(Washington, D.C., June 26, 2007) -- Diana Aviv, president and CEO of Independent Sector and a member of the Governance Committee of the Board of Regents at the Smithsonian Institution, testified this morning before the Senate Committee on Rules and Administration. Ms. Aviv testified on how the Governance Committee has been strengthening the governance and management of the Smithsonian.

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Ms Aviv's Oral Statement:

Chairman Feinstein, Senator Bennett, and other members of the Rules and Administration Committee, I appreciate the invitation to testify today about how the Board of Regents’ Governance Committee has been strengthening the governance and management of the Smithsonian.

I was invited to join the Governance Committee as a non-Regent because of my experience in the nonprofit community. I am president and CEO of Independent Sector, a nonpartisan coalition of America’s charities, foundations, and corporate giving programs. I am also executive director of the Panel on the Nonprofit Sector, an independent panel of nonprofit leaders convened in 2004 at the encouragement of the Senate Finance Committee leadership. The Panel’s charge was to recommend to Congress and to the nonprofit community ways to strengthen the transparency, ethical conduct, and accountability of charitable organizations. With my written testimony are copies of the Panel’s reports.

The Panel is currently finalizing principles relevant to all charitable organizations in the areas of good governance, transparent conduct, strong financial oversight, and responsible fundraising practices. To develop these principles, the Panel consulted experts and practitioners from the nonprofit community. The final draft has been one of the key tools used by the Smithsonian governance committee to guide its work. The principles also have been welcomed by numerous leaders of major nonprofit organizations across the United States.

As one of the many people within the nonprofit community who are deeply committed to good governance and ethical conduct, I was saddened to learn of the seriousness of the Smithsonian’s management and governance problems. Since its creation three months ago, the Governance Committee has worked intensively to address those shortcomings. We have analyzed the governance history and relevant documents, learned from the experience and practices of other nonprofit organizations, and consulted with experts in the field of nonprofit governance.

The Governance Committee found many weaknesses in the Smithsonian’s governance and oversight functions, and responded with 25 recommendations to strengthen the Institution immediately, all of which were adopted by the Board of Regents. I would like to highlight a few of the recommendations.

Some clarify responsibilities and enhance accountability by:

• Separating the positions of Chancellor and Chair of the Board;
• Adopting a formal list of duties and responsibilities for all Regents and committees; and
• Requiring that the General Counsel, Chief Financial Officer and Inspector General have direct access to the Board.

Some implement needed safeguards against future abuse by:

• Following a rigorous, independent, and transparent executive compensation system;
• Following a strict Code of Ethics;
• Establishing a “hot line” procedure to alert management and the Board to ethical and compliance issues; and
• Strengthening financial and internal controls.

And, some protect the Smithsonian from conflicts of interest by:

• Prohibiting senior executives from serving on paid for-profit boards; and
• Requiring Smithsonian Business Ventures to follow the same rules as the rest of the Institution with rare, defensible, and transparent exceptions.

The changes the Regents have already adopted are an important first step in ensuring that the Smithsonian’s governance is as exceptional as its programs. But the job is not yet done.

In the coming months, the Governance Committee plans to study the structure and composition of the Board. It will consider whether the Board is an appropriate size, particularly since the trend in the nonprofit community has been to trim the size of boards to ensure that every board member fulfills his or her governance and fiduciary responsibilities. The Committee also will examine the best way for the Board to draw on the expertise of non-Regents. It will analyze whether Board Committees should be expanded to include additional non-Regents. It will look at how other large institutions have engaged additional key community leaders possibly through advisory committees and consider how to benefit from the wealth of talent found among the more than 600 Advisory Board members.

Through his bequest more than 150 years ago, James Smithson sought to establish an institution where all Americans can gain new knowledge and enrich their lives through our vast cultural resources. By embracing the Governance Committee’s ideas for the effective, responsible stewardship of Smithson’s vision, the Regents can help maintain the Institution’s treasured place in the hearts and minds of the American people.

Thank you.

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Independent Sector is a nonprofit, nonpartisan coalition of approximately 600 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 nonprofit community.