Management Guidelines Could Lead to Cumbersome Nonprofit Regulations

November 08, 2007

Management Guidelines Could Lead to Cumbersome Nonprofit Regulations

A prominent association of donors and grant makers says it will not support an effort to create a set of governing principles for charities and foundations.

The Philanthropy Roundtable says in a document released today that Independent Sector’s proposed principles could be used as a blueprint for federal and state lawmakers for creating burdensome new regulations for nonprofit groups.

“There is a danger, however, that some of the more problematic Independent Sector principles will not remain voluntary but will be codified into law or regulation, if it is perceived that there is a wide consensus in favor of them within the charitable community,” wrote Adam Meyerson, president of the organization. “This is no idle threat.”

Because of this issue — and several others — Mr. Meyerson writes that the organization will not endorse the Independent Sector document and it will encourage other organizations to withhold their support.

The Philanthropy Roundtable — which is playing host this week to its annual meeting in Dana Point, Calif. — also contends that the Independent Sector principles are flawed because they attempt to create a “one-size-fits-all” approach for nonprofit governance.

The organization says that uniform guidelines are not practical because of the varying sizes and missions of nonprofit groups and foundations.

In addition, the Philanthropy Roundtable concludes that portions of the Independent Sector document that call for diverse boards of directors is arbitrary and would hurt the ability of some organizations to fulfill their missions.

“Boards also function best when there is strong mutual trust among board members, so they can speak more freely with each other on issues of mission, strategy, and oversight,” Mr. Meyerson writes. “Diversity of perspective can sometimes be helpful but it doesn’t necessarily lead to that trust. The goal should not be to diversify each board—that’s a recipe for sector-wide homogeneity.”

What do you think? Should nonprofit groups endorse the Independent Sector principles — or will the principles open the door for problems at nonprofit groups and foundations? Click on the comment link below this post to share your thoughts.

— Peter Panepento

Comments

I haven’t talked to anyone who seriously believes that the IS Principles will be codified into legislation. I stay in touch with policy leaders and have not come across this opinion among any of them. I’m not sure why Adam and The Philanthropy Roundtable see differently.

The BBB Standards for Charity Accountability that we have for many years used to evaluate charities track closely to the Principles adopted by IS. We have provided this service in part to avoid government regulation and this has worked. The Standards, like the IS Principles encourage organizations to operate in a transparent manner. We have never advocated that a government make our standards into law and I’m confident that Independent Sector would vociferously fight any attempt to base laws on their Principles.

— H. Art Taylor -- BBB Wise Giving Alliance Nov 9, 11:14 AM #

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