Roland|Criss Named Registrar for New Fiduciary Standard for Charities

Hagan said development of the standard began as a grassroots effort by directors and executives of "attentive foundations" who sensed something was about to change with respect to regulation in their industry. Up to the point states adopted UPMIFA, foundations had had a free ride, he said.

"When compared with the other major community of investment stewards—the U.S. corporate retirement industry, which is regulated by the Department of Labor, and major body of law [embodied in] ERISA—the foundation community has had no such comparable infrastructure of regulation: no law and no enforcement."

During the development of the standard, Hagan said, "we on the task force were shocked to discover that there could not be found one case of a breach of fiduciary duty brought against a director or an executive of a misbehaving foundation or trust."

In mid-May, the task force appointed Roland|Criss as registrar of the new standard. In this role, the firm will provide these things, according to Hagan:

• Training. Constituents who are planning to adopt the standard need training about it.
• Implementation assistance. When it comes to bringing in a new way of doing things, many organizations, already overloaded, need mentors and in some cases side-by-side assistance. "That's even more true in the foundation world," Hagan said. "Foundations by their very nonprofit nature are run very thinly in staffing."
• Independent assessment. This will lead to in an attestation of a charitable organization's conformance.

Hagan said the task force is thinking about using the attestation to create a rating system for foundations, perhaps one similar to the Standard & Poor's rating system. The donor community, including philanthropists and their advisors, would welcome a benchmark to assist them in placing charitable dollars, he said.

As well, the regulatory community would benefit because attorneys general in many states are very thinly staffed, and a rating system would help them prioritize which ones need to be audited more immediately and which later.