ethics and accountability
9/11, Hurricane Katrina and other major disasters in recent years have brought the work of nonprofits to the forefront of the nation's attention. With this focus has come greater scrutiny of how these organizations provide their services and ultimately, how they run their businesses.
Nonprofits face the challenge of determining what portion of their funds goes to services and what must go to operating costs. This debate often centers on what is "reasonable" compensation for top employees. With reports of executives of national organizations like United Way and the American Red Cross receiving surprisingly large salaries, Congress has considered placing stricter standards on nonprofits. However, new laws run the risk of upsetting the balance between paying executives too much - making donors unhappy - or too little, so that talented people don't apply for the top job.
As ranking member and former chairman of the Senate Finance Committee, Sen. Chuck Grassley has spent the past few years urging the IRS to place more oversight over all nonprofits to ensure more accountability and transparency. Before his efforts, he said, Congress had not seriously reviewed the laws related to tax-exempt organizations since 1969.
"Far too many charities have broken the understood covenant between the taxpayers and nonprofits
- that charities are to benefit the public good, not fill the pockets of private individuals."
Senator Charles Grassley
Chairman, Senate Finance Committee