Charity Regulation Needs to Be Rethought, Not Just Who Can Sue

To the Editor:

In your cover story “Rethinking Who Can Sue a Charity” (March 12), your reporter suggests that the Internal Reve nue Service’s Exempt Organizations branch does not have the resources to deal with the number of organizations it is supposed to regulate. A greater issue, which the reporter does not explore, is whether the I.R.S. should be the main federal agency that regulates charities.

Yes, charities are heavily defined by their legal exemption from taxation. But is the I.R.S. the only, or even the most suitable, agency at the federal level for oversight? The I.R.S. isn’t even the primary regulator of most activities that are taxed. Why is it so completely the regulator of what is not taxed?

We need to ask why there isso little involvement by the federal Justice Department. And when there are claims of misrepresentation by a charity in charitable solicitation, why is that handled at the state level, usually through the offices of the attorneys general, even though both solicitations and program activities so often cross state lines? Why couldn’t some office be developed in the federal Interstate Commerce Commission or the Consumer Product Safety Commission, for example, to watch out for the public’s interest?

Your reporter does discuss some options, such as expanding the right to sue or requiring public hearings. However, lawsuits generally are expensive, divisive, and overreaching, while public hearings that get little publicity seldom satisfy people who feel that their grievances are not being heeded. More consideration needs to be given to finding a middle way between either doing nothing or filing suit.

Fifteen years ago, I tried to propose a modest tribunal to listen to complaints, generally from non-profit groups, about the way private grant makers operated in fulfilling their public purposes. The idea was based on the models of the National News Council, the internal ombudsman offices at local newspapers, and what were then newly established ethics committees at teaching and research hospitals. It didn’t get very far.

Perhaps it is time to revive the idea and to apply it to wider classes of non-profits. We clearly need to develop redress-of-grievance mechanisms that are more pointed than letter-writing campaigns but less comprehensive than civil litigation.

David Ashenhurst
Principal Consultant
Private Philanthropy Matters
Oberlin, Ohio