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Rick Cohen

Continuing Concerns about Nonprofit Accountability

Sometimes an occasional Republican will surprise you, and that's the case with Senator Chuck Grassley's continuing crusade to clean up the problems in the nonprofit sector. Contrary to some skittish nonprofit critics, he isn't engaged in a "defund the left" strategy, but faces his most strident opposition from his own party, particularly Senator Rick Santorum in the Senate (and his colleague on the Senate Finance Committee) and the members of the arch-conservative Republican Study Committee in the House (cf. my op-ed from the May 16th issue of The Hill on the combined strategies of the RSC and Santorum).

To the contrary, Grassley has taken aim and continues to hunt down the abusers of charity and philanthropy of any stripe, and that has taken him to maintain a Senate Finance Committee push on enhanced regulation and oversight no matter what Santorum has to say. His June 1st press release specifically targeted, among others, the players linked to, but so far escaping indictment as a result of the Abramoff scandal, including Grover Norquist and, if anyone's been watching, members of Congress.

In an op-ed in the July 12th issue of The Hill, Grassley lays out his agenda with areas of concern that should be supportable--and supported--by progressives and anyone concerned about charitable accountability, including the following:

*Excessive compensation, perks, pay and sweetheart deals involving officers and directors
*Nonprofit groups that act more like for-profit businesses than charities
*Inappropriate political activity (this is Grassley's continuing focus on the Abramoff-related scandals, including his Committee's current review of the McCain Indian Affairs committee report, "Gimme Five", on the Abramoff scandals leading to Norquist and others--but there's more, including corporate misuse of charities to front for corporate concerns, which I'll cover in a future posting)
*Nonprofit hospitals that do not provide adequate charity care and community benefits (a concern I share from my Jersey City government days when nonprofit hospitals used to physically tag poor people in emergency rooms and have them wait until an ambulance showed up to take them to the Jersey City Medical Center, the city's then-public hospital)
*Lack of financial transparency and accountability to donors
*Tax-exempt organizations fronting as tax shelters
*Donor-advised funds and supporting organizations being used by the wealthy to protect business assets and take big charitable tax deductions with little or no money actually going to public charities
*Charitable boards that are not engaged in their fiduciary responsibilities to ensure that the charity is operated appropriately and responsibly

That last one is particularly interesting, since the new head of the Department of Treasury, Henry Paulson, was a longtime boardmember of The Nature Conservancy, whose history of truly appalling practices involving conflict of interest and other problems became front page fodder for a series done by the Washington Post and eventually an Enron-type report by the Senate Finance Committee itself. Why be concerned about Paulson? It's Paulson's department that oversees the Internal Revenue Service that is supposed to patrol the sector to spot the abuses so freely adopted and practiced by Abramoff and the TNC. Remember, it wasn't the IRS or Treasury investigators that caught Abramoff and the TNC. It was the watchdog press (helped by watchdog nonprofits).

Unfortunately, the Committee's past efforts to stick even a little enhanced oversight of the sector have been thwarted by conservatives in the House of Representatives (in conference committee on previous legislation), so Grassley even took to attaching some new charitable reforms to a telephone excise tax bill recently. They were minor reforms, apparently aimed at sending a signal to his colleagues in the Senate and across the Capitol in the House that he wasn't going to give up and succumb to the logjam that the Senate's previous charitable accountability legislation encountered, that he would even try to move small items in a piecemeal fashion to get some traction on accountability.

Given the almost daily litany of nonprofit scandals in which the abusers like Norquist escape with not even a query from Treasury and the IRS, it's good that Grassley isn't abandoning his legitimate concern for enhanced standards of nonprofit accountability.

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Posted at 10:45 AM, Jul 12, 2006 in Government Accountability | Santorum
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