On October 18, the Panel on the Nonprofit Sector, a national panel to improve accountability and ethical practice in charitable organizations that is comprised of 600 of the nation’s largest nonprofit organizations, released its Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations. The guide represents the first time that charities and foundations have come together to develop principles of ethical conduct, accountability and transparency that they aspire to and encourage all organizations to follow. The guide is a practical tool for charitable organizations to examine their operations and evaluate where they can improve.
The 33 principles constitute voluntary standards which address legal issues, governance, financial oversight and fundraising and purport to guide nonprofits to higher standards of governance. The Principles for Good Governance and Ethical Practice are organized into four categories:
- Legal Compliance and Public Disclosure: responsibilities and practices, such as implementing conflict of interest and whistleblower policies, that will assist charitable organizations in complying with their legal obligations and providing information to the public.
- Effective Governance: policies and procedures a board of directors should implement to fulfill its oversight and governance responsibilities effectively.
- Strong Financial Oversight: policies and procedures an organization should follow to ensure wise stewardship of charitable resources.
- Responsible Fundraising: policies and procedures organizations that solicit funds from the public should follow to build donor support and confidence.
The principles are available on the Nonprofit panel website.
An example of the principles includes No. 10, which deals with the size of a board of directors. Under this principle, a board could establish its own size and structure to be reviewed periodically. Another example would be principle No. 20, which states that board members generally are expected to serve without compensation.
The Some of the principles may not be needed by organizations that already have relevant procedures in place. Further, all principles may not apply to the operations of an organization.