Calls for Openness Prompt Nonprofit Groups to Revise Policies

More than half of nonprofit organizations have made changes to their governance policies in the

past three years, according to a new survey.

Many of those changes have come in response to demands from government and watchdog groups that charities become more open about their operations, said a report on the survey, which was conducted by Grant Thornton, a Chicago consulting company that advises charities and other organizations.

The company’s survey was based on data provided by 960 chief executive officers, chief financial officers, and board members who serve a range of nonprofit organizations.

Two-thirds (66 percent) of large organizations (those with annual budgets of $100-million or more) have instituted new governance policies on issues such as avoiding conflicts of interest or establishing new internal audit functions. Half of those with budgets smaller than $20-million have done so.

The biggest increase came among organizations that have put new policies in place to prevent conflicts of interest. More than three-quarters (78 percent) said they have taken such a step, compared with 67 percent that said they did so in 2005.

Forty percent of the respondents said the nonprofit board’s most important responsibility is providing strategic planning. About one-fifth (22 percent) said fund raising is the board’s key task, while the same percentage said that management and oversight is the board’s top priority.

Nearly 80 percent said their boards range from 6 to 30 members, although a small number (4 percent) reported having more than 50 board members. The survey found that most of the larger boards were the result of charities’ placing donors on the board to assist in fund raising, with most governance responsibility remaining with the executive committee.

Grant Thornton’s 2006 “National Board Governance Survey for Not-for-Profit Organizations” is available free online.

KEY DUTY OF NONPROFIT BOARDS: HOW BUDGET SIZE AFFECTS THE TOP PRIORITY Less than $20,000,000 $20,000,000 to $49,999,999 $50,000,000 to $99,999,999 $100,000,000 or more Organizations with budgets of: Ensuring effective programs 16% 12% 14% 5% Fund raising 25% 13% 13% 11% Management oversight 18% 27% 28% 46% Protecting reputation 2% 1% 0% 7% Strategic planning 39% 47% 45% 31% SOURCE: Grant Thornton PERCENTAGE OF NONPROFIT GROUPS THAT MADE GOVERNANCE CHANGES IN THE PAST THREE YEARS Yes No Organizations whose budgets were: Less than $20,000,000 50% 50% $20,000,000 to $49,999,999 66% 34% $50,000,000 to $99,999,999 59% 41% $100,000,000 or more 66% 34% SOURCE: Grant Thornton