A Memorandum of Understanding, or MOU, is a written agreement between partner organizations that outlines the basics of your collaboration. While an MOU is not a legally binding contract in most jurisdictions, it serves critical functions: it clarifies expectations, documents agreements that people made verbally, creates a reference point when conflicts arise, and demonstrates commitment to funders and stakeholders.
Many nonprofit partnerships operate without any written agreement, relying instead on personal relationships and ongoing communication. This approach works until relationships change or people forget what was actually agreed to months ago. A well-written MOU prevents these common sources of partnership conflict by documenting what you've decided together.
What Goes in an MOU
An effective MOU typically includes the following sections. Start with a preamble explaining why the organizations are partnering and what you hope to accomplish together. This provides context and helps parties remember their shared purpose when challenges arise.
Outline the mission and goals of the partnership. What specific problem are you solving together? What populations will you serve? What outcomes are you trying to achieve? Be specific enough to guide implementation but flexible enough to allow for learning and adjustment.
Define the roles and responsibilities of each partner. Who is responsible for direct service delivery? Who manages finances? Who handles communications? Who makes decisions about program changes? Ambiguity about roles is a major source of partnership conflict. Even if it feels awkward to spell this out explicitly, do it anyway.
Include information about governance and decision-making. How often will you meet? Who participates in partnership decisions? How are decisions made (by consensus, majority vote, etc.)? How will conflicts be resolved? How will you communicate between meetings?
Describe resource contributions. What funding, staff, space, equipment, or data will each organization contribute? If partners are contributing staff time, how many hours per week or month? If contributing funding, what are restrictions or expectations? Document in-kind contributions even if no money changes hands.
Specify the term of the partnership and renewal process. Is this a three-year commitment or ongoing? When will you formally evaluate partnership and decide whether to continue? What notice is required if a partner wants to exit?
Include basic legal terms. How will intellectual property created through the partnership be owned or shared? How are liabilities managed (liability insurance, indemnification)? What happens if a partner has a conflict of interest? How do you handle confidential information?
MOU Versus Formal Contracts
An MOU is less formal and legally binding than a contract, but it serves many of the same functions. A contract specifies detailed terms and conditions and is legally enforceable. An MOU documents agreement but typically includes a statement that it is not intended to create legal obligations.
Most informal coalitions and alliances can function well with an MOU. More formal partnerships with significant financial integration may warrant moving to formal contracts. Joint ventures and fiscal sponsorships definitely need contracts. A good rule of thumb: if significant money or liability is involved, consult with a nonprofit attorney about whether you need a formal contract rather than just an MOU.
Even when you have a formal contract, an MOU can be useful as an accessible summary of the main points. Many staff members will never read the full contract, but they might review the MOU. Having both documents—one legally binding and one accessible—provides value.
Creating Your MOU Step-by-Step
Start by discussing the partnership informally before writing anything. What does each organization hope to achieve? What concerns do they have? What resources can they contribute? What decisions need to be made? Have thorough conversations, make notes about what you discuss, and build trust before formalizing agreements.
Once you've had conversations, designate someone to draft the initial MOU based on your discussions. Don't try to write it together in real-time. A draft gives people something concrete to react to. Make it clear that this is an initial draft, not a final proposal, and that you welcome feedback and changes.
Circulate the draft to all partners for review. Build in at least two weeks for feedback. Ask each organization to get input from their board or leadership team, not just the staff member attending partnership meetings. Ensure decision-makers at each organization have reviewed and provided feedback.
Revise the draft based on feedback. Look for areas of disagreement or misunderstanding and work to resolve them through conversation. Often disagreements in the draft reflect conversations that didn't happen. Use the draft as a prompt for deeper discussion.
Meet in person or by video to discuss the revised draft. Don't just email a new version around. Discuss any remaining points of disagreement. Look for language that can be clarified. Once you've reached agreement, document what you've decided and incorporate it into a final version.
Have each organization formally sign the MOU. Get signatures from an authorized representative (typically executive director or board chair) of each organization. Take this step seriously as it signals organizational commitment.
Distribute the final MOU to all staff working on the partnership, not just leadership. Staff understanding of partnership agreements is critical to successful implementation. You might provide staff with a summary if the full MOU is lengthy.
Reviewing and Updating Your MOU
Plan to review your MOU annually or whenever partnership structure or goals change significantly. Partnership dynamics shift as relationships deepen, as funding changes, as organizational priorities evolve, or as staff turnover occurs. The MOU should reflect the current reality of your partnership.
When you review, ask: Are we still committed to the goals in this MOU? Have roles or responsibilities changed in practice? Are resource contributions still accurate? Do we need to adjust decision-making processes? Have we learned things about what works that should be documented?
Don't be afraid to update the MOU. It's a working document, not a static contract. Regular review and updates keep it relevant and useful. Organizations that treat their MOU as a living document that evolves with the partnership report better partnership functioning than those who write an MOU and never look at it again.
MOU Templates and Resources
Many organizations provide free MOU templates online. The Nonprofit Network Toolkit, Nonprofit Collaboration Resources, and foundation websites often have samples. Use these as starting points, but customize them for your specific situation. A generic template might miss important details specific to your partnership.
You don't need to pay an attorney to draft an MOU unless your partnership is legally complex or involves significant financial integration. Simple partnerships can use templates and customize them. However, having a nonprofit attorney review your draft before signing, even if just for a few hundred dollars, can catch legal issues you might miss.
Write your MOU in accessible language, not legal jargon. Partnership is about collaboration and trust. An MOU written in complex legal language signals formality and distance rather than partnership. Keep sentences shorter, use active voice, and define technical terms. The goal is clarity for all parties, not legal complexity.
Frequently Asked Questions
Q: Do we really need an MOU if we trust each other?
A: Trust is important but not sufficient. Even partners who trust each other disagree about things they thought they had agreed to. An MOU captures agreements in writing so people can refer back to them months later when memories have faded. It's not about distrust; it's about clarity. Many partnership conflicts would be prevented by documentation of what was actually agreed.
Q: Is an MOU legally binding?
A: Typically no. An MOU usually includes language stating that it is not intended to create legal obligations. However, if a court determined that parties intended an MOU to be binding, it might enforce it. For informal coalitions and networks, this doesn't matter much. For partnerships involving significant money or liability, consult a nonprofit attorney about whether you need a binding contract instead of or in addition to an MOU.
Q: What if partners disagree about something that should be in the MOU?
A: This is exactly the value of writing an MOU—disagreements surface during the drafting process rather than later when you're already implementing partnership. Use disagreement as a prompt for deeper conversation. Often disagreement reflects misunderstandings that surface when you actually try to write something down. Work through disagreements before finalizing the MOU rather than leaving them unresolved.
Q: How long should an MOU be?
A: It depends on the complexity of your partnership. A two-page MOU might be appropriate for a simple informal network. A more complex partnership might warrant five to ten pages. Longer is not better. If your MOU exceeds ten pages, consider whether you're trying to cover too much detail. Create a summary document for staff and keep detailed terms for leadership and board reference.