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October 22, 2007

National Good Governance Practices Pushed In Report

By Mark Hrywna
Governance practices at nonprofits are at the core of a new report from Independent Sector (IS) that suggests, but does not mandate, some 33 principles that nonprofits can follow to develop principles of ethics, accountability and transparency.

The report, the result of 18 months of expert opinion and public comment, is called "Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundation." Released last week by IS and its Panel on the Nonprofit Sector, it is organized into four categories: legal compliance and public disclosure, effective governance, strong financial oversight and responsible fundraising.

Among the suggested items are:

• A charitable organization should have a formally-adopted, written code of ethics with which all trustees, staff and volunteers are familiar and to which they adhere.
  
  
• The board should review organizational and governing instruments no less frequently than every five years.
  
  
• A charitable organization should neither pay for nor reimburse travel expenditures for spouses, dependents or others who are accompanying someone conducting business for the organization unless they, too, are conducting such business.
  
  
• Contributions must be used for purposes consistent with the donor's intent, whether as described in relevant solicitation materials or as specifically directed by the donor.
  
  
• An organization should spend a significant percentage of its annual budget on programs that pursue its mission. The budget should also provide sufficient resources for effective administration of the organization, and, if it solicits contributions, for appropriate fundraising activities.

"Many organizations will find they already meet or exceed many principles, others will find not every principle fits them," said Diana Aviv, president and CEO of Independent Sector, a Washington, D.C.-based coalition of nonprofits. "It was not easy to reach a consensus for many reasons, not the least of which was that we had very different groups sitting at the table."

The guidelines are not mandatory, even for IS members, because the group aimed to make them applicable to many organizations. Had they been mandatory, fewer principles would have made the cut, since some would not apply to certain organizations. "We opted instead to have a broader set of principles and make them voluntary," Aviv said.

The next step is to ensure wide distribution of principles, Aviv said, which includes rolling out the guide at the organization's annual conference in Los Angeles this week. She said that she is "confident that this document will quickly emerge as a critical tool, elevating the culture of responsible behavior."

The principles are available on the Panel Web site at www.nonprofitpanel.org. Those interested in receiving a hard copy of the guide can visit the Panel Web site to order. Up to 25 copies of the guide may be ordered free. Also available are the Panel's 2005 Final Report and 2006 Supplemental Report.

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This article is from NPT Weekly, a publication of The NonProfit Times.

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