Accounting Measure Omits Charity-Disclosure Clause

A measure signed by President Bush last week that toughens corporate accounting laws left out a controversial proposal that would have required companies to increase disclosure of their charitable contributions.

The measure was a compromise between the two different bills passed by the House and Senate. Lawmakers were spurred to act by disclosures of accounting errors by the telecommunications giant WorldCom, among others.

Left out of the final version was a provision of a bill passed by the House that would have required companies and their officers to report their ties to nonprofit groups. The provision, which many foundation and corporate-philanthropy leaders opposed, stemmed in part from questions raised after the collapse of Enron Corporation about company gifts made to charities favored by directors on its board.

The provision would have required corporations and their executives to notify the Securities and Exchange Commission of all nonprofit-board positions held by company executives and their immediate family members. Companies also would have had to tell the SEC about charitable gifts of $10,000 or more made over a five-year period, and about lobbying done on behalf of a nonprofit group.

Among the groups opposing the provision were the Council on Foundations, Independent Sector, the American Heart Association, and the American Sociey of Association Executives. Those organizations said the provision would have affected most board members and executives and would have made it harder to recruit and keep board members and to raise corporate gifts.

On the other side, the National Committee for Responsive Philanthropy supported the plan. It said that promoting greater openness in corporate charitable giving is an important part of restoring public trust in companies. OMB Watch also supported disclosure but said that the provision included in the House bill was too broadly written and would have been difficult for corporations to follow.