Trends in Nonprofit Transparency: From Accountability as Regulatory Compliance to Accountability for...
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Trends in Nonprofit Transparency: From Accountability as Regulatory Compliance to Accountability for Impact September 30, 2010
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The new IRS Form 990 mandates greater disclosures about how your organization is governed, managed and where you spend your money. Learn more about how stakeholders like – program officers at foundations, the media, watchdog groups, your competitors, job seekers, potential board members and regulators – are using data to evaluate your organization. Stakeholders are demanding increased transparency from nonprofits. This trend is moving from a focus on accountability as a form of regulatory compliance to one increasing on accountability for results, measured in program impact. GuideStar is the leading source of nonprofit information in the US. Through its GuideStar Exchange program, GuideStar encourages nonprofit transparency through a program of self-reporting and delivers nonprofit data to a growing audience of foundations, donor advised funds and online giving platforms.
Transcript of Trends in Nonprofit Transparency: From Accountability as Regulatory Compliance to Accountability for...
Trends in Nonprofit Transparency:
From Accountability as Regulatory Compliance to Accountability for Impact
September 30, 2010
• Greater demand for transparency & accountability
• Greater personal engagement in philanthropy
• Greater demand for data on which to base decisions
The Era of Assumed Virtue is Over
The release of information that is relevant to evaluation…
Posting information on the Internet is the necessary step for making that information public.
Transparency = Openness
Accountability
A nonprofit’s ability to be dependable to meet its stated obligations, be they financial, actionable, or moral.
Nonprofit Leader
Donors
Sharing Information Builds Trust
Transparency Builds TrustTransparency Builds Trust
Laying A Foundation
Constitutional Rights
Fiduciary Duties
Loyalty Care
Speech Religion
Assembly
Petition the Government
Obedience
Tax Privileges
501(c)(3)
Property Sales
Tax Benefits = Benefits to Society?
New Rules for Nonprofits
Every NPO
Every year
File annual report
Failure to file 3 years in a row & your tax exemption is revoked -- automatically
Revocations following 2010 filing year
Impacts of IRS Revocation
355,000 NPOs facing possible revocation
292,000 are small NPOs with annual revenues < $25,000
63,000 are larger NPOs that file 990-EZs, 990s and 990-PFs
New Form 990 DisclosuresGovernance matters…
Board independence
Fraud?
Contemporaneous documentation of meetings & committees
New Form 990 Disclosures
Policies NOT required by Internal Revenue Code
How you review Form 990?
Process for setting executive compensation include: review & approval, use data, document the decision?
New Form 990 Disclosures
How transparent are you about:Form 990
Form 990-T
Form 1023
Governing documents
Conflict of interest policy
Financial statements:
• own website• another’s website• upon request
New Form 990 Disclosures
Compensation is one of the biggest areas of concern…
“The nail that sticks out is the one that gets hammered.”
Japanese proverb
New Form 990 – Costs of Compliance
Reports of
50% to 200% increase in the costs to prepare the new Form 990
Timeliness of Filings
Due 4 months and 15 days following the close its fiscal year.
Can file 10 months and 15 days following the end of its fiscal year
Timely access to data is frustrated
Check List: Written Policies
• Conflict of Interest• Whistleblower Policy• Document retention and destruction
Policy• Accounting policies and procedures
manual• Gift Acceptance Policy• Written compensation policy, including
expense reimbursement
Check List: Practices in Place
• Written board meeting minutes• Written board committee meeting
minutes• Board review of the Form 990• Compensation practices• Audit committee• Making public disclosures of key
documents
What’s next?
Tax Exemption and Elections
Who is looking at your Form 990?
• IRS• State regulators• Watch dog groups• Media• Other nonprofits • Your staff• Job seekers• Prospective Board
members
Inputs Activities Outputs Outcomes
From Compliance to Impact
Measuring Impact
What is your organization trying to accomplish?
What are your strategies for getting there?
What are your organization’s capabilities for doing this?
How will you know if you are making progress?
What have and haven’tyou accomplished?
The Age of Transparency
Search engine optimization (SEO) means sharing information so that your website can be found
The Age of Transparency
Facebook is another place to share information and engage people who support your cause.
The Age of Transparency
People connect with causes that create impact
The Age of Transparency
Engage users to “flip the funnel” to talk about your cause
The Age of Transparency
Not perfect. Not going away. Because donors want help.
The Age of Transparency
Demonstrating a commitment to transparency.
Public Report for Memorial Sloan-Kettering Cancer Center
Sources of GuideStar Data
Uses of GuideStar Data
The Age of Transparency
Swimming up stream or going with the flow?
