March 1, 2007 | Read Time: 1 minute
Dan Prives, author of the Where Most Needed blog and an expert on charity finance, says the Internal Revenue Service needs to make it easier for the public to monitor executive compensation. And he has plenty of ideas about how to achieve that goal.
Last week Mr. Prives took Yale University’s 990 form to task for deficiencies in reporting.
In his latest item, Mr. Prives says the structure of the form makes it impossible for those who monitor the compensation of charity officials to compare how different organizations are paying their top employees.
“One of the more obvious reforms in charity accountability would be a more coherent and consistent method of reporting in this area,” Mr. Prives writes. “The IRS puts bits and pieces of compensation reporting throughout the Form 990 and Schedule A. The space provided in the Form 990 itself is not large enough, so organizations typically include the information in an attachment somewhere at the end of the report that they format any way they please.”
To correct the problem, he suggests the IRS change the form to require charities to file proxy forms similar to publicly traded companies.
“(It) provides a summary not only of compensation but also the process by which it was determined, along with background information on the board of directors and a summary of corporate governance,” Mr. Prives writes. “Even a small-scale charity should be able to provide this information.”
Discuss your thoughts on this topic by clicking on the comment link just below this posting.
