Saturday, May 15, 2004
Today is National Transparency Day, dedicated to encouraging financial transparency among charitable organizations. U.S. Rep. Sue Myrick (R-NC) introduced House Resolution 624 to support the goals of Wall Watchers, a Christian ministry formed to empower donors to make better-informed charitable giving decisions.
Political pressure is inexorably building toward Sarbanes-Oxley type reforms of the charitable sector in light of the many abuses reported in the past few years. Indeed, the New York Times recently reported that “State and federal officials charged with overseeing charitable activities around the country are promoting legislation to enhance accountability, encourage greater limits on executive compensation and place greater responsibility on nonprofit boards.” Stephanie Strom, Questions About Some Charities’ Activities Lead to a Push for Tighter Regulation, N.Y. Times, Mar. 21, 2004, at 23. I echoed this theme in a recent law review article:
A tsunami of accountability and transparency is sweeping across American law and society. One manifestation is the insatiable public demand for ever more and increasingly sophisticated rankings in all aspects of American life. Unfortunately, American institutions and the insiders that lead them initially respond almost unfailingly by taking rear-guard actions to try to preserve the comfortable status quo. But by resisting the inevitable, these caretakers cause their institutions enormous harm as private parties and the government step in to fill the void with broad-brush solutions that do not properly accommodate legitimate institutional interests. Yet the insiders’ post hoc wailing rings hollow in light of their failure to respond before a loaded gun was pointed at their heads. The landscape regrettably is littered with many recent examples.
What Law Schools Can Learn from Billy Beane and the Oakland Athletics, 82 Texas L. Rev. 1483, 1553 (2004). National Transparency Day is a helpful effort to forestall such legislative over-regulation of the charitable sector. If charities are smart, they will prefer Wall Watcher-type accountability (such as Morningstar imposes on the mutual fund industry) to staring down the barrel of Elliott Spitzer- or Paul Sarbanes-led “reform.”
