Charity Governance in the United States

Anti-Terrorist Financing Guidelines for Charities: Governance Accountability and Transparency

Note: These Department of Treasury Guidelines are designed to assist charities that attempt in good faith to protect themselves from terrorist abuse. For more information on Anti-Terrorist Financing Guidelines for Charities, see here.

Governing Instruments

Charitable organizations should operate in accordance with governing instruments, e.g., charter, articles of incorporation, bylaws, etc. The governing instruments should:

delineate the charity’s basic goal(s) and purpose(s);
define the structure of the charity, including the composition of its governing body, how such body is selected and replaced, and the authority and responsibilities of the body;
set forth requirements concerning financial reporting, accountability, and practices for solicitation and distribution of funds; and
state that the charity shall comply with all applicable local, state, and federal laws and regulations.

Independent Oversight

It is important for charitable organizations to have independent oversight of charitable operations, and each charitable organization should determine what oversight structure best suits that organization and will provide for unbiased scrutiny of its operations. The following provisions set forth basic principles for the creation of a transparent and accountable oversight body (the “governing board”).

Members of the governing board ordinarily should not have an active role in the day-to-day management of the charitable organization. [5] The charity should establish a conflict of interest policy for both members of the governing board and employees. That policy should establish procedures to be followed if a member of the governing board or employee has a conflict of interest or a perceived conflict of interest relating to the management or operations of the charity.
The governing board should be responsible for the charitable organization’s compliance with relevant laws, its finances and accounting practices and for the adoption, implementation, and oversight of practices, including financial recordkeeping that will safeguard charitable assets effectively.
The governing board should maintain records of its decisions.
Charities should maintain and make publicly available a current list of members of the governing board, their salaries and their affiliation with any subsidiary or affiliate of the charitable organization.
While fully respecting individual privacy rights, charities should maintain records of additional identifying information about the members of the governing board, such as available home, email and URL addresses, social security number, citizenship, etc.
While fully respecting individual privacy rights, charities should maintain records of identifying information for the members of the governing boards of any subsidiaries or affiliates [6] receiving funds from them.
When served with process or when other appropriate authorization exists, charities should produce requested records maintained in accordance with these Guidelines to the appropriate regulatory/supervisory and law enforcement authorities in a timely fashion.

Key Employees

In relation to key employees: [7]

Charities should maintain and make publicly available a current list of their five highest paid or most influential employees (the key employees) and the salaries and direct or indirect benefits they receive.
While fully respecting individual privacy rights, charities should maintain records containing identifying information (such as available home, email and URL addresses, social security or other identification number – e.g., taxpayer identification number, national identity, or passport number – citizenship, etc.) about their key, non-U.S. employees working abroad. Such information should be similar to that maintained by charities in the normal course of operations about all U.S. employees, wherever employed, and foreign employees working in the United States.
While fully respecting individual privacy rights, charities should maintain records containing identifying information for the key employees of any subsidiaries or affiliates receiving funds from them.

Resources

Notes

Certain charitable organizations, such as houses of worship, certain trusts, and corporations sole, may not be able to apply this practice due to their varying organizational and operational structures.
Subsidiaries or affiliates are organizations that are subject to the general supervision or control of a parent or central organization.
Key employees include not only highly compensated employees but employees who have responsibilities, powers, or influence similar to those of officials, directors, or trustees. Key employees also include chief management and administrative officials of a charitable organization, including those involved in the disbursement of funds

Governance of Foreign Charitable Foundation

Main issues include:

Board of directors or trustees
Committees
Control

Charity Governance