Charity code of ethics drafted Voluntary standards created by 50-person panel in Maryland

June 17, 1998|By Ernest F. Imhoff | Ernest F. Imhoff,SUN STAFF

Confronting a perceived loss of public trust in charities, the Maryland Association of Nonprofit Organizations has developed the first statewide voluntary "standards of excellence" for charities.

"Ethical management practices and accountability for money and results are central to the trust that most citizens have in nonprofit organizations," said Margaret E. Williams, executive director of Friends of the Family Inc., a Baltimore charity.

"We have set the bar high for ourselves," she said, "and can demonstrate that the trust is warranted."

Williams directed a work group of 50 people from various nonprofit groups that prepared the "code of ethics and accountability." The standards were to be made public today.

The code lists 55 standards in eight categories: mission and program, governing body, conflict of interest, human resources, financial and legal, openness, fund raising, and public affairs and public policy.

Developed over the past two years, the code is in part a legacy of William Aramony, the former $435,000-a-year president of the United Way of America who embezzled nearly $600,000 from national United Way funds to finance a lavish lifestyle. The leader United Way from 1970 to 1992 was convicted of fraud, tax and conspiracy charges and sentenced to seven years in prison in 1995.

The disclosures in 1992 apparently contributed to reduced donations to charities throughout the country for several years. Aramony's actions were unrelated to the United Way in Maryland.

Peter V. Berns, the Maryland Association of Nonprofit Organizations' executive director, said his 6-year-old group is a network of charities similar to those in 36 states. Maryland's is the only one that has published standards of excellence, he said.

On the national level, several groups have codes of ethics. They include the National Charities Information Bureau and the Philanthropy Advisory Service of the National Council of Better Business Bureaus.

"We expect the standards to be implemented fairly slowly," said Berns. "This is an educational process, helping nonprofits strengthen themselves."

A voluntary certification process, complete with a seal of approval, was designed as an adjunct.

After applying, a charity will be evaluated by a three-member volunteer panel of "trained peer reviewers" -- nonprofit staffers, volunteers and consultants. If the charity meets standards, it can display the seal. If not, the next move would be to improve the charity's shortcomings.

"The core of the program is the standards, not the certification," said Berns.

Dozens of the association's 801 member agencies that were mailed copies almost three weeks ago had positive responses, said Amy Coates Madsen, an association staffer. "People are excited about it. They say they now have a benchmark."

Emily C. Thayer, the leader of one member agency, however, wondered what difference the code will make, saying charities must have the will to do the right thing. She also questioned whether the public has lost trust in nonprofit organizations.

Thayer is executive director of Genesis Jobs Inc., which has helped secure 3,000 entry-level positions for the unemployed in almost 13 years.

Could her group meet the standards? "Absolutely," she said, adding that her board would consider whether to apply for the certification.

Acknowledging that the code had been "very well thought out," she also said, "Those of us who have always held ourselves accountable to high standards will continue to. I'm not persuaded that those who haven't will."

The state regulates some 4,000 Maryland tax-free nonprofit groups. Those that solicit the public for a charitable purposes must register with the secretary of state. Financial disclosure requirements vary with the size of the group's income.

The standards also make allowances for varying sizes of groups. For example, one holds that a charity hire a certified public accountant when its revenue reaches $300,000.

The association will conduct training sessions July 9 in Hagerstown, July 14 in Columbia, July 15 in Salisbury and July 21 in Silver Spring.

For a copy of the standards, call 800-273-6367 or 410-727-6367.

Standards

Groups that abide by a code created by the Maryland Association of Nonprofits would get the seal shown below.

Here are some key 55 standards among 55 in the code:

* Periodically reassess programs, their need, compliance witlaws.

DTC * Follow a written policy to avoid conflicts of interest.

* Evaluate employees; have grievance procedures.

* Hire certified public accountants to audit agencies witbudgets over $300,000.

* Keep fund-raising costs below one-third of contributions raised.

* Give the public accurate information, understandable context.

* Publish annual reports with mission, activities, financial data.

Pub Date: 6/17/98

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