Sarbanes-Oxley has helped develop a new model of governance for nonprofit boards.  Best practices influenced by Sarbanes-Oxley can help create change in nonprofit boards.

 

By comparing and contrasting Board practice of years gone by with Sarbanes-Oxley -influenced best practices for today, we can see the changes our Board need to make.

 

Previously Board members could be selected without a screening process, whereas today a nominating committee should screen prospective members and submit nominations to full Board for a vote.

 

In the past, either Board Members didn’t receive an orientation, or they merely attended a social gathering.  Today, Board members should receive a job description, an orientation and receive pertinent documents such as a strategic plan, financial documents and bylaws.

 

For many years the agenda at Board meetings was staff driven, while Board members played a passive role.  Today, Board members are expected to prepare in advance by reviewing materials and coming to meetings ready to debate issues.

 

The culture of Boards has changed as well – no longer viewed as being run by well -intentioned volunteers, Boards are now viewing nonprofits as fiscally responsible businesses dedicated to achieving the missions of their organization.

 

Conflict of interest statements are becoming necessities for most Boards, in order that members do not personally profit from their involvement with the organization.  Years ago it was common place for Board members to profit from a nonprofits’ contacts with their business.

 

While some Board members may have used their position to influence staff, today Board members behave in a professional manner.  The size of Boards has changed too. Rather than relying on a large number, today’s Boards appoint the number necessary to cover the various portfolios with quality people.

 

These have been other legal and financial changes too, Directors and officer’s insurance indemnifying the board from liability has become common place.  Audits used to be for large nonprofits, however, annual financial reviews/audits should be stipulated for today’s nonprofit organizations.

 

For further information on Sarbanes-Oxley for nonprofits, please consult an excellent new book coming out from John Wiley & Sons Publishing, “Sarbanes-Oxley for Nonprofits: A Guide to Building Competitive Advantage.”  Visit their website: www.wiley.com.