Presentation on theme: "Recent Trends in U.S. Nonprofit Governance"— Presentation transcript:
1 Recent Trends in U.S. Nonprofit Governance Marilyn Wyatt
2 Topics to be coveredStructure of U.S. nonprofit sector and charitable orgsNew regulatory and voluntary approaches to accountability and good governanceOngoing issues
3 Main pointsDespite the sector’s size and diversity, increasingly rigorous standards for nonprofit accountability and governance are gaining tractionThe key challenge: striking the right balance between government regulation (which must be flexible) and self-regulation (which must be reliable)
5 Life cycle of a public charity* Starting Out -- organizing documents; bylawsApplying to IRS -- exemption applicationRequired filings -- Annual Form 990Ongoing compliance -- jeopardizingexemption (inurement/private benefit;intermediate sanctions; lobbying/politicalactivity); taxes; disclosure requirementsSignificant events -- audits; termination*Abbreviated
6 Life cycle of a private foundation* Starting Out -- organizing documents; bylawsApplying to IRS -- exemption applicationRequired filings -- Annual Form 990Ongoing compliance -- jeopardizing exemption (inurement/private benefit; lobbying/political activity); private foundation excise taxes (self-dealing, failure to distibute income, jeopardizing investments); disclosure requirementsSignificant events -- audits; termination*Abbreviated
7 Typical structure of a charitable org. Board of directorsAdvisorygroupsExecutivecommitteeFinancecommitteeGovernancecommitteeAuditcommitteeFundraisingcommittee, etc.GOVERNANCEChief executiveMANAGEMENTAdvisorygroupsFinance managerDevelopmentmanagerProgrammanagerAdministrativemanager, etc.
8 Recent developments re: nonprofit governance 20012002200320042005200720072008Enron collapse triggers corporate governance crisisCongress passes Sarbanes- Oxley ActWidely reported scandals shake nonprofit sectorCongress conducts hearings on abuses; Independent Sector convenes blue-ribbon panelIS Panel recommends reforms to Senate Finance CommitteeIS Panel issues Principles for Good Governance and Ethical PracticeInternal Revenue Service posts discussion draft of revised Form 990Revised Form 990 introduced for fiscal year 2008
9 Impact of Sarbanes-Oxley Directly applicable:Document retentionWhistle blower protectionRecommended best practices:Separate audit committeeOutside auditor, rotated regularlyCertification of financial reportsDisclosure of financial informationNo loans to board members and senior executivesConflict-of-interest policy
10 Recommendations from Panel on Nonprofit Sector Report to Congress, 2005Regulatory steps to improve accountabilityBalance between appropriate regulatory oversight and independence of nonprofit sectorPrinciples for Good Governance and Ethical Practice, 2007Steps nonprofits should take voluntarilyPrimacy of good governance and board oversight
11 New IRS reporting requirements Revised Form 990 issued in 2008Governance focus:MissionOrganizational documentsGoverning bodyGovernance and management policiesFinancial statements and Form 990 reportingTransparency and accountability
12 Conclusions New expectations for public accountability Import of standards from business sectorSelf-regulation vs government regulationBoards as active steward of mission and programs vs guard against malfeasance (Ostrower)Good governance in time of economic downturn
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