Effective charitable marketplace depends on openness

By Todd Cohen

While its plan for fixing charity needs some fixing itself, the Panel on the Nonprofit Sector is on the right track.

To strengthen nonprofit governance and openness, the panel proposes an integrated mix of voluntary action, tougher policing and changes in the law to match changes in nonprofit practice.

Diana Aviv, who heads Independent Sector and the panel, says greater transparency is critical to improve nonprofit performance and curb abuse.

In a sector that has doubled in 25 years, she says, ethical nonprofit and donor behavior can fall prey to competitive pressure or to weak, unclear or outmoded rules.

And while nonprofits themselves must be more open, she says, greater openness alone will not stop individuals intent on enriching themselves at charity’s expense.

Only a combination of voluntary action, tougher enforcement and better laws can ensure the transparency that nonprofits, donors and volunteers need to make the informed decisions an effective charitable marketplace depends on, Aviv says.

She is right.

While it ignores the shamefully low foundation payout rate, and muddies tough issues like conflicts of interest and excessive compensation, the panel calls for the balance needed between regulation and independence to keep the charitable marketplace open and even-handed.

Todd Cohen is the Editor and Publisher of the Philanthropy Journal.

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