Regulatory backlash

Government poised to crack down on charitable excess.

By Todd Cohen

[05.05.04] – If they do not change, charities are going to get a serious comeuppance.

Lavish board and staff perks, and other excesses at some charities, have waved a red flag in front of lawmakers and regulators already itching to crack down on charities they see as smug and ethically lax.

In its ongoing examination of charity, the Boston Globe recently reported many top U.S. foundations “underwrite high-end travel costs and perks that many public corporations no longer permit for their executives.”

And the half-price sale to the New Jersey Symphony of rare instruments valued at $50 million has spurred a Senate probe to find out whether the deal is part of a wider scheme by well-heeled donors, aided by lazy appraisers, tax enforcers and cultural institutions, to pump up the value of gifts.

Corporate hoodlums already have triggered new laws requiring greater accountability.

And foundations have protested a bit too much in whining about proposals to keep them from counting overhead as part of the share of assets they must pay in grants each year.

Charities are stewards of other people’s money.

To soften the reckoning that surely is coming, charities need to police themselves, quickly, thoroughly and openly.

Todd Cohen is the Editor and Publisher of the Philanthropy Journal.

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