Wednesday, May 30, 2007

Two Senators Urge IRS to Update Charities Disclosure Form

Sen. Max Baucus, chairman of the Senate Finance Committee Chairman and Sen. Charles E. Grassley, Republican of Iowa have asked the IRS and - specifically - the U.S. Department of the Treasury to update the Form 990, the federal informational tax return charities file.

"It is clear that transparency and openness are pillars in encouraging our nation's charities to be responsive to the needs of the community," wrote the Senators. A more thorough form "will allow the IRS to better identify those entities that warrant additional review or further questions... and also mean that charities that are doing the right thing will be less subject to audit."

Among the topics the senators asked the Treasury Department to focus on as they revise the form:

  • Executive pay and perquisites - including payments from other charities, joint ventures, contracts, and subsidiaries
  • Endowments - charities that have endowments should show how much of the endowment is spent on their charitable mission
  • Related organizations and joint ventures
  • Fund raising - how much of the money they raise is spent on charitable programs rather than fund-raising costs
  • Hospitals - more information about their charity care and billing and debt-collection practices
  • Governance

"Fast and loose games in this area undermines the mission of nonprofits and fosters a public cynicism that's detrimental to all charities as they rely on public support for their nonprofit work," wrote the Senators.

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