Management Guidelines Could Lead to Cumbersome Nonprofit Regulations

A prominent association of donors and grant makers says it will not support an effort to create a set of governing principles for charities and foundations.

The Philanthropy Roundtable says in a document released today that Independent Sector’s proposed principles could be used as a blueprint for federal and state lawmakers for creating burdensome new regulations for nonprofit groups.

“There is a danger, however, that some of the more problematic Independent Sector principles will not remain voluntary but will be codified into law or regulation, if it is perceived that there is a wide consensus in favor of them within the charitable community,” wrote Adam Meyerson, president of the organization. “This is no idle threat.”

Because of this issue — and several others — Mr. Meyerson writes that the organization will not endorse the Independent Sector document and it will encourage other organizations to withhold their support.

The Philanthropy Roundtable — which is playing host this week to its annual meeting in Dana Point, Calif. — also contends that the Independent Sector principles are flawed because they attempt to create a “one-size-fits-all” approach for nonprofit governance.

The organization says that uniform guidelines are not practical because of the varying sizes and missions of nonprofit groups and foundations.

In addition, the Philanthropy Roundtable concludes that portions of the Independent Sector document that call for diverse boards of directors is arbitrary and would hurt the ability of some organizations to fulfill their missions.

“Boards also function best when there is strong mutual trust among board members, so they can speak more freely with each other on issues of mission, strategy, and oversight,” Mr. Meyerson writes. “Diversity of perspective can sometimes be helpful but it doesn’t necessarily lead to that trust. The goal should not be to diversify each board—that’s a recipe for sector-wide homogeneity.”

What do you think? Should nonprofit groups endorse the Independent Sector principles — or will the principles open the door for problems at nonprofit groups and foundations? Click on the comment link below this post to share your thoughts.