November 12, 2007 | Read Time: 1 minute
How far should the Internal Revenue Service go in making sure the public isn’t getting taken when it donates to charity?
That question took center stage at the annual meeting of the Philanthropy Roundtable in Dana Point, Calif., following a presentation by Steven T. Miller, the commissioner of the IRS’s tax-exempt and government-entities division.
Said Mr. Miller: “Efficiency and effectiveness have obvious implications when you consider the level of subsidy being provided here. Should the public be able to rely on the Internal Revenue Service and the states to be sure when they make a contribution to an organization that the contribution is being put to good use and not squandered?”
Mr. Miller also said he is concerned that some charities and foundations are allowing donors to stash money tax-free in donor-advised funds and other entities without any requirement to put that money to charitable use.
He suggested that the IRS should consider requiring donor-advised funds to pay out a minimum portion of their assets each year to maintain their tax-exempt status — much in the same way that private foundations are required to distribute at least 5 percent of their assets each year to charity.
“We should review existing tools and explore whether we can hold organizations to a standard of commensurate use of assets, at least in the most offensive or egregious cases,” Mr. Miller said.
What do you think? Does the IRS have the authority to help the public identify ineffective nonprofit organizations? Should donor-advised funds be subject to a minimum distribution requirement? Click on the comments link below this post to share your thoughts.
