The Sarbanes-Oxley Act and Nonprofits: 'But I Thought That Didn't Apply to Us'

Summary

---

Every nonprofit has board members who in their business lives are coping with the requirements of the Sarbanes-Oxley Act. Congress passed the Sarbanes-Oxley Act in the wake of corporate misdeeds that harmed shareholders, employees, and retirees. Nonprofits aren't directly subject to the Sarbanes-Oxley Act, unless they violate its whistleblower and document-retention provisions. The proper question for nonprofit management isn't whether Sarbanes-Oxley legally applies to nonprofits but, rather, what elements of Sarbanes-Oxley it would be prudent to adopt, even though they may not be directly mandated. Several governance guidelines similar to Sarbanes-Oxley may relate to nonprofit organizations, such as the Uniform Prudent Investor Act and model policies from the Foundation for Fiduciary Studies. Some Sarbanes-Oxley requirements simply make sense and should be followed even if not required. These "Why not?" issues relate to ethics statements, conflict of interest policy, audit review, certified financials, education policies, document retention, and whistleblowers.

See the full content of this document

Extract

---

The Sarbanes-Oxley Act and Nonprofits: 'But I Thought That Didn't Apply to Us'

Every nonprofit has board members who in their business lives are coping with the requirements of the Sarbanes-Oxley Act. We know it's out there. What does this law mean to you as a nonprofit board member?

Congress passed the Sarbanes-Oxley Act (technically named the American Competitiveness and Corporate Accountability Act of 2002) in the wake of corporate misdeeds that harmed shareholders, employees, and retirees. The Act has stepped onto the landscape of corporate law as a new colossus. The new law, and the regulations the securities and Exch...

See the full content of this document

---