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A PROGRAM OF THE U.S. CHAMBER OF COMMERCE FOUNDATION
 

IOM Blog

December 4, 2010

Governance: Good to Be Transparent

The new Federal Form 990 (now in its second year) is doing exactly what its collective creators envisioned. It is getting organizations to take governance seriously and letting the public know that they have or do not have good governance policies.

The new 990 gained the attention of nonprofit organizations both large and small by requiring more and better accountability and transparency to the general public by specifically addressing governance policies, compliance issues and key disclosures in a new light of openness and respect for better business practices.

Nonprofit organizations are rushing to fill in the gaps to alleviate the fear that they might have to answer some questions on the new 990 as “NO”, thus leaving donors, fiduciaries, members and the general public at large wandering why these governance policies and/or better business practices are not in place.

Recognizing that most of these governance policies and better business practices are not new brings a sense of urgency to the task of making sure as few questions as possible will be checked “NO” on your next Form 990 filing.

There are a lot of new questions on the Form 990 related to governance policies, compliance issues and key disclosures. As a starting point, I like to make sure the “Big List of Easily Recognizable Governance Issues” is covered. These are the issues I believe are generic to most nonprofit organizations, irrespective of size, exempt purpose and exempt status. I have narrowed my list down to the following nine policies and related and other key disclosures. I recognize that there are many other governance policies, compliance issues and key disclosures that are not on this list but I believe the average person, donor, board member, funding source, or general member would recognize most of the items on this list and thus I would make sure that these items are covered and in-place first.

Governance Policies:

· Code of Ethics Policy

o Conflict of Interest Policy

o Gift Policy

· Document Retention Policy

· Whistleblower Policy

· Board Review of Form 990 Policy

· Compensation Review and Approval Policy

· Minutes for Board and Committee Meetings Policy

· Affiliations and Joint Ventures Policy

Key Disclosures:

· Disclose Fraud If Occurred

· Annual Conflict of Interest Statement and Disclosure

· Gift Policy Disclosure Form

· Compliance with Other Tax Filings – Fin. 48 Disclosures from Audited Financial Statements

· Document Disclosures: Governing Documents and Policies

· Intermediate Sanctions

Each of the above listed policies and disclosures resonate with people, bringing to the surface feelings of negativity and suspicion if they do not exist, and a sense of comfort and confidence if an organization has taken the time and care to put them in place for all to see.

Next, I will discuss individually each of these governance policies and key disclosures and the impact the new 990 form is having on nonprofit organizations.

 

Avatar photo
A. Michael Gellman, CPA, CGMA
Founding Principal Partner
Fiscal Strategies 4 Nonprofits, LLC (FS4N)

Mike is an independent fiscal and financial strategist for nonprofit organizations and a co-founding principal partner of Fiscal Strategies 4 Nonprofits, LLC (FS4N) and co-founder of Sustainability Education 4 Nonprofits (SE4N). Before starting FS4N, Mike had 30 years Public Accounting Firm experience managing not-for-profit business, fiscal and financial services consulting specialty group. He has been designing strategies and teaching budget and projection-based systems and fiscal and financial management enhancement strategies for over 30 years. He has conducted numerous seminars and has written articles on budgeting, operating reserve and investment policies, financial management, fiscal sustainability, leading economic indicators for nonprofits, and the impact on governance and transparency and accountability.

Mr. Gellman teaches courses and has made presentations for Georgetown University, the U.S. Chamber of Commerce Foundation's Institute for Organization Management, American Institute of Certified Public Accountants (AICPA), many State CPA Societies, the Center for Nonprofit Advancement, and for national nonprofit organizations such as the National Urban League, Volunteers of America, and many other nonprofit organizations.

He can be reached at mgellman@fiscalstrategies4nonprofits.com .

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