Best Practices: Nonprofit Corporate Governance
One of the most significant and valuable developments of the post-Sarbanes-Oxley Act environment has been the emergence of governance “Best Practices” proposals designed to enhance and improve corporate responsibility and governance. These proposals have come from a wide variety of sources, ranging from self-regulatory agencies (e.g., NYSE, NASDAQ) and business groups (e.g., The Business Roundtable, The Conference Board, National Association of Corporate Directors) to professional associations (e.g., the American Bar Association) and major corporations (e.g., General Electric, WorldCom, TIAA/CREF). While most of these Best Practices proposals have been recommended for adoption by public companies, their relevance as an aspirational goal for nonprofit corporations and non-public companies is widely recognized. From these and other resources, we have developed the following set of guidelines as “food for thought” concerning governance “Best Practices” to assist nonprofit corporations in responding to the current “corporate responsibility” environment. To set the proper perspective, a few important caveats are in order. First, these are Best Practices guidelines, and do not in most instances, reflect current legal requirements. Instead, the guidelines reflect our perspective on evolving trends in nonprofit governance and law. In many circumstances, adoption of, and adherence to, “Best Practices” may reduce a nonprofit corporation’s exposure to potential state and federal corporate, charitable trust and tax challenges. Their adoption by nonprofits may also improve the ability of corporations to attract charitable contributions and grants, to the extent it evidences a commitment to appropriate stewardship of charitable assets. It must be stressed, however, that no negative inference should be drawn from a board’s decision