Exempt Organizations Advisory - Nonprofit Governance Update

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com) 

On June 23rd, Sarah Hall Ingram, Commissioner, Tax Exempt and Government Entities spoke at the Georgetown University Law Center’s Continuing Legal Education program about the IRS’s involvement in nonprofit governance.  In her remarks, she reiterated the IRS’s commitment to promoting “good governance.”  Ingram believes that there is a link between good governance and tax compliance and stated that the IRS has a “clear, unambiguous role to play in governance.”  Specific practices mentioned include board independence, appropriate policies and procedures to protect the organization’s assets, and increased transparency.  According to Ingram, these are all organizational and operating principles that derive from the requirements for tax exemption.  A copy of the speech is available here.  

Independent Sector, in partnership with BoardSource, has announced the release of a free workbook to help nonprofits, foundations, and corporate philanthropy programs examine and improve governance practices.  In 2007 the Panel on the Nonprofit Sector developed the Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations which listed 33 recommendations for organizations to consider when evaluating their governance practices.  The Principles Workbook: Steering Your Board Toward Good Governance and Ethical Practice is designed to help organizations work through those principles by making it easier to discuss governance and ethical practices.  The Workbook is available here.