Managing current-use and endowed funds across a large institution, such as a university or hospital, involves numerous people, funds, systems, and processes. Ensuring each of these components has clear lines of communication, and that all processes and responsibilities are clearly outlined, is critical for an effective fund management operation. We’ve created a step-by-step guide to use when creating a compliance committee.
Monitoring fund activities and maintaining fund hygiene will help ensure that you are honoring donor intent, maximizing utilization of resources, and creating the highest impact for the communities you serve.
Establishing a compliance committee ensures resources are utilized effectively and efficiently while coordinating activities across large groups and various data components. The committee can help your organization foster a culture of philanthropy, adopt effective donor stewardship practices, and increase fund utilization.
This step-by-step guide provides a roadmap for establishing a philanthropic fund compliance committee.
Empowering a committee can provide a structured platform for diverse perspectives to be heard and integrated into decision-making processes. Committees ensure that all organizational facets and goals are considered while distributing the workload and responsibility to a team rather than a single individual. This is especially helpful for large, dispersed organizations where various units have unique environments that need to be considered.
The committee, in collaboration with organizational leadership, should agree on objectives for the committee. Some key objectives to consider include:
When establishing a compliance committee, it is essential to have representation from across the institution. Committees enhance problem-solving and innovation within the organization by bringing together individuals with varied expertise and experiences.
Each organization's makeup is unique. When appointing a philanthropic fund compliance committee, review the different related offices, divisions, departments, and stakeholders involved in the full cycle of fund management and reporting. Consider which offices should have a standing representation versus areas that should have rotating termed positions.
Consider representation from some of the following areas:
Every good committee has a Chair who will outline the group's work and steer the committee towards achieving set goals. The Chair is responsible for setting meetings and meeting agendas, as well as coordinating the group's activities and objectives. Typically, this is a representative from the Office of Advancement/Development Office.
Outlining an annual committee work plan at the start of each fiscal year sets the tone and goals for the committee's work each year. A work plan is a great way to ensure progression towards a committee's outlined overarching objectives and meeting more of the organization's standards.
By outlining annual goals and strategies, committees will foster accountability, coordination, and productivity, enabling progress, effectively addressing existing challenges, and achieving desired outcomes.
We suggest quarterly meetings that align with the fiscal year. These should be pre-scheduled for the entire year at the start of each fiscal year. We also recommend creating a shared organization-wide annual philanthropy calendar with important dates to coordinate the yearly cycle of tasks and events across the organization.
Some important dates to consider are:
Setting fund management metrics provides a clear framework for assessing performance and progress towards goals, as well as identifying areas for improvement. By regularly evaluating progress against established metrics, the committee ensures alignment with organizational objectives and enhances stakeholder accountability. Benchmarks allow the committee to track their effectiveness over time and make data-driven decisions.
Leverage 3rd party entities that make sense for your organization like consultants, vendors, and professional organizations to seek best practices and benchmarks for fund management standards.
Once standards are set, it is important to monitor progress and results. Control mechanisms and audits are essential to ensure that your organization adheres to established procedures and policies.
Monitoring adherence to these standards helps detect errors, deviations from policies, and non-compliance, thus safeguarding the organization's integrity and maintaining trust with donors and stakeholders.
Foster transparency and accountability by communicating compliance findings to leadership, the board of trustees, and other stakeholders. Share with senior leadership and the board reports and progress to foster engagement and support for the committee's objectives. This ensures that the institution's leadership is aligned with the committee's efforts to maintain high standards of fiduciary responsibility, compliance, and donor stewardship.
Sharing results through an annual report is vital because it celebrates achievements, fosters transparency, and empowers leadership with the insights to drive strategic decisions and continued success.
Consider sharing the annual reports with the following groups:
Sharing the annual report with critical stakeholders promotes transparency and accountability across the institution and drives continuous improvement by highlighting areas of success and identifying potential risks or gaps. With better data around their philanthropic funding, leadership can prioritize actions that enhance operational efficiency, regulatory compliance, and institutional effectiveness.
Every organization’s needs, dynamics, and goals are different, but we hope this guide will prompt helpful topics to consider.
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