Charitable solicitation, trustee compensation, taxation of donated property, and international grantmaking are among topics addressed in a new report calling for changes to improve transparency, governance and accountability of charitable groups in the U.S.
A group representing the nation’s 1.3 million nonprofits and headed by Diana Aviv, president of Independent Sector, has presented a supplemental report to Congress that includes recommendations in nine areas.
The Panel on the Nonprofit Sector, a group established by Independent Sector at the urging of the U.S. Senate Finance Committee, issued the recommendations as a supplement to the final report delivered to the committee last year.
The final report included more than 120 recommendations.
While suggesting no changes by Congress or the IRS in response to concerns that grants made by charities might ultimately benefit terrorist organizations, the panel in the new supplemental report recommends charities follow a set of “Principles of International Charities.”
The principles include following all U.S. and relevant foreign laws, establishing financial controls that track the flow of grant dollars, and reiterating that responsibility for following laws and appropriate procedures lies with the boards of nonprofit organizations.
To counter fraudulent solicitations, the panel recommends Congress provide funding for a national uniform filing system for registration and reporting by charities, while leaving primary regulatory control of the sector with the states.
Regarding compensation of trustees of charitable trusts, the panel suggests changing self-dealing regulations and sanctions to clarify the methods by which excessive payment of trustees is determined.
In response to taxpayers over-estimating the sales value of donated property, and thus increasing their tax deductions, the panel recommends Congress strengthen requirements that qualified appraisals be provided to prove the value of donated property.
But the panel says it does not believe Congress should create laws that would treat income from the sale of such property as taxable business income.
Other topics covered in the supplemental report include the application of the “prudent investor standard” to nonprofits, regulation of conversions of nonprofits to for-profit status, oversight of consumer credit counseling groups, disclosure of unrelated business activities by nonprofits and expansion of the powers and jurisdiction of the Tax Court over charities