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Sarbanes-Oxley Act (SOX) & Non-Profit Orgnaizations


The Sarbanes-Oxley Act, often called SOX, is legislation that establishes standard practices in financial management for publicly traded corporations. Although the Act does not regulate nonprofit organizations, it has already had a tremendous impact on the way the third sector handles financial matters.

For more information regarding SOX and how it has impacted the nonprofit sector, review Independent Sector's article "The Sarbanes-Oxley Act and Implications for Nonprofits," found at:

Also read the New York Times article "In Sarbanes-Oxley Era, Running A Nonprofit Is Only Getting Harder" found at:

Use the following questions to complete your discussion of this important and timely topic in nonprofit management. Your final submission should be in narrative, essay format, and should synthesize your ideas as well as incorporate references from lecture notes, text readings and other outside sources. Once complete, the Word document should be submitted through the Assignments Drop Box


1. How has SOX impacted nonprofit organizations? How do these implications affect the role of the Executive Director and the skills required for this position? How do these implications affect the role of the Board of Directors?

2. Why is it important for nonprofits to react to legislation such as SOX when the sector is not included in the regulation? How do these reactions aid and hinder the professionalization of the nonprofit sector?

3. Discuss how SOX increases an organization's accountability to a variety of stakeholders, but particularly to financial contributors.

Accountability is an essential ingredient for non-profit agencies. SOX created Nonprofit software which is a class of software tailored to helping nonprofit agencies with some of the many challenges they face that do not exist in the corporate sector. This offers guidance and security for the stakeholders and a clear way for future financial contributors to clearly understand the financial need of the non-profit organization. The focus of nonprofit software ranges from volunteer and event management to fundraising and fund accounting. Nonprofit accounting software, which helps nonprofits track individual funds as separate entities (as required by law), also contains the more generic accounting functions found in corporate software, such as a general ledger, inventory, job/project tracking, and payroll. Many nonprofits find the use of nonprofit software to be a very attractive alternative to adapting standard corporate software to their needs.

4. What are the positive impacts for the nonprofit sector in regard to SOX? What are the negative impacts for the nonprofit sector in regard to SOX?

5. What are the other important issues related to this topic?

I need help with these questions to help point me in the right direction. Thank you.

Solution Summary

This solution responds in some details to the questions discussing aspects of the impact of the Sarbanes-Oxley Act (SOX) on non-profit healthcare organizations.