The Relationship Between Sarbanes–Oxley Policies and Donor Advisories in Nonprofit Organizations
- 27 Downloads
This study examines the impact of Sarbanes–Oxley (SOX) on the nonprofit sector. Focusing on three key SOX policies applicable to charities—conflict-of-interest policies, records retention policies, and whistleblower policies—this study tests the relationship between the existence and addition of these policies on subsequent ethical and governance lapses as reflected in the issuance of “donor advisories” by the large third-party ratings agency Charity Navigator. The findings suggest that, controlling for other relevant organizational factors, the three SOX-inspired written policies are related to a reduced likelihood of donor advisories in the organizations rated by Charity Navigator.
KeywordsAccounting ethics Charities Nonprofits Regulation Sarbanes–Oxley
Compliance with Ethical Standards
Conflict of interest
The authors declare that they have no conflict of interest.
This article does not contain any studies with human participants or animals performed by any of the authors.
- Board Source-Independent Sector. (2006). The Sarbanes–Oxley Act and implications for nonprofit organizations. Washington, DC. Retrieved October 7, 2016, from https://www.independentsector.org/uploads/Accountability_Documents/sarbanes_oxley_implications.pdf.
- Charity Navigator. (2016). CN advisories. Retrieved September 14, 2016, from http://www.charitynavigator.org/index.cfm?bay=search.donoradvisories.
- Guidestar. (2003). The Sarbanes–Oxley Act and implications for nonprofit organizations. Retrieved from https://trust.guidestar.org/the-sarbanes-oxley-act-and-implications-for-nonprofit-organizations.
- Gujarati, D. N. (1995). Basic econometrics (3rd ed.). New York: McGraw-Hill.Google Scholar
- Independent Sector. (2016). Scope of the nonprofit sector. Retrieved September 14, 2016, from https://www.independentsector.org/scope_of_the_sector.
- Marquardt, D. (1980). You should standardize the predictor variables in your regression models: Discussion of “A critique of some ridge regression methods”. Journal of the American Statistical Association, 75(369), 87–91.Google Scholar
- McLaughlin, T. A. (2003). For-profit spillover: New regulation of independence. Morris, NJ: NonProfit Times.Google Scholar
- Ostrower, F. (2007). Nonprofit governance in the United States. Washington, DC: The Urban Institute.Google Scholar
- Ostrower, F., & Bobowick, M. J. (2006). Nonprofit governance and the Sarbanes–Oxley Act. Washington, DC: The Urban Institute.Google Scholar
- Peregrine, M. (2012). Antidote to nonprofit scandals: The Sarbanes-Oxley Act. Retrieved from https://www.philanthropy.com/article/Antidote-to-Nonprofit/156281.