Reviewed by Christopher Johnston, CPA, Partner

Even if you’re confident your organization operates with integrity, adopting a code of ethics can provide several benefits: It can help prevent fraud, guide staffers in their decision-making, and reassure donors and other stakeholders that your organization is adhering to its values. If you’re ready to adopt a code of ethics, here’s how to do it.

Values into action

First, what’s the difference between a mission statement and a code of ethics? You probably already have a mission statement that explains your values and goals, so a code of ethics may seem redundant. Think of it as a statement of how you, your staff and volunteers, and your board of directors practice ideals and put values into action.

Start creating a code of ethics by reviewing your strategic plan and mission statement to identify the ideals specific to your organization. Next, look at peer nonprofits to see which values you share with them, such as:

• Fairness and justice,
• Commitment to your community,
• Accountability to the public, and
• Adherence to the law.

Also think about ethical behaviors in your industry. For example, if your staff must be licensed, discuss meeting those requirements. You may also want to include practical standards that address current issues or behaviors common to your workplace, such as cooperativeness and promptness. Although these principles aren’t directly related to ethics, they’re relevant to your nonprofit’s image.

Possible considerations

The type and size of your organization will help determine the scope of your code of ethics. But most nonprofits should address such general areas as mission, governance and legal compliance.
Also consider covering conflicts of interest, such as paying board members for their services, responsible stewardship of funds, and transparency and disclosure. Increasingly, inclusiveness and diversity are considered important components of a nonprofit’s code of ethics. For each of these topics, discuss how you’ll abide by the law, be accountable to the public and responsibly handle resources.

Finalizing and training

When your code of ethics is final, your board must formally approve it. Train staffers, volunteers and board members on the code and ask them to sign copies of it. Make sure they understand potential repercussions — such as dismissal — if they violate it. Also post your code in public locations, such as on your website, so your community can witness your organization’s commitment to its values.

Are you still unsure about how to get started? Or are you concerned about specific activities that might jeopardize your organization’s tax-exempt status? Contact us for advice.

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