2. Recognize and fulfill all fiduciary and legal responsibilities, and abide by state and federal laws that govern nonprofit and grantmaking organizations.

Clarifying statement: ABAG members comply fully with all legal requirements, while also making good faith efforts to adhere to “best practices” in organizational administration.

Implementation Options:

a) Ensure the governing body and staff are knowledgeable and up-to-date about basic legal, accounting, audit, and tax requirements that apply to your organization.

¯ Highlighted Resource:         

The Sarbanes-Oxley Act and Implications for Nonprofit Organizations

BoardSource, Independent Sector, 2006

Click here to view (links to another website)

This document summarizes the different sections of the Sarbanes-Oxley Act and provides an explanation of their relevance to nonprofit organization auditing practices.

b) Seek competent and field-experienced legal, accounting, and tax advice when needed to support compliance.

c) Adhere to generally accepted financial standards, including generating regular financial statements, creating investment policy statements, and, where possible and practical, an annual independent audit or financial review.

d) Ensure that administrative expenses, including compensation of staff, fall within accepted  regional and national benchmarks and are proportionate to distributed grants and grantmaking activities, as well as staff responsibilities and time commitment.

e) Be particularly vigilant in avoiding possible acts of self-dealing, understanding that even if a transaction results in a significant benefit to the grantmaking organization, it may still constitute a self-dealing violation.

¯ Highlighted Resource:         

Self-Dealing: A Concise Guide For Foundation Board and Staff

Association of Baltimore Area Grantmakers, Forum of Regional Associations of Grantmakers, 2006

Click here to view

A brief overview that defines self-dealing, identifies common violations and penalties, and provides recommendations for grantmakers.

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