|
|
press release BEYOND VIGILANCE: STRENGTHENING CHARITY OVERSIGHT AND REFORM 22 June 2004 The following testimony was presented by Policy Development Executive Director Aron Goldman, by mail, for the United States Senate Committee on Finance hearing, "Charity Oversight and Reform: Keeping Bad Things from Happening to Good Charities" on June 22, 2004. Senator Grassley, Senator Baucus, distinguished Members of the United States Senate Committee on Finance, thank you for giving representatives of non-profit organizations and concerned citizens across the country an opportunity to share our perspectives on charity oversight and reform. Much of the testimony presented today is concerned with closing the loopholes in the current system. All of us in the non-profit sector have a new sense of urgency to make changes in light of recent examples of fraud, embezzlement, and gross mismanagement in both the for- and non-profit sectors. While the economic and social impact of the Enron and Tyco scandals was huge, their correlates in the non-profit sector stand out because these organizations enjoy special tax status and many are entrusted with donations earmarked for critical humanitarian purposes. The misuse of funds at a non-profit organization is therefore equivalent to a diversion of tax dollars from their intended purpose, and a threat to social welfare. The closing of regulatory loopholes is clearly essential. But that's not new. There will always be attempts to subvert the spirit or letter of the law, and thus an ongoing need for vigilant oversight. While most funders are quite good at parsing out the legitimate and most effective non-profit organizations, and new ways to monitor and evaluate funders are emerging, government oversight will always be important. The new challenge for all of us concerned about the fate of the social sector, and the impact of the work we do, is to reform the system in such a way that, while abuses are reduced, the highest quality organizations are able to thrive. Federal and state regulatory regimes should not only prevent abuses, but they should also foster an environment where great ideas can come to fruition. Unfortunately, this is not our reality today. While interesting and effective cross-disciplinary and cross-sectoral initiatives are proving themselves in the domestic and international arenas, the federal tax code is a burden rather than a catalyst. The most glaring example is the vast amount of untapped private sector capital that could be used — in the form of grants and investments — for social purposes. But the natural affinities among for-profit and non-profit entities go unrealized for fear that novel collaborations will be viewed as conflicts of interest, self-dealing, or abrogations of their commitment to social purposes. Again, conflicts of interest and self-dealing are real problems in the industry, but a more sophisticated understanding of the state of the industry could lead to win-win reforms: fewer loopholes and fewer burdens for innovators. I urge the Committee to continue to look for ways to thwart abuses, while understanding that this task is an ongoing one (and that media coverage of individual instances of abuses should be put in perspective). Simply being more vigilant is not the answer. Instead, regulators must revisit their long-held notions of what constitutes a social purpose organization and develop new rules which reflect the sophistication of the non-profit sector in its current, evolved state. |
|
||||||||||||||||
Return to top |
||||||||||||||||||
| Home About Us Projects News Resources Contact |
