Panel on nonprofits still pulling punches

Published on July 6, 2005

By Todd Cohen Despite marshaling thousands of people and reportedly spending over $3 million, the Panel on the Nonprofit Sector has come up short in recommendations to the Senate Finance Committee for regulating nonprofits. As the National Committee for Responsive Philanthropy suggests, the panel improved on earlier proposals, but still seems to be in denial, trying to substitute nonprofit self-regulation for “substantive public accountability laws and regulation.” The panel, for example, has reduced to $1 million in annual revenues from $2 million its recommended threshold for required audits, called for using the foundation excise tax to pay for IRS and state regulation of nonprofits, and recommended tougher spending and disclosure rules for donor-advised funds.   Todd CohenEditor and PublisherPhilanthropy Journal But as NCRP suggested, $1 million still is too high a threshold, and spending minimums should apply to individual donor-advised funds, not to aggregate funds. The panel also fails to call for requiring foundations to pay more than 5 percent of assets a year in grants, delays addressing how to count administrative costs, and muddies its proposals on policing conflicts of interest and excess compensation. Balanced regulation respects nonprofits’ independence while curbing their excesses. If the panel will not face facts, nonprofits likely will face congressional overkill.

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