Imagine that there's a new law that states that your nonprofit must fill out a seven-page form and list up to 37 separate pieces of information every time a new trustee or senior manager responsible for tax returns is appointed. Scary enough, yes? But now imagine that as a result of what's in your filing, you are notified that your new trustee or senior manager has failed to be found "fit and proper" and, more importantly, as a consequence, your tax-exempt status has been revoked.
Well, according to the Third Sector.Com, in England, "the Finance Act 2010 gives HM Revenue & Customs the power to carry out the test every time a charity hires a new trustee or senior manager. If a trustee fails to pass the test, the charity can be denied tax relief."
While I think that revocation of tax-exempt status is a punishment a bit unequal to the crime, I must say that the idea of having some resource for checking the "fit and proper" nature of trustees and senior managers is appealing. After all, there are far too many every day occurrences of trustees and senior managers throughout the US nonprofit sector who pilfer funds or conduct a variety of acts which at very minimum, redirects donor money for personal gain and at the worse, reduces a nonprofit's potential to achieve its mission.
One good reminder: it is up to the nonprofit board, be it a governance or nominating committee, to ensure that incoming trustees are indeed "fit and proper." And of course, the first test is commitment to mission.