The New Age of Nonprofit Accountability (Report)

Sally Covington (The National Committee for Responsive Philanthropy, 1994)
This report is a review of who oversees charities, what they evaluate and what they don't, self-regulation vs. governmental oversight, the effectiveness of private watchdog agencies, voluntary public accountability of charities, and who benefits from charitable activity. It concludes with recommendations for regulatory and legislative reform. It is an in-depth, no-nonsense review of recent criticism by the media about charities’ behavior and accountability; in the wake of charitable misconduct and increased public and governmental scrutiny, this report begins with the simple question of what nonprofit accountability is and follows it up by asking what role nonprofits play in our society. It recommends that nonprofits take action in four key areas to help fund raisers communicate their effectiveness to the public and donors: (1) expand access to 990 forms, (2) increase public information (publish and distribute annual reports that give salary ranges and fund-raising expenses, and reveal racial, ethnic, and gender composition of governing boards in annual reports and tax returns), (3) increase board involvement, stepping up their role in monitoring daily operation, promoting strong stewardship to help guarantee appropriate conduct and use of funds, and (4) improve law enforcement tools (asking local IRS branches to disclose the names of wrongdoers while publicly acknowledging nonprofits whose books are in order, and apply intermediate sanctions to allow wrongdoers to be penalized without taking the extreme step of revoking tax exemption, enabling donors to learn about effective nonprofits and those with problems can correct mistakes without jeopardizing all fund-raising efforts). It concludes with concrete suggestions for regulatory and legislative reform and is part of NCRP’s Special Report Series. Softcover, 24 pages, $25 (includes shipping)