87% of not-for-profit organizations have made governance policy changes
Significant increase in changes in the last four years
CHICAGO, Dec. 3, 2007 - The governance landscape of the not-for-profit community has changed dramatically since the implementation of Sarbanes-Oxley. Today, 87 percent of not-for-profit organizations have created new governance policies compared with 20 percent in 2003, according to Grant Thornton LLP's fifth annual National Board Governance Survey for Not-for-Profit Organizations.
Some notable board governance policy changes that organizations have made include:
- 92% of respondents have implemented new accounting policies and procedures, compared to only 59 percent in last year's survey.
- Almost nine out of 10 (87 percent) respondents have adopted a written investment policy, compared to 63 percent in 2006.
- Only 30 percent of survey respondents have a policy in place requiring the board or one of its committees to review the organization's Form 990, but this remains an emerging trend.
"Form 990 is the most public financial document available about a not-for-profit organization. Many more interested parties will read a not-for-profit organization's Form 990 than will ever read its audited financial statements," says Frank Kurre, national managing partner of the Grant Thornton's not-for-profit industry practice.
"To ensure an organization's information is presented completely and correctly, the audit or finance committee should review the Form 990 before it is filed."
Conflict-of-interest policy
Almost nine out of 10 (89 percent) organizations have a conflict-of-interest policy in place. The percentage of individuals signing the policy is on the rise:
- More than nine out of 10 (94 percent) respondents require board members to sign a conflict-of-interest policy, compared to 89 percent in the 2006 survey.
- More than two-thirds (68 percent) have executive management sign the policy - an increase from 50 percent in 2006.
- Requirements for committee members to sign such a policy are also on the rise: 41 percent this year, compared to 29 percent in 2006.
Whistle-blower policy
Nearly seven out of 10 (68 percent) respondents have a whistle-blower policy in place. "With Form 990 soon requiring organizations to indicate whether they have a whistle-blower policy, the percentage of organizations with a policy should increase in the near future," Kurre says.
Organizations submit their whistle-blower complaints to the chair of the audit committee (21 percent), legal counsel (19 percent), and executive management (18 percent).
| Have you made changes to the following board governance policies? | ||
|
| Yes | No |
| Adopted conflict-of-interest policy | 89% | 11% |
| Established audit committee | 82% | 18% |
| Revised investment policy | 87% | 13% |
| Implemented accounting policies/procedures | 92% | 8% |
| Established code-of-ethics policy | 75% | 25% |
| Updated record-retention policy | 78% | 22% |
| Created new governance policies | 87% | 13% |
| Updated gift-acceptance policy | 68% | 32% |
| Established whistle-blower policy | 68% | 32% |
| Developed audit committee charter | 60% | 40% |
| Established policy for board members to review Form 990/990-T | 30% | 70% |
About the survey
Grant Thornton conducted the National Board Governance Survey for Not-for-Profit Organizations in September 2007. Responses to the Web-based survey were received from 603 not-for-profit executives and board members in 47 states and the District of Columbia.
About Grant Thornton LLP
Grant Thornton LLP is the U.S. member firm of Grant Thornton International, one of the six global accounting, tax and business advisory organizations. Through member firms in more than 110 countries, including 50 offices in the United States, the partners and employees of Grant Thornton member firms provide personalized attention and the highest quality service to public and private clients around the globe. Visit Grant Thornton LLP at www.GrantThornton.com.
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