Document Type

Article

Publication Title

Fordham Law Review

Volume

76

Publication Date

2007

Keywords

non-profit governance, charitable organizations, financial controls

Abstract

It is my privilege, as organizer of this conference, to reflect on the excellent papers published in this issue and the wonderful discussions that they inspired. The presentations left me with the impression that the law of nonprofit governance is moving toward a more corporate model of accountability-a model that emphasizes audits and other formal financial controls, and that focuses enforcement on financial wrongdoing and misuse of charitable funds by directors and managers. Along with these developments, it appears that the legal role of donors in nonprofit governance is growing, increasing donors' ability to impose their vision on the organizations that they support. These trends are reflected in the models for nonprofit governance prepared by the Panel on the Nonprofit Sector and the American Law Institute (ALI). The panel's report, Strengthening Transparency, Governance and Accountability of Charitable accountability, closely followed a business model, stressing financial accountability, while devoting lesser attention to how organizations can be impelled to carry out their missions. The ALI Principles of the Law of Nonprofit Organizations explicitly adopted fiduciary obligations for nonprofit directors that were based on the principles applicable to business boards. These developments offer opportunities to improve the functioning and reliability of nonprofit governance. Financial controls, such as audit committees or mandated audits, would improve the reliability of the information available to donors and regulators. Eradicating stealing, excessive compensation, and misdealing within organizations is undeniably a worthy goal. In addition, increasing the range of remedies available to donors, compared to those available under current law, may bolster their support of the charitable sector.

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