Texans join together throughout the state to form associations and organizations of every type. These nonprofits are essential to the vitality of communities and enrich our quality of life. The volunteers, board members and employees engaged in these organizations epitomize our highest societal values as they seek to fulfill their public benefit mission.

The continued success of Texas nonprofits requires broad public support and confidence. These principles and practices for nonprofit excellence seek to educate all engaged in nonprofit leadership and management as to their fundamental roles and responsibilities.

The 11 accountability principles described here differentiate the nonprofit sector from government and business sectors. The over 190 management practices provide specific guidelines for individual organizations to evaluate and improve their operations, governance, human resources, advocacy, financial management and fundraising. These are adapted to reflect the Texas Business Organizations Code.

While not intended as a substitute for the wisdom of directors of individual organizations, these principles and practices highlight the importance of nonprofit organizations’ commitment to public accountability and the processes necessary to be transparent in fulfilling their responsibility to the communities they serve.

Introduction

This document has three intended purposes. The first is to provide individual organizations striving for excellence with a tool for strategic planning and operational evaluation relative to the rest of the nonprofit sector. The second is to support the growth and quality of the sector. The third is to increase public understanding of the role and contributions of the nonprofit sector. The Principles and Practices for Nonprofit Excellence are not meant for use by funders or government to evaluate nonprofit organizations, nor are they intended as a substitute for the wisdom of directors or trustees of individual organizations. Given the blurring of the lines between the three sectors of the economy and the enormous growth of the nonprofit sector, this document is designed to support the effective functioning of our sector by recommending specific best practices.

Every nonprofit organization needs a strong foundation of compliance and a broad organizational awareness of laws and regulations related to fundraising, licensing, financial accountability, human resources, lobbying, political advocacy and taxation. The Principles and Practices presume that each organization is in compliance with applicable laws, including the Texas Business Code, relevant sections of the Internal Revenue Code, and other federal and state laws dealing with employment, occupational health and safety. Texans join together throughout the state to form associations and organizations of every type. The Principles and Practices for Nonprofit Excellence are of particular interest to 501(c)(3) organizations. However, the information and concepts apply broadly to all types of nonprofit organizations. Because of the sector’s diversity by size, region and activity area, each organization must determine whether or not an individual practice is appropriate for its current situation.

Nonprofit organizations are essential to the vitality of communities. They enrich quality of life, epitomize the highest societal values and strengthen democracy. Volunteers, board members and employees become involved with a nonprofit because of the organization’s public benefit mission. Therefore the continued success of Texas’ nonprofit organizations requires broad public support and confidence. This document publicly testifies the nonprofit sector’s commitment to excellence — always for the benefit of society.

The critical role of nonprofits in democratic societies underscores the importance of knowing how to form, govern and manage these organizations. The growth and progress of the nonprofit sector depends on developing and improving this body of knowledge. Since its founding, the Center for Nonprofit Studies has provided education and assistance to strengthen nonprofit management and governance.

Information regarding Texas nonprofit regulations can be found in the Texas Business Code.  Information regarding federal nonprofit regulations can be found on the Internal Revenue Service website.

 

 

Note to Readers: Please be aware that certain words have particular meanings in this document.

  • “Must” is used to describe practices required by stake or federal law, and is noted with a gavel symbol and highlighted in red.
  • “Should” is used to describe highly recommended practices.
  • “Constituents” describes people with a stake in the success of the organization and may include members, neighbors, clients, volunteers and contributors.

Acknowledgement
Principles & Practices for Nonprofit Excellence is adapted from Principles & Practices for Nonprofit Excellence developed by the Minnesota Council of Nonprofits © MCN 2004 and from Principles & Practices Guide for Nonprofit Excellence in Michigan © 2009, and used with permission. minnesotanonprofits.org