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Sector At Risk From Poor Governace

By Paul Clolery - August 26, 2013

The charitable sector spends too much time on the sidelines of the regulatory process when it should be engaging regulators and “willing to stand by what we believe with regulators.” The charitable sector is vital and central to the nation’s safety net so “why are we not also” not in the middle of public policy?

Those were some of the words of a former regulator, Scott Harshbarger, former attorney general for Massachusetts. He was the opening act this morning in Boston at the 2013 Risk Summit, presented by the Nonprofit Risk Management Center. He is now an attorney in private practice and a former nonprofit CEO.

He argued that the sector is one major headline away from losing its ability to self-regulate at the level it has been able to operate. Board members and leaders need to ensure transparency and good governance. Unfortunately, good governance seems to be in short supply. Board members “have a fiduciary responsibility” to engage in public policy debates, said Harshbarger.

Americans don’t believe government is working. The public sees the sector as regulated by that dysfunctional structure, and advocating for one side or another, puts the sector in a precarious position. The key is supporting people and not an entity. “When you could call the nonprofit sector a special interest group, we have lost the battle,” he said.

“We are the cavalry” of democracy, said Harshbarger. “Where is the voice for those who can’t speak” when the debate is about whose ox will be gored to pay for services?,” he asked rhetorically. Nonprofits have to speak from the center in a nation currently polarized.

Harshbarger ticked off scandals that have hurt the sector, everything from the Penn State sex abuse case to the money paid to the executive of the Fiesta Bowl to the Susan G. Komen For the Cure issues.

“I come to you as a fellow traveler,” said Harshbarger. He said that over-regulation of the sector will stifle innovation. Nonprofit leaders have been less than transparent and haven’t made the case for expansion of revenue. The sector has spent so much time doing more with less that it is being backed into a financial and risk corner that weakened the service delivery system, he said.

It all comes down to being better stewards of democracy, he said. It takes a broad, non-partisan civil society to supplement private and public investment in the nation.

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