How many children play in sports leagues? How many attend day care? How many low-income older persons or persons with disabilities benefit from services that allow them the dignity of living independently? How many families visit museums or take part in cultural festivals? All of these activities, as disparate as they are, involve Illinoisans in giving or receiving the services of nonprofit organizations.
Illinois nonprofits, including grantmaking foundations, house the homeless, feed the hungry, enrich lives through the arts, educate the young and care for the elderly. In fact, four out of five Illinois residents — people of all ages, backgrounds and incomes — benefit in some way from the services of at least one nonprofit. Each and every day, Illinois nonprofits improve the public good in abundant ways.
We can expect this to be even more the case in the future. With an eye to cost savings and sensitivity to community concerns, the public sector is increasingly turning to nonprofits to help fulfill its obligations. With funding from state government, for instance, nonprofits staff health and social service hotlines, provide employment and training services and meet low- and moderate-income families' need for child care.
But the public sector should offer more than financial support. It should set clear and reasonable guidelines for nonprofit governance and accountability; ensure opportunities for resources and training that will help nonprofits understand and carry out their legal, ethical and fiduciary obligations; and maintain active involvement in the nonprofit sector.
Why do these guidelines and this training matter? What would happen if nonprofits failed to thrive because of poorly managed finances or staff? What if nonprofit board members did not carry through on their obligation to provide effective oversight of the organization's work? Without strong and informed leadership, organizations and institutions that we have come to rely on for services to improve the public good would not be able to carry out their missions effectively or use resources wisely. A treasured museum might fall into disrepair. A theater could close its doors. The local hospital may not provide the level of service the community has come to expect and depend on.
The nonprofit sector has grown by leaps and bounds over the past decade. Here in Illinois, more than 150 new nonprofit organizations are created each month. As the sector has grown, stories about poorly managed nonprofits and misused charitable funds have caught the attention of policymakers. Legislators at the state and federal levels are taking a closer look at nonprofits, considering legislation to regulate everything from the number of board members nonprofits may have to the ways in which they can maintain nonprofit status to revisions in annual forms nonprofits file with the Internal Revenue Service.
As the state budget tightens, Illinois nonprofits are facing increasing service demands and calls for greater accountability on the use of public and private resources. But in reality, nonprofits have always been concerned about effective governance and management. Staff struggles with ways to help board members understand their roles and encourages them to support the organization, while board members struggle with ways to best fulfill their obligations.
In addition to national associations, nonprofits have relied on a host of local resources for assistance and support concerning management and governance issues, including the United Way, community colleges, universities, community foundations, and more recently, centers for effective nonprofits.
Here in Illinois, the Donors Forum helped create and staffs the attorney general's Charitable Advisory Council, a group of volunteer experts who advise the attorney general on policies that are realistic for nonprofits to adhere to, while still ensuring transparency and public accountability. Further, we have led efforts to strengthen management and governance of the nonprofit sector in the Chicago region for more than 30 years.
In response to increased scrutiny of nonprofit financial, governance and management practices, we recently launched the Preserving the Public Trust Initiative, which is designed to help nonprofit organizations throughout Illinois take specific steps to ensure adherence to high ethical standards and strong governance principles.
We provide a range of tools and practical advice to assist nonprofits with this task, such as workshops on governance and online how-to tips, tools and sample policies.
Connecting with nonprofit leaders statewide through a task force, local focus groups and online feedback opportunities, the Donors Forum also created the Illinois Nonprofit Principles and Best Practices, a guide to great governance for nonprofits. Creating the Public Trust Initiative and the Principles and Best Practices stems from the Donors Forum's mission to promote an effective and informed nonprofit sector in Illinois.
Through new efforts to reach out to nonprofits statewide, the Donors Forum also will be partnering with libraries, nonprofit service centers and community foundations throughout Illinois to make more training workshops and reference materials available to nonprofits in every part of our state. Updates on Donors Forum activity will be posted on our Web site: www.donorsforum.org.
Illinois residents rely on nonprofits for a range of activities, including the delivery of state services. Effectively and efficiently run nonprofit organizations will ensure that day care, health care delivery and cultural opportunities meet the public's expectations and needs. Informed leadership at the board and staff level — as well as sound policy and financial support from government — will prove enormously beneficial to Illinois nonprofits, and in turn to Illinoisans whose lives they enrich.
Illinois Nonprofit Principles and Best Practices
The Donors Forum offers the following guidelines:
1. The organization has a clearly stated charitable or educational mission, approved by the governing body, in pursuit of the public good.
2. The role, responsibilities, selection and tenure of the governing body are clearly stated in the organization's governing and policy documents and understood by the governing body members.
3. The governing body ensures that its members are competent, knowledgeable
and sufficiently diverse in point of view and experience to provide credible and effective oversight of all aspects of the organization's work.
4. The governing body regularly assesses the organization's mission and the effectiveness of the organization and its leadership in achieving it.
5. The full membership of the governing body is responsible for the organization, and each member acts at all times in an ethical manner and in the best interest of the organization and the public.
6. The governing body and staff know about and comply with all federal, state and local laws, regulations and fiduciary responsibilities.
7. The governing body exercises active oversight of the financial affairs of the organization and sets policies to ensure that the organization's resources are used appropriately in furtherance of the organization's mission.
8. The organization makes information about its mission, program activities and finances available to the public and communicates in a clear and timely manner with those who request information.
9. Organizations that raise funds from the public or from donor institutions ensure that all solicitation communications are accurate and correctly reflect the organization's mission and use of solicited funds.
10. Grantmaking organizations establish, follow, and clearly communicate processes for receiving, reviewing, and acting on grant applications and for monitoring and evaluating grants made.
See the www.donorsforum.org/ publictrust/ principles.html for more information.
Valerie S. Lies is president and CEO of the Donors Forum.
Illinois Issues, November 2007
