January 25, 2007 | Read Time: 1 minute
Nonprofit organizations are taking new steps to stomp out abuses among their peers.
Independent Sector, a Washington coalition of about 550 foundations and charities, wants nonprofit organizations to comment by February 2 on a draft proposal, put together by 34 nonprofit leaders, to help charities and foundations prevent abuses.
“The nonprofit community has a responsibility and opportunity to regulate itself,” said Diana Aviv, Independent Sector’s president.
After Congress passed a law last year that aimed to curb abuses of tax laws by donors and charities, some lawmakers said they planned to develop legislation in the future to place further restrictions on charities.
The draft proposal, which is based on a survey of charity laws, self-regulation, and accreditation policies throughout the United States, recommends that charities with at least $1-million in annual revenue and foundations with at least $25-million in assets follow 29 principles. Among the key recommendations:
Oversight. Institute conflict-of-interest and whistleblower-protection policies to help organizations deter or catch wrongdoing.
Board governance. Establish rules to ensure that charitable boards of directors fulfill their oversight and governance responsibilities, such as requiring that boards meet at least three times a year and that a majority of their members be independent of the organization.
Financial accountability. Institute strong financial oversight to make sure money is spent properly, by keeping thorough financial records and having an independent expert review them annually, among other practices.
Fund raising. Establish clear policies for organizations to follow that will help build confidence among donors, such as requiring contributions to be spent in the way the charity has told donors they will be and providing donors with acknowledgement of their gifts.
A copy of the principles is available for review and comment at http://www.independentsector.org.
