Principles for governance, ethics released

The Panel on the Nonprofit Sector has released a set of guidelines intended to help the nation’s nonprofits and foundations do a better job regulating themselves.

The panel, created in 2004 by Independent Sector at the urging of the Senate Finance Committee, highlights 33 recommendations in its “Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations.”

The goal of the publication is to foster self-regulation of the charitable sector by encouraging policies and practices that lead to transparency, accountability and good governance.

In the area of legal compliance and public disclosure include, the panel recommends all organizations have written codes of ethics, policies and procedures covering conflicts-of-interest, whistleblower policies, and that they ensure that information about internal operations is open to the public.

To ensure effective governance, the panel encourages nonprofits and foundations to have diverse volunteer boards that meet regularly to review and approve critical operational and strategic issues, with at least two-thirds of the board members being independent of the charity.

Boards also should evaluate regularly their charities’ mission, goals and programs, as well as board performance, establishing policies for removing ineffective members.

Financial oversight is critical the guidelines say, and charities should maintain complete and accurate records at all times, have in place policies for the responsible investment of funds and for expense reimbursement, and should not provide loans to its directors or officers.

Charities’ fundraising materials must be clear, truthful and identify the organization, and donations should be used as intended by the donor, with proper tax receipts provided, the panel says.

Neither staff nor external fundraisers should be paid based on commissions or percentages of the amount raised, the panel says, and policies must be in place to prevent gifts that would compromise the organization’s ethics or programs.

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