Dana Brakman Reiser (Brooklyn) has published There Ought to be a Law:  The Disclosure Focus of Recent Legislative Proposals for Nonprofit Reform, 80 Chi.-Kent. L. Rev. 559 (2005). Here is the Introduction:

In response to news of scandals in nonprofit organizations large and small, prestigious and obscure, states and the federal government have begun to tout legislative solutions to the perceived nonprofit accountability gap. These legislative reform initiatives have been linked, by their proponents and by commentators, to the federal Sarbanes-Oxley Act ("Sarbanes-Oxley" or "the Act") passed in response to Enron and the other major for-profit scandals of the early 2000s. One can obviously link the two sets of reforms in terms of timing, as the first of the legislative proposals for nonprofit reform surfaced just a few months following the passage of Sarbanes-Oxley. More interesting, however, is the substantive link between these two sets of reforms, particularly their shared emphasis on a disclosure model of regulation. This Article explores this disclosure focus of recent legislative proposals for nonprofit reform and evaluates the ability of disclosure-based reforms to improve nonprofits’ accountability, either alone or in concert with other regulatory approaches.

Part I chronicles this most recent chapter in the long, but often meager, history of nonprofit enforcement. It begins by describing the first foray into nonprofit reform legislation "adopting reforms similar to those enacted by the federal Sarbanes-Oxley law," spearheaded by New York Attorney General Eliot Spitzer and his Charities Bureau. In addition, it offers background on the similarly comprehensive draft legislation released by Massachusetts Attorney General Tom Reilly, and on some of the more limited proposals under review in other states. This Part also introduces the nascent but sweeping federal agenda for nonprofit legislative reform recently publicized by the U.S. Senate Finance Committee. Although this federal reform project is only at the discussion stage, the current information publicly available suggests that over 200 separate legislative reforms may be under consideration. It is impossible to predict the ultimate path these reform efforts will take. Part I concludes by reporting the current state of their evolution.

Part II highlights the disclosure focus of each of these efforts at nonprofit legislative reform. Two disclosure-focused techniques, again with obvious links to Sarbanes-Oxley, particularly stand out. First, there have been proposals at both the state and federal levels that would require officers to certify the accuracy and reliability of organizational reports or filings. Second, virtually all of the recent proposals share an emphasis on auditing, either as part of a comprehensive agenda or as a standalone reform. In addition to these recurrent ideas, various other state and federal proposals also rely on disclosure mechanisms. 8 In all of these proposals, legislative drafters’ faith in the ability of disclosure to improve nonprofit accountability is evident.

Next, the Article questions the assumption that disclosure-focused reforms will be effective. Part III argues that for legislation adopting disclosure-based reforms to improve nonprofit accountability, the reforms must either improve nonprofit behavior, facilitate enforcement in the nonprofit sector, or both. A combination of factors will make it difficult for disclosure-based reforms such as officer certification and increased auditing to improve the behavior of nonprofit organizations and actors. These factors include the duplicative nature of some of the suggested reforms, their assumptions about nonprofit compliance, and the costs of their implementation. Part III also considers the potential for currently proposed disclosure-based reforms to facilitate enforcement by regulators or others. Unfortunately, significant resource and structural issues unique to the nonprofit context also will make it difficult for many of these reforms to improve nonprofit accountability by facilitating enforcement.

Bearing in mind the limits of disclosure reform, Part IV offers suggestions for legislators as they continue to consider such proposals: (1) invigorate enforcement and (2) increase education and training. Legislatures should increase funding for state and federal regulators currently facing vastly inadequate resources to meet their nonprofit enforcement responsibilities. Further, legislatures should support education and training efforts to teach nonprofit fiduciaries and employees the skills they need to self-regulate and self-police. Disclosure-based reforms should be viewed as a useful adjunct to fully funded governmental enforcement and knowledgeable, effective internal monitoring, and should be adopted only when they will serve this purpose. Advances in disclosure technology, especially electronic filing, should be pursued to enable regulators to do more with less and to use disclosures to target investigation and prosecution. Moreover, to the extent their costs are not prohibitive, reforms that focus on guiding the process of disclosure creation should be favored over those that primarily increase disclosure outputs.

The Article concludes that the ability of disclosure-based reforms to enhance nonprofit accountability may be overstated, but can be improved if legislatures recognize the limits of the for-profit analogy and refashion their reforms to complement enforcement. With many proposals for nonprofit reform still at an early stage, this kind of realignment remains possible, if reformers are willing to support this more appropriate regulatory approach.