Vague agreements with staff and volunteers expose nonprofits to disputes, liability, and wasted resources. A solid written agreement prevents confusion about roles, confidentiality, and what happens when someone leaves. This guide covers the essential clauses every nonprofit should have in place.
Why Written Agreements Matter for Nonprofits
Handshake deals don't hold up in court, and verbal understandings evaporate when turnover happens—which is frequent in the nonprofit sector. Written agreements establish clear expectations upfront, reduce legal exposure, and make your organization look professional to funders and donors. They're also essential if you ever face an employment dispute or need to enforce confidentiality or non-compete restrictions.
Many nonprofits skip formal agreements to save costs, but this false economy creates bigger problems later. A $300–600 agreement drafted by a nonprofit attorney now beats a $5,000+ legal battle over intellectual property or misconduct allegations later.
Core Sections Every Agreement Should Include
Role and Responsibilities
Be specific about what the person will do, what they won't do, and who supervises them. Instead of "assist with fundraising," write "responsible for drafting three grant proposals per quarter under the development director's supervision." This clarity prevents scope creep and protects you if performance issues arise.
Compensation and Hours
For staff, state hourly rate, salary, benefits eligibility, and expected hours. For volunteers, clarify this is unpaid work and no employee benefits apply. Note whether timekeeping records or sign-in sheets are required. If you're reimbursing expenses (mileage, materials), specify the process and any cap.
Confidentiality and Intellectual Property
Nonprofits handle donor information, beneficiary details, and strategic plans that must stay private. Include a clause requiring staff and volunteers not to disclose sensitive information during or after employment/service. Address who owns materials created on the job—documentation, curriculum, social media content, and grant applications usually belong to the nonprofit.
Code of Conduct and Conflict of Interest
Reference your nonprofit's policies on harassment, discrimination, substance use, and acceptable behavior. Require disclosure of conflicts of interest (family members on the board, outside work that competes with your mission, financial interests in vendors you use). Specify consequences for violations, from warnings to immediate termination.
At-Will Employment or Term Limits
For staff, clarify that employment is at-will unless you're offering a fixed contract. For volunteers, note that service can end with notice from either party. Most nonprofits operate at-will, which gives you flexibility but must be stated in writing to be enforceable.
Data Protection and Technology Use
State whether the person can use nonprofit equipment (computers, email, phones), what monitoring may occur, and that all work product belongs to the organization. If they'll access donor databases or financial systems, require training and confidentiality acknowledgment.
Termination and Separation
Specify notice periods (typically two weeks for staff, immediate for volunteers in cause situations). Address return of keys, devices, and materials. Clarify that unused vacation or personal days are handled per your nonprofit's written policy and state law (some states require payout).
Background Check Authorization
Many funders and insurance policies now require background checks for anyone working with vulnerable populations. Include consent language and outline what disqualifies someone. Typical costs run $30–75 per check through services like Checkr or GoodHire.
Common Compliance Pitfalls to Avoid
- Misclassifying volunteers as employees: If someone works regular scheduled hours and follows your direction closely, they may be an employee legally, not a volunteer. A written agreement won't fix misclassification; you need the facts to align.
- Ignoring state employment laws: Minimum wage, overtime, meal breaks, and family leave vary by state and apply to nonprofits too. Your agreement should not contradict state requirements.
- Forgetting about independent contractors: If you hire contract bookkeepers or consultants, use separate contractor agreements with 1099 language, not staff agreements. Misclassifying employees as contractors invites IRS penalties.
- Incomplete dispute resolution: Add a clause addressing how conflicts will be handled—mediation, arbitration, or escalation to the executive director. This prevents lawsuits and shows funders you take governance seriously.
Getting Your Agreements Ready
Use templates from organizations like the Nonprofit Law Center or LawHelp.org as starting points, then have a nonprofit attorney review them for $300–700 (flat fee). Mercoly helps you compare and find trusted Nonprofit Legal & Compliance providers in one place to get quotes and see reviews.
Keep agreements current by reviewing them annually and updating them after any policy changes or legal shifts in your state.
Frequently Asked Questions
Q: Can we use the same agreement template for all staff positions? A general template is fine, but customize the role and responsibilities section for each position. Executive directors, program coordinators, and part-time grant writers have different expectations and risks.
Q: Do we need separate agreements for board volunteers versus program volunteers? Yes—board members typically sign a board agreement covering fiduciary duties and confidentiality, while program volunteers sign a simpler document covering liability waivers and code of conduct.
Q: How often should we update our agreements? Review annually or whenever you change policies, reorganize staff roles, or experience significant legal changes in your state.
Start with a nonprofit attorney who knows your state's nonprofit law—it's the one investment that saves money down the road.