Tuesday, September 14, 2004

The New York Times has an interesting article noting that public confidence in charities remains low in the wake of post-Sept. 11th reports that some charities planned to spend some of the money raised on other efforts and that the money was not being distributed fast enough:

Since then, charities have faced intense scrutiny, which has led to demands for greater financial accountability and tougher regulation.

The Senate Finance Committee held a hearing in June on oversight of the charitable sector and plans to introduce legislation that would crack down on excessive compensation, impose more stringent financial oversight and plug loopholes in tax laws governing charitable activities.

The Internal Revenue Service, which grants tax exemption to nonprofits, is dedicating more auditors to its tax-exempt unit, auditing about 500 foundations to determine their compensation practices and taking other steps to beef up oversight.

“It’s telling that public confidence in charities hasn’t recovered and that people don’t always trust charities to spend their money wisely,” said Senator Charles E. Grassley, Republican of Iowa, the chairman of the finance committee. “While the strong majority of charities appear to be doing a good job, I’m discouraged that the more we dig, the more problems we find.”

He cited cases of charities taking part in tax shelters used by corporations and wealthy individuals, insiders using charitable assets for their own purposes and donations being spent on private jets and European vacations. “Oversight has been poor,” Mr. Grassley said.

Thanks to reader Steven Sholk for the tip.