- Articulates and defines important objectives, principles or values
- Limits or prescribes what kind of action will be taken in different situations
- Defines roles, responsibilities and authority
All organizations, as a requirement of incorporation, are required to establish by-laws in respect to specific matters. These are usually matters that relate to the functioning of the board and its relationship to members.
General policies should also be set that are subject to change by the board of directors at any time. Indeed, it is in the interest of most voluntary and non-profit organizations to limit the number of policies designated as formal "by-laws" and focus their attention on creating other key policies.
This gives the board of directors the flexibility and opportunity to identify the organizational practices that are important to them in such a way that they can be easily modified when the need arises. This is often referred to as "governing by policy".
Key areas for policy setting
- Organizational mission, objectives and values.
- Role and responsibilities of the board.
- Board decision-making and meeting practices (usually covered partially by by-laws).
- Conflict of interest.
- Board member conduct.
- Role, responsibilities, and authority of the executive director or CEO.
- Financial management.
- Personnel, hiring and other human resource practices.
- Treatment and protection of consumers, customers, clients or users.
- Fundraising (including ethical considerations).
- Advocacy and public education.
- Accountability to members, stakeholders and community (may be partially addressed by by-laws in references to annual general meeting and annual financial report).
-Dalhousie University Non Profit Sector Leadership Program