Overhaul of charity oversight buried

By Todd Cohen

Some nonprofit leaders are claiming victory because Congress OK’d legislation to spur giving and curb charitable abuse.

Overall, though, charities and donors lost because Congress failed to overhaul regulation of the charitable marketplace.

For too long, foundations, donors and nonprofits have faced little regulatory oversight.

Weak regulation, plus their wealth, has given foundations too strong a hand in the charitable marketplace.

Weak regulation also has given foundations, donors and nonprofits a virtual license to behave badly.

Most of them surely want to play by the few rules that do apply, but some cross the line, engaging in excess, self-dealing and even wrongdoing.

Angry over incidents of scandal and lavish spending, lawmakers were set to sharply tighten regulation and policing of charitable activity.

But fearing a long-overdue toughening of regulations, including a requirement that they spend more, foundations and trade groups they support helped defang a proposed regulatory crackdown by pushing a package of modest changes and self-regulation.

Much more is needed: To foster the diverse and collaborative charitable marketplace they claim to champion, foundations and nonprofit trade groups should focus less on hoarding power and wealth, and more on sharing it and helping nonprofits operate and compete fairly and effectively.

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

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