In addition to the fiscal burdens highlighted in the Governor’s message, we remain concerned that SB 1262 sets a dangerous precedent, detailing the composition and operations of nonprofit boards of directors, dictating the contents of contracts, and establishing government mandates for practices that are best left to the discretion of individual organizations.The Governator acknowledged his concern with by issuing a message accompanying the act encouraging the Legislature to re-visit the bill if it turns out to impose unnecessary burdens on nonprofits.
We urge that future legislation intended to improve nonprofit integrity not be conceived without extensive consultation with all stakeholders and be based on a comprehensive examination of the issues rather than reactions to specific incidents. In addition, CAN looks forward to improvements in nonprofit oversight growing out of the California Performance Review and to joining with the Governor to strengthen the work of nonprofits and to promote involvement in nonprofit community service.
Does your state have a "nonprofit integrity act"? So far at least five states do: Connecticut (SB 946/HB 6515), California (Nonprofit Integrity Act of 2004 SB 1262), Massachusetts (Act to Promote the Financial Integrity of Public Charities), New Hampshire (HB 1408), and Connecticut (passed SB 946/HB 6515).
Most "integrity legislations" covers the same bases.
California's Nonprofit Integrity Act, for example, applies to nonprofits with gross revenues over $2 million, not counting funds for which a governmental entity requires an accounting, must comply with these requirements:
- Annual CPA-audited financial statements using generally accepted accounting principles
- Independent auditor-The financial statements must be audited by an independent auditor
- Public Disclosure - The audited financial statements must be available to members of the public on the same basis as its Form 990
- Audit committee- A charity that has a finance committee must have a separate audit committee, the chairman of the audit committee may not be a member of the finance committee, and members of the finance committee must be a minority on the audit committee
- CEO/CFO Compensation The Board of Directors must review and approve the compensation, including benefits, of the corporation’s President or CEO, and its Treasurer or CFO, "to assure that it is just and reasonable."
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