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Supporting organizations face stiff regulation

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By Ret Boney

The Senate Finance Committee likely will introduce nonprofit reforms aimed at curbing abuses among certain kinds of tax-exempt groups, the committee’s chair said.

“In general the reforms will focus on better transparency and improving board governance, particularly on self-dealing and high salaries,” Sen. Charles Grassley chair of the committee, told a group of nonprofit CEOs at a recent conference.

He also said to expect more targeted efforts to stop abuse among supporting organizations, which are groups that exist to support other nonprofits, and among donor-advised funds and credit-counseling groups.

Independent Sector, the national network of nonprofits that convened the Panel for the Nonprofit Sector to provide recommendations to the Finance Committee, hosted the conference in Washington, D.C. on Oct. 22-24.

Diana Aviv, executive director of Independent Sector and the panel, said the Finance Committee may do away with supporting organizations altogether, and may regulate donor-advised funds, credit counseling and non-cash contributions to a greater degree than the panel recommended.

While some in the nonprofit sector have asked for more money for enforcement of existing regulations, Grassley said that would not be enough to address all problems within the sector, noting there had been no extensive reform of the sector since 1969.

Due to Hurricane Katrina, the Senate Finance Committee likely will introduce nonprofit regulatory reforms in a “piecemeal” way, he said.

“While I hoped to have a complete reform package ready this fall, Katrina has affected this and many other plans,” Grassley said. “I hope to bring forward the first phase of reforms this fall and continue with a second phase of reforms as a priority next year as well.”

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