Focus on Foundations: Nonprofit Sector Panel Issues Best Practices Manual for Nonprofits

Title:
Focus on Foundations: Nonprofit Sector Panel Issues Best Practices Manual for Nonprofits
Publication:
From the December 2007 <I>Riker Danzig Tax and Trusts & Estates Update</i>
Practices:

The Panel on the Nonprofit Sector, with the encouragement of the Senate Finance Committee, recently published a “best practices” manual for nonprofit organizations, which is designed to help nonprofit organizations avoid ethical and legal improprieties.1 The manual sets forth a comprehensive set of principles whose purpose is to reinforce a common understanding of transparency, accountability, and good governance for the nonprofit sector as a whole – not only to ensure ethical and trustworthy behavior, but also to spotlight strong practices that contribute to the effectiveness, durability, and broad popular support for charitable organizations of all kinds.

The 33 principles are organized under four main categories:

(1) Legal Compliance and Public Disclosure – responsibilities and practices (such as implementing conflict of interest and whistleblower policies).

(2) Effective Governance – policies and procedures a board of trustees should implement to fulfill its oversight and governance responsibilities effectively.

(3) Strong Financial Oversight – policies and procedures an organization should follow to ensure wise stewardship of charitable resources.

(4) Responsible Fundraising – policies and procedures to build donor support and confidence.

Some of these principles describe actions that all charitable organizations must take because they are required by law. Others describe actions that charitable organizations should strongly consider following. Among the noteworthy recommendations are the following:

It would be prudent for every charitable organization’s board to conduct a thorough discussion of the complete set of principles, and to determine how the organization should apply the principles.

In addition to aiding good governance practices generally, implementing these principles now will better prepare a nonprofit organization for the additional compliance inquiries reflected in the new IRS Forms 990 and 990PF.

 

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1. Principles for Good Governance and Ethical Practice – A Guide for Charities and Foundations, Panel on the Nonprofit Sector Convened by Independent Sector, October 2007. It can be located at www.nonprofitpanel.org.