When I say that museums and nonprofits need to cultivate a corporate sensibility, I'm thinking specifically in terms of—for example—compliance with Sarbanes-Oxley legislation, which establishes guidelines for boards for assuring the independence of their auditors. S-O applies only to publicly traded companies, but Independent Sector has published about ways in which 1) nonprofit organizations have voluntarily adopted S-O best practices (smart!) and 2) state lawmakers have drafted S-O-ish legislation for nonprofits (smarter!). The Independent Sector produced a report on the subject last year (PDF and HTML), and the report's advice is straightforward:
It is good practice for nonprofit organizations to take steps to ensure the independence of the audit committee. While most nonprofit board members serve as volunteers without any compensation and staff members do not participate as voting members, all nonprofit organizations should review their practices to ensure the independence of the audit committee.The Smithsonian is a thorny case, being a public-private hybrid created by Congress. (Consider that FOIA requests don't apply to the Institution.) But Congress is ideally suited to mandate Smithsonian-specific reforms. I agree with Tyler Green's prescription, for example, that
Acting Secretary Cristian Samper should immediately move to establish the Smithsonian inspector general's independence from his office. The IG should report to the regents (SI lingo for the board of directors) and should have its investigations funded by non-Secretary-controlled funds. Samper could institute this change almost immediately.however, this is a job for Congress, not Samper. If Sen. Grassley (R-Iowa) et al. are serious about mandating reforms within the Smithsonian, they should abandon the pointless, punitive redresses—like capping the director's pay at a truly noncompetitive rate and freezing a $17 million funding increase.* Small's abuses were heinous, but far worse for the Smithsonian in the long run were the Board's efforts to disguise or exculpate his offenses before they came to light.
DISCLOSURE: I contribute to Eye Level, the blog by the Smithsonian American Art Museum.
UPDATE: It was brought to my attention that Inspector General A. Sprightley Ryan does not and has never reported to the Office of the Secretary; this post might have inadvertently muddied the point, but the IG reports to the Board. More information about the position here.
* According to the WaPo, Sen. Grassley will withdraw the amendment that docked the Smithsonian increase.
Posted by Kriston at March 27, 2007 6:49 PM