Accrediting agency created for nonprofits

June 30, 2004|by ASHA PATEL

BALTIMORE (AP) - A Maryland group said it has established a national accrediting body for nonprofit and charitable organizations, hoping to buttress public confidence in an industry that received more than $240 billion in donations last year but also faced congressional calls for tighter regulation.

The Maryland Association of Nonprofit Organizations, which accredits Maryland groups, launched the Standards for Excellence Institute Monday.

"Charity accountability is not all going to be solved by law enforcement," said Peter V. Berns, chief executive of the Maryland Association of Nonprofit Organizations. "The nonprofit community needs to take responsibility for its own affairs as well." Berns also will serve as chief executive of the new institute.

Nonprofit experts say this is the sector's first nationwide accountability program. It's about time, they said.

As scandals about embezzlement, chief executives' pay and other issues erode public confidence, charities that are following the rules want a way to prove it.


"Nonprofits are desperate to have some sort of validation that they can hold out to the public demonstrating their efficacy and efficiency and most importantly their honesty," said Trent Stamp, executive director of Charity Navigator, a New Jersey watchdog that rates large nonprofits.

"This is something that should have been done at the government level a long time ago ... before fraud and abuse led the market to create its own sanctioning body."

Noting the amount of money donated last year by individuals, foundations and corporations, Stamp added, "This is not the mom-and-pop sector that it was. ... This is big business."

The Maryland association has certified 46 local nonprofits in the six years since it introduced what it calls "an ethics and accountability code for the nonprofit sector."

It expanded the standards to five other states before deciding to go national.

Meanwhile, the Senate Finance Committee is considering a raft of proposals for reforming nonprofit operations, much as the 2002 Sarbanes-Oxley Act put new requirements on businesses. At a committee hearing last week, the IRS said it would soon increase efforts to audit tax-exempt groups.

"Far too many charities have broken the understood covenant between the taxpayers and nonprofits - that charities are to benefit the public good, not fill the pockets of private individuals," Sen. Charles E. Grassley, the Iowa Republican who chairs the committee, said last Tuesday.

Berns said the standards aren't meant to be a substitute for government regulation but might convince Congress to "take a balanced approach" and avoid adding laws that burden decent nonprofits.

He noted with pride that the Finance Committee's report included a positive reference to the association's accreditation effort.

Stamp said the timing couldn't be better for the new accreditation effort.

"The best you can do is a pre-emptive strike to say, 'It's OK, we've got this under control, we'll take care of this ourselves, you go back to balancing the budget and handling foreign wars,"' Stamp said.

Information from: The Sun,

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