Disclosure: Detail your commitment to openness with stakeholders, including reporting obligations and information sharing.

With increasing emphasis on diversity, equity, and inclusion, consider how your nonprofit can express these values in your code. For each area, outline expectations for legal compliance, accountability to the public, and responsible resource management.

Finalizing, Approving, and Training

Once you’ve drafted your code of ethics, your board should formally review and approve it. Make sure staff, volunteers, and board members receive training on the code and its importance. To underscore its significance, ask them to sign a copy, to acknowledge their commitment to uphold it and understanding the consequences of non-compliance, such as potential disciplinary actions. Finally, share your code publicly—on your website or in your facility—so your community can witness your dedication to ethical principles.

Need Assistance?

If you’re uncertain about developing your code or want to ensure specific activities comply with tax-exempt requirements, reach out to us for guidance. A well-crafted code of ethics can strengthen your nonprofit’s integrity and ensure a positive impact on the communities you serve.