The Maryland Association of Nonprofits, which awards a "seal of excellence" to state charities that survive a rigorous certification process, plans to announce tomorrow that it will expand the program to nonprofits nationwide.
The association, which represents 1,500 Maryland charities, gives the seal to groups that go beyond legal requirements in monitoring their operations and that regularly assess their services, train and evaluate volunteers and limit solicitations of their donors. The six-year-old program has spread to five other states, and association officials said they plan to establish an Institute of Excellence in Baltimore so nonprofits across the country can participate.
"This is about making sure that respectable organizations get better, so the public trust . . . is deserved," said Peter Berns, executive director of the Maryland association.
The expanded program is one of several efforts by nonprofit groups to raise accountability in the charitable world, which has been rocked by recent scandals, so that legislators won't impose it from outside. At a hearing last week into charitable fraud, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) said he plans to introduce legislation to tighten nonprofit oversight and require charities to re-apply for nonprofit status every five years.
"If the [nonprofit] sector does not start to self-regulate," warned Paul Light, a New York University professor of public service who is advising the Maryland Association of Nonprofits on its initiative, "it's going to end up in a world of pain," with expensive new federal and state regulations.
Light said his new golden rule for nonprofits is, "Do unto yourself before Congress does unto you."
This year, Independent Sector, a Washington-based group that represents nonprofits and charitable foundations nationally, wrote a code of ethics that it is urging nonprofits to adopt. The code requires nonprofits to define their missions clearly and ensure that employee compensation is reasonable and appropriate, among other measures. The Council on Foundations, which represents 2,000 U.S. foundations, is reworking the ethics and accountability standards that its members are required to sign, said Dot Ridings, its president and chief executive.
But the new standards and ethics codes are being greeted skeptically by some charity-watchdog groups and legislators, who have said the rules do little to close bad charities that choose not to abide by the voluntary guidelines.
Standards in the nonprofit sector "can be an important tool to encourage charities to embrace best practices and good governance," Grassley said in a statement. "However, there's a limit to what solely voluntary [standards] can achieve."
Many nonprofit groups agree.
"We are a membership association, and our members are the ones to whom we are responsible," Ridings said, adding that if foundations are going to cheat, "why would they want to belong to an organization like ours?"
Nonetheless, nonprofit groups have said their programs teach charity executives how to run well-managed, ethical organizations; reassure donors that their dollars are being well-spent; and generally raise the performance bar for the nonprofit sector.
To help its charities meet the standards, the Maryland Association of Nonprofits offers workshops, instructional literature and management aid. A charity applying for the seal must complete a five-inch-thick application, Berns said. The association's review panel also examines such material as three years of minutes from the group's board meetings, financial statements and fundraising material.
The charities that achieve all 55 association standards earn the right to display the association's seal of excellence -- a box with a check mark in it. The association's national Standards for Excellence Institute in Baltimore will teach nonprofit associations in other states to set up similar programs and certify nonprofits in states that lack such programs.
Although more than 1,000 of the Maryland association's members have taken workshops or otherwise used the association's educational programs, only 48 charities have earned the seal since the program was instituted in 1998.
An additional 100 nonprofits are close to being awarded the seal, Berns said.
But he acknowledged that earning that honor is not easy: "We have come to understand that we have created a very rigorous process for groups to go through."
It took the Alzheimer's Association's Greater Maryland Chapter almost a year to earn its seal, said Cass Naugle, the chapter's executive director, adding that the process was worthwhile because it forced the organization to examine every aspect of its operation.
But the process isn't foolproof. This year, a Baltimore AIDS group, the Health Education Resource Organization, which earned the association's seal in 2001, found itself in trouble when its executive director, Leonardo R. Ortega, was accused of misusing funds and hiring a personal trainer at the group's expense.
An internal review cleared Ortega, who said his employment contract permitted him to bill the organization for a personal trainer. But several board and staff members resigned, and Baltimore officials have asked the FBI to look into the group's use of federal funds.