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Panel on the Nonprofit Sector

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Frequently Asked Questions

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Why and when was the Panel created?
On September 22, 2004, Senate Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) wrote a letter (.pdf, 825 kb) to Independent Sector President Diana Aviv encouraging Independent Sector to convene an independent national panel to make recommendations to strengthen governance, ethical practice and accountability within the nonprofit sector. On October 12, 2004, the national Panel on the Nonprofit Sector was named (.pdf, 125 kb).

What issues did the Panel examine?
The Panel, its two Advisory and five Work groups studied and provide recommendations on governance, transparency, and financial accountability. The Panel initially focused on the recommendations presented in the Senate Finance Committee staff discussion draft in July 2004. However, the Panel also considered other issues of concern to the nonprofit sector relating to governance, transparency, ethical practice and accountability.

How were members selected?  How did the Panel ensure proper representation?
The Panel on the Nonprofit Sector, its five Work Groups, its Citizens Advisory Group, its Expert Advisory Group, and consultants encompass approximately 200 highly qualified and experienced professionals. Most hold senior executive positions with national, state and local public charities, private foundations, and corporate giving programs. Many serve on boards of national organizations and are actively engaged in governance and accountability issues important to large, intermediate and smaller charities and philanthropies. Others hold leadership roles in academia and the legal and accounting professions, and are seasoned experts in nonprofit law, finance and accounting. Some members are former government oversight officials with extensive experience in the regulation of nonprofits.

Members of the Panel and associated groups work in all regions of America and in a broad range of fields of practice. Their wisdom, experience, breadth of knowledge, and dedication to the sector provide the critical foundation for making necessary improvements.

How was the Panel’s work funded?
The Panel received broad support for its work. Over 90 organizations, including private foundations, community foundations, public charities and corporate giving programs, made financial commitments to fund the work of the Panel. These financial contributions reflected the sector’s widespread commitment to supporting the work of the Panel by ensuring it has the funds necessary to achieve its goals. The Panel also benefited from the pro bono contributions of time and expertise of numerous individuals throughout the sector.

How was the Panel staffed?
A core team of full-time and part-time professionals, along with communications, legal and research consultants, provided staff support to the Panel, its three advisory groups and five work groups. This staff also coordinated outreach efforts to provide information to and solicit participation from the nonprofit sector, Capitol Hill, the Administration and the general public.

In addition, the Panel worked with nationally recognized experts to:

  1. identify and analyze self-regulatory, certification and accreditation systems in the nonprofit and philanthropic sector;
  2. conduct research on recommendations for changes to the Form 990 and to provide professional accounting and technical assistance to an ad hoc advisory committee on the Form 990; and
  3. conduct an evaluation of the Panel and its processes.

Considerable time and expertise was provided to the Panel on a pro-bono basis by approximately 200 individuals -- CEOs, CFOs, CPAs, attorneys and other experts -- serving as members of work and advisory groups and as consultants.

Does the Panel think new regulations should be required?
The overwhelming majority of charitable organizations discharge their responsibilities legally and ethically. However, as in any field of endeavor, there are individuals who disregard the law and are indifferent to ethical practice. Their abuses hurt the entire nonprofit sector. We believe that the sector should strive for a zero tolerance policy for all illegal and unethical behavior. Some problems can be eliminated through more vigorous enforcement of existing federal and state law. Other issues can be addressed by increasing the technical and educational assistance available to the less experienced members of the sector. The Panel and its associated groups assessed the sufficiency of the legal and voluntary systems currently in place to determine where further action is called for either by the sector or by government. See the Panel’s Reports and Recommendations for details.

How did the Panel ensure that what it recommended to Congress is compatible with the capacity of small organizations?
Organizations with budgets of less than $500,000 comprise almost 75% of the charitable sector. While their commitment to good governance and ethical and transparent practice is as strong as organizations with more resources, their capacity to implement some obligations is more limited. The Panel recognized the special challenges that smaller organizations face and convened a separate work group on small organizations to ensure that adequate consideration was given to their needs.

How did the Panel ensure its process was open?
The Panel held national teleconferences and opened public comment periods to solicit feedback from the field on each of its reports. This web site allowed the sector and the media to track all activities of the Panel and its work groups. In addition, the Panel held field hearings in 15 cities across the country to hear questions and comments from the charitable community, and to share with them the work of the Panel. The Panel also has encouraged nonprofit organizations to share their thoughts and ideas throughout the process and have encouraged groups to do so via the Panel website.

What should charities and foundations do to address the concerns that have arisen?
The nonprofit sector plays a vital role in serving our communities, solving problems, and improving people’s lives. It is important that the beneficiaries, donors, public officials and the press know about the important work your organization is doing and the value it provides to communities, locally, nationally and internationally.

The Panel has released Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations. The Panel encourages the board and staff leaders of every charitable organization to examine the Principles carefully and determine how best they should be applied to their own operations.

Has the Panel developed a position on what should be proposed by the Senate Finance Committee?
The Panel released two reports to congress and the nonprofit sector entitled Strengthening Transparency, Governance, and Accountability of Charitable Organizations. These reports include over 150 recommendations, including to the Senate Finance Committee. See the Reports for details.

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About the Panel

The Panel on the Nonprofit Sector is an independent effort by charities and foundations to ensure that the nonprofit community remains a vibrant and healthy part of American society.