Stepping far beyond the precepts of the Sarbanes-Oxley Act of 2002 and the light it shines on publicly traded companies, the Panel on the Nonprofit Sector released a report last week that among other things encourages not-for-profit organizations to post their Internal Revenue Service Form 990s online.
If the recommendation is taken seriously by not-for-profit hospitals, it would mark a sea change in terms of transparency. Other recommendations in the report would perhaps not represent such startling changes for hospitals, some of which have been cleaning up their governance practices in recent years under pressure from the IRS and the Senate Finance Committee, among others.
Less revolutionary for large health systems: The panel is suggesting that at least two-thirds of a not-for-profits board of directors should be independent. Boards of directors should have a diverse membership and they should annually evaluate the organizations chief executive officer prior to any change in compensation, according to the panel (Oct. 15, p. 28).
The panels 18-month effort represents the first time charities of all kinds have come together to put together principles to which they should all aspire, said Diana Aviv, executive director of the panel and president and chief executive officer of Independent Sector, which convened the panel. Signing on to the principles is a necessary but not sufficient step toward bringing transparency and accountability to the nations tax-exempt sector, she added.