"The nonprofit sector has been negligent," Richard Klarberg, CEO of the Council on Accreditation, told one hundred Hawaii nonprofit leaders gathered at the Pacific Club in Honolulu for the Hawaii Alliance of Nonprofit Organization's annual meeting on Thursday, Nov. 1. He urged them to tell their stories: "It has to be about outcomes, how you improve lives – the impact of what you do on the community."

Nonprofits need to tell their stories on both print and broadcast media because "it is almost literally open season on nonprofits in Hawaii and you as leaders." Klarberg cited a recent series in the Honolulu Advertiser titled "Unguarded Giving," reports of thefts at Hawaii nonprofits, the case of a nonprofit that hired a convicted felon on parole for a top management position and Senate Bill 73 that was introduced last year in the Hawaii Legislature.

This bill would require Hawaii nonprofits to meet standards similar to those imposed on for-profit publicly traded companies by the Sarbanes-Oxley Act. According to the bill, its purpose is "to restore the trust and confidence of the public in nonprofit corporations and charitable organizations by establishing good practices standards, providing clearer standards regarding financial oversight, and encouraging nonprofit corporations to strive for greater disclosure and transparency."

Klarberg characterized recent events here as "a Greek chorus of gloom and doom about the integrity of the nonprofit sector." Still, he said, although there have been abuses, this "doesn't mean that the public has lost faith in nonprofits or that they have turned their backs on the nonprofit sector." But the recent events shouldn't be blown out of proportion as they have been.

It isn't that nonprofits shouldn't be held to account, he said. Nonprofits enjoy certain rights, privileges and responsibilities and in return they face substantial oversight from donors, foundations, boards of directors, contractors, the media and others. "They could and should be more transparent and accountable. ... They should be watched more and watched appropriately."

However, being held accountable is largely about what has happened in the past. Filing an IRS Form 990, publishing an annual report or having an audit is good, he said, "but it's like a man driving down the road and looking only at the rear-view mirror." Documents such as the recently released "Principles for Good Governance and Ethical Practice" are good, too, but "how does the public have a clue if the principles are being implemented? Principles by themselves won't change the landscape."

The key, Klarberg said, is to reduce the reoccurrance of actions by the very small number of wrong-doers who impact public confidence in the entire sector. "It's naive to think that wrong-doing can be eliminated," he said. "The public understands that bad things happen to good organizations – that happens to them, too. They get it. They don't, however, understand when an organization lacks the capacity to keep the same bad things from happening repeatedly."

Accreditation "isn't a silver bullet," Klarberg said. "Bad things can and do happen to accredited organizations" but they are better equipped to avoid having the same kind of bad thing happen over and over. MOeover, stakeholders want to know that an independent party is validating the existence of best practices. He cited two key components of COA's independent accreditation:

• Performance Quality Improvement – Leadership creates and endorses a culture that sets and monitors expectations, making sure that procedures are routinely reviewed and improved.
• Risk Prevention Management – Managers adopt a formal process to manage and reduce risk through policies, procedures and periodic internal reassessments. 

Rebuilding public confidence will need a combination of responses, he said, but most important will be communicating what nonprofits do. "It needs to be more than a newsletter or an annual report – most donors don't read those. They don't understand the magnitude of what you do. The media isn't reporting it and if it isn't reported, to them it doesn't exist."

But there's hope. The state's charities, "Team Nonprofit Hawaii," includes 50,000 nonprofit employees, Klarberg said, and "there is an energized state nonprofit association with highly competent leadership. You can get the message across," he said. "The public has the right to hear the good things."

Klarberg is in Honolulu to speak to HANO members and to participate in COA trainings that will be presented for the first time in Hawaii at a 50 percent discount sponsored by HANO and the Consuelo Foundation from Nov. 5 to 8 at the Pacific Club.

• Monday, Nov. 5, Introduction to the 8th Edition Standards, cost: $150
• Tuesday and Wednesday, Nov. 6-7, Performance and Quality Improvement (two days), cost: $200
• Thursday, Nov. 8, Building Organizational Capacity, $150

A very limited number of seats are still available for the COA workshops. Click here for more information. To register, contact Amy Fukunaga, (808) 532-3939 ext. 224 or afukunaga@consuelo.org.