By: Paul Firstenberg, 08/16/06
Reform of nonprofits is in the air. It has been propelled by the passage of the Sarbanes-Oxley legislation introducing sweeping reforms in corporate governance. Following the passage of the legislation, the Senate Finance Committee, under the Chairmanship of Senator Charles Grassley (R-Iowa), a frequent critic of nonprofits, held a series of hearings on potential changes in the regulation of nonprofits, although his committee has not yet generated actual legislation. At the same time, the leaders of the industry have produced a report acknowledging the need for change and proposing a package of specific reforms to the Congress and the nonprofit sector (The Panel on the Nonprofit Sector June 2005). The American Bar Association Coordinating Committee on Nonprofit Governance (May 2005) has also issued a report recommending reforms nonprofits should adopt in the wake of Sarbanes-Oxley. It also has been recommended by some critics that the IRS re-qualify organizations for exemption every five years."