The purpose of this chapter is to determine how to develop the necessary policies and procedures needed for the nonprofit, communicating the importance of these policies and procedures and ensuring compliance throughout the nonprofit.

Nonprofits are faced with numerous laws, rules and regulations, and a violation of any of them can result in the nonprofit’s 501(c)(3) status being terminated. In addition, Board members risk being sued, and the nonprofit could lose the public support that it depends on to provide its programs and services. A lawsuit brought against the nonprofit can not only have serious ramifications in defending the lawsuit but can also bring to the public’s attention the failure of individuals at the nonprofit to follow necessary policies and procedures. Such failure may cause the public to question whether this is a sound organization to support, and without public support, most nonprofits would cease to exist.