U.S. Nonprofit Governance and Accountability
Amid Calls for Reform, New Study Details Actual Practices
With Hurricane Katrina demonstrating anew the need for an effective and reliable network of private, nonprofit organizations to help meet urgent national problems, and recent calls for increased regulation of nonprofit organizations from the Senate Finance Committee and others, a new report from the Johns Hopkins University's Nonprofit Listening Post Project offers the first up-to-date information on the actual governance and accountability practices of U.S. nonprofit organizations.
More than 600 nonprofit organizations in the United States were surveyed for the report, which reveals that the overwhelming majority of the organizations responding have boards of directors that are already significantly involved in the key oversight functions that nonprofit boards are expected to perform. These include setting organizational missions (93 percent), setting the chief executive's compensation (88 percent), establishing and reviewing organizational budgets and finances (87 percent), reviewing auditing and accounting policies and practices (83 percent); and approving significant financial transactions (81 percent).
The survey also found that the overwhelming majority of responding organizations already have other policies and procedures in place to promote accountability and ethical behavior. These include internal controls on finances and financial accounting (98 percent), records retention policies (84 percent), conflict of interest policies (83 percent), and travel expense policies (81 percent).
In addition, the vast majority of the organizations reported having undergone an independent audit in the past two years and nearly two-thirds take part in best-practice accreditation programs.
"There are many calls for reform and suggestions for regulating nonprofit governance, but this is the first comprehensive view of what these organizations are actually doing," said Lester Salamon, director of the Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies, which oversees the Listening Post Project.
"While there will always be instances of poor governance in any sector, what this report shows is that the vast majority of nonprofit managers and governing boards take their fiscal responsibilities very seriously and have governance and accountability mechanisms in place that are far more up to the challenge than some recent accounts have suggested," said Salamon.
"This report provides some much-needed empirical evidence on how nonprofit organizations are managing their operations and it demonstrates the inadvisability of basing wide-ranging legislation on a handful of negative anecdotes," noted Peter Goldberg, CEO of the Alliance for Children and Families, and the chairman of the Steering Committee to the Listening Post Project.
The Listening Post Project focuses on nonprofit organizations operating in five key fields — children and family services, elderly services and housing, community and economic development, theaters, and museums. For more information on this survey, including names and contact information of survey participants available to talk to the press, or to interview Salamon or Goldberg, please contact Mimi Bilzor at the above phone number or e-mail address.
Copies of the Nonprofit Governance and Accountability report, as well as other reports of the Listening Post Project, are available at www.jhu.edu/listeningpost/news.
The Listening Post Project is a collaborative undertaking of the Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies, the Alliance for Children and Families, the Alliance for Nonprofit Management, the American Association of Homes and Services for the Aging, the American Association of Museums, the National Council of Nonprofit Associations, the National Congress for Community Economic Development, and Theatre Communications Group. Its goal is to monitor the health of the nation's nonprofit organizations and assess how nonprofits are responding to important economic and policy changes. Support for the project has been provided by the Carnegie Corporation of New York, the Ewing Marion Kauffman Foundation, the Rockefeller Brothers Fund, and the Surdna Foundation.
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