Helping the less fortunate through the giving of one’s time, talents and treasure builds stronger communities all across America. Iowans share in this heritage by opening up their hearts, hands and pocketbooks to help those in need. Recognizing the significant social and economic benefits, the federal government promotes charitable good works through incentives in the federal tax code.
Unfortunately, a few bad apples among professional do-gooders are giving charities and non-profit organizations a black eye. Estimates by the Nonprofit Resource Center in Maryland indicate that fraud by such swindlers reaches $10 to $50 billion each year.
Consider the high-profile cases of wrongdoing among some executives in corporate America. Their greed led to unethical decisions that bled shareholders and drained retirement savings of loyal employees. Now it appears the fleecing isn’t restricted to captains of industry. Unethical behavior and financial mismanagement among some tax-exempt organizations, charity managers and middlemen taints the good name of philanthropies committed to good works.
Like a wolf in sheep’s clothing, some schemers prey on the generosity of donors and siphon away the money intended for worthy causes. Others push abusive tax shelters. From fraud to misuse of federal tax laws and embezzlement, mounting evidence exists of wheeling and dealing by those raising money for a needy cause.
The federal tax code promotes use of in-kind contributions by allowing donors to write-off the fair market value of their charitable gift-giving. Donations of cars, land, art and intellectual property are among the tax-deductible items.
But a federal audit conducted in 2003 by the nonpartisan General Accounting Office reveals potentially significant abuse of the federal tax incentive. Each year taxpayers reduce their income tax liability by $654 million through the vehicle donation deduction. However, the federal audit disclosed charities receive just five percent or less of the donated car’s value. That’s pennies on the dollar.
As chairman of the Senate Finance Committee, I’m working on measures designed to strengthen America’s philanthropic network. From launching college scholarships to boosting health care research, replenishing local food pantries and supporting local fire and police departments, charitable and nonprofit organizations pull people together to reach a common goal. I want to shut down the hucksters who twist the good will and generosity of others for their own personal benefit.
As part of my effort, I’m advancing bipartisan charity reform legislation that would strengthen financial reporting requirements and make boards of trustees more accountable to their donors rather than professional fund-raisers and charity managers. Folks ought to be able to see how their hard-earned donations are spent. Transparency ought to help curb inflated overhead costs and direct resources where they were intended to go in the first place.
From my leadership position in the U.S. Senate, I’m also beefing up congressional oversight over tax-exempt organizations. I will scrutinize those who are biting on bait peddled by 21st century snake oil salesmen offering schemes to skirt federal tax obligations.
In addition, the Internal Revenue Service needs to do a better job enforcing the tax laws. I’m glad the IRS is stepping up its efforts to clamp down on tax shelter scams among charities and nonprofit organizations. I’ll be keeping close tabs on its follow-through.
By targeting the misdeeds cooked up by wrongdoers infiltrating charities and other do-good organizations, we can help cultivate the good deeds carried out every day by philanthropies funded by the generosity of big-hearted Americans.