January 15, 2012 | Read Time: 8 minutes
Washington
Long before Rep. Charles Boustany was elected to Congress, he was deeply involved with nonprofits in his native southwestern Louisiana, working as a heart surgeon at a nonprofit hospital and volunteering on many charity boards.
Today, as the chairman of the powerful House Ways and Means subcommittee that oversees the Internal Revenue Service, he is putting that inside knowledge to use as he patrols the activities of tax-exempt organizations.
In his first year on the job, he has made clear that he doesn’t think the IRS is doing enough to curb abuses by charities, including excessive executive compensation, inappropriate commercial activities, and improper involvement in political campaigns.
And in an interview with The Chronicle in his office on Capitol Hill, he said he plans to become even more aggressive this year.
“In every community across this country, there are tremendous leaders who step forward and volunteer their time and ultimately create a better community,” Dr. Boustany says. “But I think we have to make sure that the law is clear and that there’s proper oversight, because there can be abuses.”
‘Lonely Work’
In the year since he took over as chairman of the House subcommittee, he made headlines by holding a hearing at which he pressed AARP, the giant advocacy group for older people, to justify its tax-exempt status.
He got more national press attention when he sent the IRS a letter with 36 questions designed to find out exactly what it was doing to ferret out wrongdoing and make sure tax-exempt groups complied with federal law.
Dr. Boustany’s scrutiny of nonprofit enforcement could signal a return to the days when charities had to work hard to defend their activities on Capitol Hill.
The attention to nonprofit wrongdoing subsided a bit when Iowa’s Sen. Charles Grassley, stepped aside last year as the top Republican on the Senate committee that monitors the IRS.
Senator Grassley, who continues to keep an eye on charity abuses, says he welcomes signs that another lawmaker is ready to ask difficult questions, though he says Dr. Boustany will face a tough time.
“If you express concern about tax-exempt practices, you can be accused of being anti-charity,” he says. “It can be lonely work, so the more, the merrier.”
Dr. Boustany says he plans to pursue a wide range of concerns about nonprofits and IRS enforcement.
“What is the IRS actually doing in this sector to monitor and provide guidance?” he asks. “I’d like to know what are the triggers for an audit. And do we need to change the law?”
Questions for the IRS
The questions he asked the IRS in his letters touched on topics such as the total amount of tax-exempt royalty income nonprofits can claim for the sale of licensed products, how the IRS reviews allegations of improper political campaigning, and how many nonprofits have faced an excise tax for violating lobbying rules.
He says he hoped the IRS letter would bear fruitful results. But the agency has provided only basic information in answer to his inquiry, he says—and that information was already publicly available.
Dr. Boustany declined to share that response, saying the correspondence is not complete. The agency has also not provided the document in response to a Chronicle request under the Freedom of Information Act, saying it needed more time.
Dr. Boustany says he’ll continue to press the IRS for answers. His letter also asked the tax agency to provide more information about the charitable activities of nonprofit hospitals as well an update on the agency’s audits of colleges and universities, which have examined their unrelated business income and executive pay.
Unrelated business income, the money charities earn for activities that are not related to their charitable mission, was a key concern in Dr. Boustany’s investigation last year of the advocacy group AARP, in which he criticized its financial structure, saying that it operates more like a business than a nonprofit group.
Dr. Boustany has asked the IRS to investigate the group’s activities, noting that his staff members found that royalty payments to AARP from for-profit insurance companies made up nearly 46 percent of AARP’s revenue in 2009, while membership dues totaled just 17 percent.
Some of Dr. Boustany’s critics say the lawmaker isn’t really all that concerned about the AARP’s tax-exempt status but that he is singling out the group for its support of the president’s health-care bill in 2009.
“This is nothing but a political witch hunt,” Rep. John Lewis, Democrat of Georgia, said at the hearing Dr. Boustany held on AARP’s activities, “Who is next? Who else is on your list? My college? Your church? This is a dangerous game to play.”
Dr. Boustany denies that partisan politics were a motivation. He says his concerns about nonprofits extend far beyond AARP.
For its part, AARP says revenue from royalties allow the organization to keep membership costs low.
Pat Read, a nonprofit consultant and a former senior vice president at Independent Sector, cautions nonprofits not to dismiss Dr. Boustany’s inquiries as mere partisan politics. The questions he’s asking about unrelated business income, for example, could significantly affect their activities, she says.
“This is going to reach far beyond AARP,” Ms. Read says. “There are many Democrats that also get concerned about nonprofit activities that generate profit and activities that they don’t consider to be a part of what the nonprofit exemption was created for.”
Nonprofit Roots
Dr. Boustany’s interest in nonprofits stems, at least in part, from his growing up and living in southwestern Louisiana’s Cajun country.
The 55-year-old congressman worked at Charity Hospital in New Orleans and served on the board of Lafayette General Medical Center. He was also a longtime board member of the Lafayette Parish Medical Society, a nonprofit business league, where he helped to open the Lafayette Community Health Care Clinic, which offers free services for the working poor and is supported entirely with private donations.
But his connection to the nonprofit world runs deeper. Growing up, Dr. Boustany says, he admired how his mother, Madlyn, planned and participated in charitable events.
Dr. Boustany’s father, Charles Boustany Sr., was the Lafayette Parish coroner for 16 years. It was the combination of their work that led to his interest in medicine and politics, he says.
After running a private medical practice in Lafayette for 14 years, Dr. Boustany entered politics in 2004 after arthritis in his neck cut short his medical career.
He ran for Louisiana’s 7th Congressional District seat and won. The win marked only the second time a Republican had secured the district since it was drawn in 1903.
He was quickly tested in 2005 when Hurricane Rita struck the Gulf Coast. As a freshman lawmaker, he was instrumental in getting aid to communities, says Raymond J. Hebert, president of the Community Foundation of Acadiana, in Lafayette.
Dr. Boustany’s critiques of nonprofit activities have not gone unnoticed back home, says Mr. Hebert, but he thinks it’s part of the congressman’s philosophy that businesses, governments, and nonprofits adopt sound business practices.
“I just think he’s very interested in accountability. And that’s OK,” says Mr. Hebert. “The days of having a nonprofit keep records in a shoebox under your bed are over. And he gets that.”
Dr. Boustany has used his medical background to his advantage in Congress. In 2009, he was tapped to give the Republican response to President Obama’s televised address to lawmakers that outlined an extensive effort to overhaul the nation’s health-care system. In the response, he criticized the president’s proposal as too costly and bureaucratic.
He considers himself a staunch Republican, and he has voted 95 percent with his party this session, according to the congressional tracker OpenCongress.
Last spring Dr. Boustany, along with other Republicans, backed a plan to cut the IRS budget by $600-million—a move some critics say is inconsistent with his calls for the IRS to step up monitoring of nonprofits.
“Why is he so concerned about tax-exempt enforcement and yet participated in cutting the IRS so severely?” asks William Josephson, the former head of the Charities Bureau in New York.
Dr. Boustany says he supported the cuts because tough economic times call for across-the-board austerity.
Charitable Deductions
Part of the problem, too, he says, is the complex tax code that often makes more work for the IRS.
As Congress considers ways to change the tax system, he says, he’ll be mindful of the bureaucracy that can result from too many complex rules.
But even as he looks to simplify tax laws, Mr. Boustany says he wants to protect the deduction taxpayers receive for making charitable donations.
Dr. Boustany opposes the President’s plan to limit the value of the deduction for wealthy people, but says it’s too premature to propose legislation that saves any specific deduction.
For now, he plans to move forward, examining the tax code and holding hearings to find ways to improve enforcement of nonprofit laws.
“I take my role as oversight chairman very seriously,” Dr. Boustany says. “We will continue to conduct oversight activities on a broad range of subjects. Including the nonprofit sector.”
