November 25, 2004 | Read Time: 2 minutes
Almost half — 48 percent — of nonprofit organizations that responded to a recent survey by Grant Thornton, an accounting and business advisory group, said they had voluntarily made changes in their operations as a result of the 2002 federal Sarbanes-Oxley Act that was designed to improve corporate governance and accountability.
Only 20 percent of nonprofit officials reported making such changes in a similar survey conducted by Grant Thornton a year ago.
What’s more, 83 percent of more than 700 nonprofit officials recently surveyed said their organizations were at least somewhat familiar with the law, compared with 56 percent of about 300 nonprofit officials who responded last year (The Chronicle, December 11).
“Corporate scandal, media buzz, heightened governance activity,” and increased scrutiny of nonprofits by the Senate Finance Committee may have played a part in the increased awareness of Sarbanes-Oxley, said the report by Grant Thornton.
“This awareness may continue to rise as state legislatures propose and pass legislation similar to Sarbanes-Oxley,” said the report, and may lead greater numbers of nonprofit groups to make changes. “Organizations may be actively anticipating that these ‘best practices’ will soon become law,” the report said.
The Sarbanes-Oxley Act was intended to insure that the boards of publicly traded companies have the financial expertise and independence needed to oversee their managers’ performance.
Conflict-of-Interest Policies
Of the nonprofit organizations in the survey that said they had made changes in response to Sarbanes-Oxley, 76 percent said they instituted conflict-of-interest policies; 56 percent developed procedures for internal financial controls; 54 percent wrote codes of ethics; 54 percent created audit committee charters; 45 percent drafted new board policies; 43 percent adopted record-retention policies; and 29 percent codified protections for whistle-blowers.
The report said that, not surprisingly, large organizations are more likely to be familiar with the Sarbanes-Oxley Act than small ones.
Ninety-seven percent of large groups said they were somewhat or very familiar with the law compared with 75 percent of smaller groups.
Grant Thornton conducted the survey in September.
Forty percent of survey respondents were social- or human-services organizations; 13 percent were trade or professional associations; 9 percent were health-care groups; 9 percent were higher-education institutions; 6 percent were foundations; 3 percent were religious groups; and the remaining 20 percent were other kinds of organizations.
The 2004 “National Board Governance Survey for Not-for-Profit Organizations” is available free online at http://www.grantthornton.com/nfpsoxsurvey.
