In The New Age of Corporate Governance For Non-Profit Organizations, an article published in Taxations of Exempts, Avi Z. Kestenbaum, Co-Chair of Meltzer Lippe’s Trusts & Estates practice group, discusses how recent corporate governance scandals have impacted the complicated regulatory environment concerning non-profit organizations.
Mr. Kestenbaum notes that while a series of high-profile controversies involving Enron, Tyco, Worldcom, and Adelphi Communications have increased public awareness of legislation such as Sarbanes-Oxley and governance scandals in the for-profit sector, changes in the legal and regulatory environment concerning non-profits also merit attention. These changes, he writes, “involve diverse areas ranging from charitable solicitations and contributions to charity tax shelters and excessive compensation for directors and insiders. These changes effectively may have increased the duties and liabilities of nonprofit directors and officers even more so than those of their for-profit counterparts. Moreover, these changes have dramatically affected the way that nonprofit organizations are required to operate. Advisors to nonprofit organizations must be sensitive to and aware of these changes to ensure that well-intentioned organizations and their directors and officers do not run afoul of their increased legal obligations.”