April 15, 2004 | Read Time: 3 minutes
If the Nature Conservancy wants to improve its management practices and operations, it should make its finances and programs more transparent, enforce new conflict-of-interest policies, and strengthen board governance at the national and local levels, a new report urges.
While the report was intended to focus on the conservancy, a key U.S. senator currently conducting a review of nonprofit practices said other nonprofit groups should consider following its advice.
The 28-page report was issued by an independent committee established by the national environmental group, in Arlington, Va., after The Washington Post published a series of articles that raised questions about the group’s practices, such as allegedly selling land to trustees, making loans to employees, and receiving money from the sale of land to federal and state governments. The Post articles prompted an inquiry into the Nature Conservancy by members of Congress.
To become more open to donors and other parties, the committee urged the group to provide more information on its federal Form 990, the annual informational tax return the organization files with the Internal Revenue Service.
“The panel suggests the Nature Conservancy voluntarily disclose as much as possible (about its mission, policies, programs, goals, etc.) in its annual Form 990 in order to keep donors, the public, and interested governmental entities well informed about its activities,” the report said. The form “provides an opportunity for transparency and disclosure.”
The five people serving on the panel were chosen for their expertise in nonprofit work and corporate governance and include Ira M. Millstein, a New York lawyer, and Richard T. Schlosberg III, former president of the David and Lucile Packard Foundation.
The committee called on the Nature Conservancy to view its 990 as the nonprofit equivalent of the information that public companies must file with the Securities and Exchange Commission to comply with the so-called Sarbanes-Oxley Act. That federal law applies to corporations only, but nonprofit umbrella groups have encouraged charities to adopt certain provisions (The Chronicle, October 30, 2003).
As a “model” of an informative and complete 990, the panel pointed to the federal return filed by Memorial Sloan-Kettering Cancer Center, in New York.
Compensation Policy
Additional recommendations included in the panel’s report:
- Maintain a “consistent policy” of providing executive compensation comparable to similar-size charities.
- Prohibit board members and their companies from selling land to the Nature Conservancy, buying property from the charity, and joining in so-called cause-related marketing efforts, where the charity’s logo is put on products or used in corporate-advertising campaigns.
- Create a Conservation Project Review Committee on the board to oversee the environmental group’s conservation programs.
- Establish better communication between the Nature Conservancy’s national office and its 55 chapters nationwide.
The report also made several recommendations already adopted by the nonprofit group, including restructuring its governing board to improve oversight and requiring stricter enforcement of policies concerning donations of property to the charity (The Chronicle, March 18).
“We have implemented many of the panel’s recommendations,” said Henry M. Paulson, chairman of the conservancy’s board of governors.
Senator’s Support
Sen. Charles Grassley, an Iowa Republican who as chairman of the Senate Finance Committee is investigating the Nature Conservancy, applauded the report’s recommendations. “I’m pleased that it looks like Nature Conservancy has gotten the message that business as usual won’t cut it,” he said.
Mr. Grassley also said other nonprofit groups might consider adopting the report’s suggestions. “I’ve concluded that there’s a need for broader reforms of charities. I’ll study the Nature Conservancy’s reforms to see if some of them can have wider applicability across the board for all nonprofits,” he said.
“People should have confidence that when they write a check for charity, the money will help the needy, not the greedy.”
The committee’s report is available on the Nature Conservancy Web site at http://nature.org/pressroom/press/press1389.html.
