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From: Senny Boone, DMA Nonprofit Federation [mailto:nonprofitfederation@the-dma.org]
Subject: DMANF MEMBER ALERT - Charitable Reform
1615 L Street, NW - Suite 1100 - Washington, DC 20036 - Tel: 202.628.4380
Email: nonprofitfederation@the-dma.org - Web: www.nonprofitfederation.org

Dear Monica:

The DMANF's Advisory Council has requested that all members take time to review the draft guidelines of the Independent Sector that would govern the practices of nonprofit organizations including public charities. A description of their project and a link to their principles follows below. Please pay particular attention to the sections on fundraising, starting at principle #21. To view the DMANF current ethical guidelines please visit our website.

If you have any comments, please send them to the IS as outlined below by March 30th, and please copy the DMANF so that we can incorporate your concerns into our comments as well.

Thank you in advance for your review of this matter.

Executive Director
DMA Nonprofit Federation

Since the fall of 2004, the Panel on the Nonprofit Sector has brought together thousands of people committed to ensuring that charities and foundations maintain the highest possible ethical standards. The nonprofit community recognizes that its ability to improve lives depends on the support of the public, which it will receive only if it earns the public’s trust.

The Panel, which was convened at the encouragement of the leaders of the U.S. Senate Finance Committee, continues to demonstrate this commitment to operating accountably and transparently. The Panel’s Final and Supplemental Reports together detailed more than 150 recommendations for action by Congress, the Internal Revenue Service, and the charitable community to strengthen the transparency, governance and accountability of charitable organizations. Many of these recommendations shaped the nonprofit reforms included in the Pension Protection Act enacted in August 2006.

While well-crafted, well-enforced laws and regulations are crucial to protecting charitable organizations from individuals who deliberately use them for personal profit, a strong system of self-regulation and education is critical to enable the people making up the nonprofit community—boards, staff, volunteers, and donors—to ensure that their organizations are living by the highest ethical standards. To assist in developing recommendations for strengthening self-regulation, the Panel created a special Advisory Committee on Self-Regulation of the Charitable Sector comprised of 34 leaders from charities, foundations, and academic institutions.

The Advisory Committee examined the standards and principles established by over 50 self-regulation and accreditation systems that monitor different types of charitable organizations to develop a set of 29 principles of effective practice that all charitable organizations should aspire to follow. The Committee asked for comments on its initial draft of the principles in mid-January.

After reviewing the more than 125 suggestions it received, the committee revised the draft principles and requested that Panel staff draft two new principles about risk management practices and codes of ethics. The committee made a series of other revisions, including clarifying that practices required by federal or state law “must” be followed by charitable organizations, while practices recommended to advance the ethical and effective behavior are stated as principles that “should” be followed. The Panel reviewed the revised draft and made additional changes.

In preparing these draft principles, the committee followed the approach adopted by the Panel in its June 2005 Report to Congress. At that time, the Panel explained that while “all organizations should be expected to operate ethically and serve as worthy stewards of the public and private resources entrusted to them…[ it may not be possible or desirable for small organizations, given their limited human, technical, and financial resources, to demonstrate their ethical and accountable operation by complying with some of the more complex requirements appropriate for larger charitable organizations.”

The Advisory Committee now invites public comment on its second draft of 29 principles and the staff drafts of two additional principles, which are arranged in the following five categories:


	Facilitating Legal Compliance and Public Disclosure—responsibilities and practices, such as implementing conflict of interest and whistleblower policies, that will assist charitable organizations in complying with their legal obligations and providing information to the public.
	Effective Governance—policies and procedures a board of directors should implement to fulfill its oversight and governance responsibilities effectively.
	Strong Financial Oversight—policies and procedures an organization should follow to ensure wise stewardship of charitable resources.
	Responsible Fundraising—policies and procedures organizations that solicit funds from the public should follow to build donor support and confidence.
	Staff Drafts of Additional Principles regarding risk management practices and adoption of a code of ethics.

To download all 31 revised draft principles in a single document, please click here.

The committee will consider comments submitted by March 30, 2007 as it prepares its recommendations for the Panel. The committee is also examining the most effective methods for helping charitable organizations ensure that their practices are consistent with these principles. The Panel will consider the committee’s proposals and issue its final recommendations to the charitable community in late Spring 2007.