Most of Hawai'i's largest nonprofit organizations have implemented new governance policies since the passage of the landmark Sarbanes-Oxley Act that mandated new federal rules governing corporate behavior, a study found.

Grant Thornton LLP said more than 80 percent of the state's 22 biggest tax-exempt organizations put in new accounting policies and procedures, and 95 percent have added new conflict-of-interest policies since Congress passed the Sarbanes-Oxley reforms in 2002.

About 68 percent of Hawai'i's biggest nonprofits adopted a new written investment policy, the study said.

"Every year, we're seeing a substantial increase in the number of organizations that have adopted the (governance) recommendations," said John Flanagan, chief executive officer of the Hawai'i Alliance of Nonprofit Organizations.

Unlike publicly traded corporations, nonprofit organizations are not required by law to implement governance policies contained in the Sarbanes-Oxley Act, which was passed by Congress in 2002 in response to the corporate and accounting scandals at Enron Corp. and Tyco International.

But many of the nation's largest tax-exempts have voluntarily adopted the law's provisions, which include a code of ethics policy and whistleblower and document retention policies.

Grant Thornton, which surveyed 603 nonprofit organizations across the country, found 92 percent of the nation's largest nonprofits have adopted new governance policies since 2002.

The study also found that 89 percent of the country's largest tax-exempt organizations have installed a conflict-of-interest policy while 87 percent have a written investment policy.

The Grant Thornton report only covers a tiny segment of Hawai'i's nonprofit sector and doesn't include many of the state's smaller tax-exempts, whose limited resources have hampered their ability to adopt new governance rules.

Of the 5,600 nonprofit organizations in Hawai'i, 4,000 have revenues of $100,000 or less, figures provided by the state attorney general's office show.

Deputy Attorney General Hugh Jones, whose office oversees Hawai'i charities and foundations, said the state is backing a measure this legislative session that would require nonprofits with $1 million or more in annual revenues to register and file basic financial and operational data with the state.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.