Sarbanes-Oxley: It’s Not Just for Corporations Anymore

Corporate malfeasance may have been the impetus for the Sarbanes-Oxley Act of 2002, but the nonprofit community was paying attention, too. According to Grant Thornton LLP’s fifth annual National Board Governance Survey for Not-for-Profit Organizations, 87 percent of nonprofits have implemented new governance policies, up from 20 percent just four years ago.

Some notable board governance policy changes that organizations have made include:

• 92% of respondents have implemented new accounting policies and procedures, compared to only 59 percent in last year’s survey.
• Almost nine out of 10 (87 percent) respondents have adopted a written investment policy, compared to 63 percent in 2006.
• Only 30 percent of survey respondents have a policy in place requiring the board or one of its committees to review the organization’s Form 990, but this remains an emerging trend.

Conflict-of-interest and whistleblower policies also are on the rise. As last week’s Red Cross announcement demonstrated, nonprofits, staffed, just as the for-profit sector is, by inherently fallible humans, are not immune to ethical lapses, not to mention illegality. Anything that produces greater transparency and accountability is to be welcomed, just as it should be in Corporate America. | 501(c)