Commentary: Nonprofit reforms recommended

Daily Record, The (Baltimore), Jul 15, 2005 by Betsy Nelson

Great attention has been paid to the behavior of charities this year. As the ugly side of a small group of nonprofits emerged into the public eye, the old adage one bad apple spoils the whole bunch rang true for many.

The unfolding and well-publicized sagas of some nonprofit leaders sent some others into a frenzy of defense, all in the name of working in the public trust.

While the vast majority of charities carry out their good work ethically, the reputation of the masses did suffer a blow due to the flagrant abuses of a small minority. And while a few in the nonprofit world bristled at the necessity of a nonprofit accountability panel, I think it's just what we needed. And in the nick of time, the Panel on the Nonprofit Sector was created.

The panel was convened by Independent Sector, an umbrella organization of nonprofits, at the encouragement of the Senate Finance Committee Chairman Charles Grassley and Ranking Member Max Baucus.

Concerned about ethical lapses in governance, fundraising, and other practices, both the Senate Finance Committee and the House Ways and Means Committee have held hearings over the past year about the operations of nonprofit organizations. The IRS is also reviewing the practices of charities and foundations.

The charge for the Panel on the Nonprofit Sector over the last eight months was to develop recommendations to improve the governance, ethical conduct and oversight of nonprofit organizations. And the panel, made up of a diverse group of leaders of the nation's charitable organizations, delivered.

The panel recently released its comprehensive report, which details an integrated plan to help charities govern themselves properly and openly. And even for those nonprofit organizations that have been operating with good conduct, considering the panel's recommendations and taking a good look at the way we do business will be a useful exercise.

These recommendations are intended to strike a balance between providing the oversight needed to prevent abuses and protecting the independence that is a vital element in the charitable community's innovation and effectiveness, said Paul Brest, one of the panel's co- conveners and president of the William and Flora Hewlett Foundation. They reflect the panel's belief that any new regulation should not impose costs that exceed their benefits.

Charities have a lot to be proud of. And the reforms presented by the panel actually serve to strengthen and promote our good work, rather than ask us to defend it. The panel proposes more than 120 actions to be collectively taken by charitable organizations, Congress and the Internal Revenue Service. While this seems like a lot of work, most of us are already doing it. And collectively, our due diligence will ensure that we can fulfill our work in accordance with the law and our mission.

Independent Sector offers nine guidelines to help kick-start nonprofits as we affirm our commitments to accountability and integrity. Review them at www.independentsector.org. And stay tuned for part two of my column - how to make the guidelines work for you!

Betsy Nelson, the executive director of the Association of Baltimore Area Grantmakers, writes this column, Charitable Giving, every other week for The Daily Record. The opinions expressed are her own. She can be reached at 410-727-1205 or bnelson@abagmd.org.