Non-Profit Whistleblower Policy
Non-Profit Whistleblower Policy Preparation Form (Coming Soon) – We recommend that you gather the information in this form prior to accessing the online questionnaire. Doing so will help you efficiently create your custom Non-Profit Whistleblower Policy.
Non-profit organizations can use this whistleblower policy to set up procedures for whistleblowing. Specifically, non-profits will use this policy for its directors, officers, employees, and volunteers (referred to collectively as non-profit individuals) to report any suspected criminal behavior, violations of law or internal policies, or misuse of the non-profit’s resources. It is important for non-profits to create a process to investigate these reports and address any wrongdoing. By using this policy, non-profits protect their individuals from retaliation for reporting misconduct.
Regulators and watchdog agencies are increasingly recommending written governance policies for non-profits since the introduction of the Sarbanes-Oxley Act of 2002 (SOX), which sets out governance standards mainly applicable to public companies. Almost all states have passed whistleblower protection statutes and encourage non-profits to adopt whistleblower policies. Laws usually do not require governance policies. However, not having them can bring into question the non-profit’s compliance with laws, such as anti-retaliation statutes, and negatively affect the non-profit’s reputation and operations. For example, if the non-profit does not have a whistleblower policy:
- The IRS may be more likely to audit the non-profit.
- Watchdog organizations may assign a lower rating to the non-profit.
- The non-profit may face more difficulties in attracting new donors, who may view weak governance as a sign that an organization also poorly handles its operations and funds.
Benefits of a Whistleblower Policy
A well-drafted and effectively implemented whistleblower policy can:
- Encourage reporting, and therefore, reduce the risk that fraud and other malfeasance go undiscovered.
- Send a message to non-profit individuals, regulators, and other stakeholders that the non-profit does not tolerate misconduct.
- Be used as a marketing tool in order to help instill donor confidence in the non-profit.
- Enhance the non-profit’s reputation, as it demonstrates the non-profit’s commitment to identifying and remedying malfeasance.
- Encourage non-profit individuals to raise matters of concern internally, therefore, avoiding the potential damage that may result from external disclosure.
- Help directors fulfill their fiduciary duties to oversee the non-profit and ensure compliance with applicable laws and internal policies.
- Put the non-profit in the best possible position to defend against claims of improper handling of complaints brought by a whistleblower.
- Promote compliance with federal and state anti-retaliation laws. For example, SOX and many state laws prohibit non-profits, including charitable organizations, from retaliating against whistleblowers.
- Meet IRS expectations. The IRS asks on Form 990, the publicly available annual return for non-profits, whether the non-profit has a written whistleblower policy and considers having that policy a good governance practice.
Customizing the Policy
This whistleblower policy assumes that the non-profit is a 501(c)(3) public charity. Therefore, the non-profit should customize this policy as needed to:
- Meet the requirements of any applicable state laws governing whistleblowers. For example, a New York non-profit meeting certain size and annual revenue thresholds must adopt a whistleblower policy that meets the requirements described in Section 715-b of the Not-for-Profit Corporation Law.
- Comply with any industry-specific requirements (for example, hospitals must include additional language to comply with federal law).
- Include any specific disclosure or reporting requirements and mitigation procedures that the non-profit currently has in place or wishes to implement.
Helix Compliance, LLC (“Helix”) is not a law firm, and Helix’s employees and representatives are not acting as your attorney. Helix provides a technology-based platform for those seeking to prepare their own legal documents. Using Helix’s system-generated documents does not create an attorney-client relationship between you and Helix or any Helix employee or representative. Therefore, your communications with Helix do not constitute privileged communications. Likewise, neither the attorney-client privilege nor the work product doctrine protect your communications with Helix. Helix is not your lawyer in any way, shape, or form.
Using Helix’s documents is not a substitute for the expertise of an attorney. Thus, you should not use Helix’s system-generated documents as a substitute for legal advice. Additionally, you should not construe Helix’s system-generated documents as legal advice. Helix does not review any information provided to it for legal accuracy or sufficiency. Helix does not apply the law to the facts of your situation, and Helix does not draw legal conclusions. Further, Helix does not provide opinions about your selection of documents. Users seeking legal advice should consult a qualified licensed attorney.
Even though Helix seeks to ensure that document content is up-to-date, laws change rapidly. Therefore, Helix does not guarantee that each document is completely current. The law differs in each legal jurisdiction and may be applied differently depending on your factual circumstances. If you are unsure whether your situation requires a specific document or whether the document’s contents are legally sufficient for your specific purposes, you should consult a qualified licensed attorney.