Panel on the Nonprofit Sector Invites Second Round of Comments on Revised Draft Principles for Effective Practice

(Washington, D.C., February 28, 2007) -- The Panel on the Nonprofit Sector invites the nonprofit community to give feedback on the second draft of Principles for Effective Practice through a comment period beginning today and ending March 30. The principles propose parameters of good governance and practice that charitable organizations should aspire to follow.

The draft principles were developed by the Panel’s Advisory Committee on Self-Regulation of the Charitable Sector, comprised of 34 leaders from charities, foundations, and academic institutions, and chaired by Joel L. Fleishman, director of the Samuel & Ronnie Heyman Center for Ethics, Public Policy, and the Professions at Duke University, and Rebecca W. Rimel, president and CEO of The Pew Charitable Trusts. After reviewing over 125 comments it received from the first-round comment period announced in mid-January, the committee made a number of revisions to the draft principles.

“Feedback shared during the first comment period strengthened these principles, and we encourage additional suggestions to improve this revised draft,” said Diana Aviv, executive director of the Panel on the Nonprofit Sector and president and CEO of Independent Sector. “By working together to define principles for effective practice, our nonprofit community can strengthen the transparency, governance, and accountability so essential to retaining the public’s trust.”

The committee’s changes included clarifying language about how organizations should comply with legal requirements as well as how they should go beyond the law to advance accountability. The committee also asked staff to draft two new principles about risk management practices and adoption of a code of ethics.

Available for review and comment through the Panel’s website, the second draft of the principles is arranged in five categories:

• Facilitating 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 provide 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.
• Staff Drafts of Additional Principles -- risk management practices and adoption of a code of ethics.

The committee will consider comments submitted by March 30 as it prepares its recommendations for the Panel’s consideration. The committee is also considering how best to encourage charitable organizations to ensure that their practices are consistent with these principles. The Panel will consider the committee’s proposals and issue its recommendations to the nonprofit community in late spring.

The Principles for Effective Practice is a continuation of the Panel’s work begun in 2004. The Panel’s Final and Supplemental Reports released in 2005 and 2006 detailed more than 150 recommendations for action by Congress, the Internal Revenue Service, and the charitable community to strengthen the transparency, governance and accountability of charitable organizations. Many of the Panel’s recommendations helped to shape nonprofit reforms included in the Pension Protection Act enacted in August 2006.

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The Panel on the Nonprofit Sector is an independent panel of 24 leaders from a wide range of the country’s public charities and private foundations. Convened by Independent Sector at the encouragement of the leadership of the U.S. Senate Finance Committee, the Panel has worked since October 2004 to develop recommendations to improve the governance, ethical conduct, and oversight of nonprofit organizations. A Citizens Advisory Group, an Expert Advisory Group, and five specialized Work Groups assisted the Panel, which also invited input from charities and foundations of all sizes serving diverse missions and geographic locations. The Panel released a major report in June 2005 and a supplemental report in April 2006. Its current work is being assisted by an Advisory Committee on Self-Regulation of the Charitable Sector and advisory committees on financial reports.

Independent Sector is a nonprofit, nonpartisan coalition of approximately 575 charities, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the charitable community.