What Is the Sarbanes-Oxley Act and Why Should Nonprofits Care?
Summary:
Enacted in the wake of corporate scandals, 'SOX' sets new standards of accountability and board behavior. Strictly speaking, most apply only to publicly-traded corporations, but there's more to it than that.
Answer:
Rosanna Tarsiero, the Volunteer Manager and Coordinator at http://www.bipolardream.com/ wrote to Nonprofit (see http://www.rain.org/mailman/listinfo/nonprofit) on 11/6/03:
Although the Sarbanes-Oxley Act is aimed at improving corporate accountability, there are implications for nonprofits as well. Independent Sector and BoardSource have collaborated on an article examining how nonprofits could benefit by voluntarily adopting elements of the act.
You can find it at:
http://www.boardsource.org/clientfiles/Sarbanes-Oxley.pdf
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The lawfirm McDermott Will and Emery has a paper on their website describing some nonprofit "best practices" based on Sarbanes-Oxley: http://www.mwe.com/info/news/wp0604a.pdf
Reese McMahon offers a similar paper from an accounting point of view: http://www.reesemcmahon.com/news/thoughtLeadership/SOX%20Article%20-%20FINAL.pdf
The consulting firm Grant Thornton conducted its first National Board Governance Survey for Not-for-Profit Organizations in the fall of 2003 and found that Sarbanes-Oxley had had little effect on not-for-profit organizations throughout the United States. To order a free copy of Grant Thornton's 2003 survey of how nonprofit groups have responded to Sarbanes-Oxley, go to: http://surveys.gt.com/formprocess/nfpcorpgov.asp.
Posted 11/6/03 -- PB
