Nonprofits in the post-Enron world
According to this Wall Street Journal story (subscription required), even nonprofits are beginning to improve their corporate and fiduciary governance due to the post-Enron Sarbanes-Oxley corporate reform law passed by Congress:
As president of New York's prestigious Juilliard School, Joseph Polisi gets to hang out with actor Robin Williams, opera singer Renée Fleming and other famous alumni in the performing arts. But he also has to know how to analyze a balance sheet, negotiate faculty contracts, oversee big fund-raising drives and achieve consensus among the school's 26 trustees on issues ranging from curriculum to the current $150 million capital campaign and campus expansion.
..."Sarbanes-Oxley doesn't apply to nonprofits, but like ink in water it's changing the way they operate," says Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance. "Suddenly you've got accounting firms that audit nonprofits clamoring for the same financial controls now in place at for-profits." And nonprofit trustees want more transparency. Although they're exempt from financial liability in most states except in cases of fraud, they worry that in this climate their reputations could be hurt if money is misused or the organization falters.