Sunshine Laws Illuminate Case for Transparency

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Everyone knows how it feels to be excluded from a conversation that interests you. It’s human nature to wonder what takes place behind closed doors in an office conference room, or why a group of people lean close together, conspirators, as they talk over lunch. With exclusion comes suspicion—what were they saying? Why must they whisper? Are they doing something wrong?

Suspicious minds tend to draw their own conclusions. These conclusions are most often false or at least based on limited information.

In this time when trust in public institutions, public officials and corporations is waning, people still place a great deal of trust in nonprofits. Well-known nonprofit organizations, such as the American Red Cross or National Public Radio, enjoy a high degree of public confidence. Americans seem to be more disappointed and disillusioned when a nonprofit board or staff member is involved in a newsworthy scandal. Public mistakes often impact public perception of the nonprofit sector as a whole. Nonprofits must do their best to build and maintain the trust they so richly deserve. Openness and transparency play a key role in effective self-regulation and can serve as proof-positive that the nonprofit sector is worthy of the people’s trust. By conducting self-assessments, posting our Form 990s online, and admitting to and learning from our mistakes, we will demonstrate that we are doing the right thing.

Particularly after Watergate, Americans’ trust in government and many other institutions faltered. To counteract a potentially disastrous trend of sinking citizen morale, Congress reinforced legislation that gave the public access to government activity by strengthening sunshine laws. Originally created to increase accessibility to government after the Freedom of Information Act was passed in 1966, sunshine, or open meeting, laws also apply to many nonprofits that have specific interactions with government.

Those organizations that are subject to sunshine laws are required to advertise meetings, open them to the public, and make minutes available for public consumption. Conducting board business in a fishbowl can be challenging, but increased transparency can also serve as a much-needed catalyst for examining how the board functions.

Although they vary from state to state (see State Laws Box), open meeting laws generally apply to organizations that receive state or municipal funding, those that have a government appointee or government official on the board, and those that perform a government function—for example, a charter school or hospital. Basically, sunshine laws affect organizations that have a significant relationship with government.

I know of one unusual example in Wisconsin in which the nonprofit that operates the Olympic ice rink training center must have open meetings. You might wonder why an ice rink would need to worry about accountability, but in light of the recent board problems at the United States Olympic Committee and the International Olympic Committee, it’s probably not a bad idea.

Whether an organization is subject to them or not, the provisions in sunshine laws can be used as a mechanism for board self-regulation. Any board can benefit from becoming more aware of the kinds of records that should be kept and standards that should be adhered to for maximum public accountability.

Although sunshine laws are not on top of the priority list of charity regulators, any member of the public who feels that a nonprofit has violated that state’s open meeting laws can sue the organization. This is not to scare nonprofits into rearranging their structure and operations to avoid the threat of litigation. Rather, becoming aware of the state’s sunshine laws and how to adhere to regulations can help your organization, and your board, become more efficient and more accountable to constituents and donors.

Board members may not know that in Colorado, for example, a meeting is official when two board members are present. Those conversations in the hallway or the parking lot might be more serious than you think!

Some worry about the impact of sunshine laws on a board’s ability to conduct confidential business, but the laws’ provisions allow for private sessions. Certain issues, including personnel situations, salary discussions, disciplinary action, security arrangements, tax matters, and confidential legal issues, may be discussed in closed meetings. To avoid arousing unnecessary suspicion from members of the public or media, it is important to announce the purpose of the closed meeting in an open meeting.

Not all board interactions necessarily fall under the definition of a meeting. Interacting socially and getting to know one another outside the confines of the boardroom usually solidifies the board as a team and helps board members work better together. Social events and board development activities do not need to be public. Although members cannot conduct official business at these events, they can discuss how they interact or how better to fulfill their roles.

Some in the nonprofit sector are sensitive to what they perceive as efforts to interfere in their business or question their intentions. The nonprofit sector certainly would not benefit from excessive regulation of its activities. The solution is to keep a close eye on our own activities. Some board members may feel that these laws should exempt nonprofits, that they are too restrictive, and that they hinder open discussion, but having well-planned meetings and being forthcoming with information regarding potentially controversial issues usually serves to increase public confidence. Why not stop the suspicion before it starts by providing broad access to information to all those who are interested? This way we’ll demonstrate that we’re doing what’s right.

Each state has its own laws that range from paragraphs to pages detailing the requirements of transparency and which organizations are affected. Check this useful guide to sunshine laws that includes a directory of online locations of state statutes.

While each state’s law contains different provisions, all states follow a general structure. Items that are covered in most state laws include:

  • Who must attend for a meeting to be legal
  • How and when the public must be notified about meetings
  • Permissible locations for meetings, including the size of the meeting space
  • Requirements for special and emergency meetings
  • Provisions for the public audience and its possible involvement
  • Allowances for closed meetings
  • Enforcement and punishment for violation of the law
  • Special issues, such as provisions for technology

In almost all states the public has the right to sue an organization that violates the law. The court can then give an injunction that forces the organization to cease its behavior. The court can also void any action that occurred in an illegal meeting. Most states also cite some form of punishment, which generally includes a fine of up to $1000 per person and payment of the plaintiff’s attorney fees.