Sean S. McNeil, CPA, MBA
Accounting & Auditing Director
Accounting & Auditing Director
Values and beliefs are foundational to the existence of most nonprofit organizations. So it follows that the manner in which an organization’s work is carried out matters as much as its results. Your organization can make a public statement about its adherence to a set of values by developing a code of ethics.
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 staff in their decision-making and reassure donors and other stakeholders that the organization is adhering to its values.
Developing a code of ethics may take time and a fair amount of research and discussion. This may best be done by a small committee of board members and staff who can frame the discussion and draft the code. Following are some of the steps that may be involved. 
Values in action
You probably already have a mission statement that explains your values and goals, so a code of ethics may seem redundant. But while a mission statement expresses the organization’s purpose and goals, the code of ethics is a statement of how you, your staff, your volunteers and your board of directors practice the organization’s underlying ideals in their everyday approach to the mission.
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:
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- Fairness and justice
- Commitment to your community
- Accountability to the public
- Adherence to the law
Also, think about ethical behaviors in your industry. For example, if your staff must be licensed, discuss meeting those requirements. Any professional associations to which your staff or your organization belongs may have their own codes of ethics or professional standards that can help guide your thinking.
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, and they signal respect for the clients and allied professionals with whom you work.
Depending on the size of your organization, you may want to consider surveying your staff, volunteers and board members about the content of the code of ethics. Having a meaningful role in developing the code can help gain buy-in down the road.
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, as well. For each of these topics, discuss how you’ll abide by the law, be accountable to the public and responsibly handle resources.
Training staff, volunteers and board
When your code of ethics is final, your board must formally approve it. Train staff members, volunteers and board members on the code and ask them to sign copies of it. Make sure all trainees have the opportunity to ask questions during the training and discuss what the code means to their everyday work.
Also, discuss potential repercussions — such as dismissal — if they violate the code of ethics. Post your code on your website to make sure your community is aware of your organization’s commitment to its values.
Contact your GT Reilly advisor to discuss how to get started on your organization’s code of ethics.
