Nonprofit Accountability Update

Reports of financial scandals and the emergence of many new nonprofits have increased scrutiny of the nonprofit sector. The Senate Finance and House Ways and Means Committees both held hearings in June that put nonprofits under the spotlight, and more congressional oversight activity is planned. Moreover, calls for greater nonprofit accountability are coming not only from the federal government, but also from state legislatures. The Panel on the Nonprofit Sector, managed by Independent Sector , recently announced both the participants for its five work groups and the creation of a nine-member Citizens Advisory Group. The five work groups will assist the Panel as it prepares recommendations to the Senate Finance Committee on improving oversight and accountability of nonprofits. The work groups will review: § Governance and Fiduciary Responsibilities; § Legal Framework; § Oversight and Self-Regulation; § Small Organizations; and, § Transparency and Financial Accountability. The work groups will discuss possible changes to existing laws, advocate increased self-regulation in areas, and identify issues where more research is needed. Additionally, the Citizens Advisory Group, comprised of leaders of America’s business, educational, media, political, and religious institutions, will advise the Panel as it develops recommendations to Congress to improve the oversight and governance of nonprofit organizations by providing broad perspectives on how to strengthen governance, transparency, and accountability within the sector. Members of the panel are: Norman R. Augustine, chairman, Executive Committee, Lockheed Martin Corporation, Bethesda, MD; Johnnetta B. Cole, president, Bennett College for Women, Greensboro, NC; John M. Engler, president and CEO, National Association of Manufacturers, Washington, DC; Rev. James A. Forbes, senior minister, Riverside Church, New York, NY; Alex S. Jones, director, Joan Shorenstein Center on the Press, Politics and Public Policy, John F. Kennedy School of Government, Harvard University, Cambridge, MA; Bob Kerrey, president, New School University, New York, NY; Leon E. Panetta, founder, The Panetta Institute, Seaside, CA; John E. Porter, partner, Hogan & Hartson, Washington, DC; Sharon Percy Rockefeller, president and CEO, WETA, Arlington, VA. With Congress’ passage of the Sarbanes-Oxley Act, many state legislators and attorneys general have passed or been considering various proposals to increase nonprofit accountability at the state level. The National Council on Nonprofit Associations has compiled a chart detailing these pending bills and proposals to change nonprofit governance in the states.
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