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With Charity for All

With Charity for All

by Rick Turoczy on January 26, 2005

In early 2003, Barron “Buzz” Tenny, the executive vice president and general counsel of the New York-based Ford Foundation, sat down with the text of the Sarbanes-Oxley Act, the 2002 corporate governance reform law passed in the wake of the Enron Corp. and WorldCom Inc. meltdowns. The law primarily applies to public companies, but two provisions in it were also incorporated into the criminal section of the United States code: the expanded protections for internal whistleblowers and new standards on document retention. Tenny thought that other sections of the law might make sense for his organization too, such as the requirement that audit committee members are completely “independent” — governance-speak for no business ties with the foundation.

He spoke with other Ford Foundation executives and board members about implementing some of SOX’s provisions. “[The topic] was in the air,” recalls Tenny. “[New York attorney general Eliot] Spitzer had been making noises about cracking down on nonprofits, and everywhere there was talk of increased scrutiny. It became obvious to me that it would be good for us to do something.”

Shortly thereafter, Tenny initiated a governance overhaul at the $10 billion charity. A team of lawyers from Morgan, Lewis & Bockius helped him figure out what needed to be done. Then Tenny set to work. He established an audit committee, mandating that each of its five members be completely independent. He also created a code of ethics for the entire board’s 14 members, set up an annual review process to evaluate the directors’ performance, and wrote a new code of conduct for the whole foundation staff. The process took close to 16 months. Tenny won’t reveal what the overhaul cost, saying only that, because he used outside counsel mostly in an “advisory” role, the price was “quite modest.”

With Charity for All

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