by Putnam Barber pbarber@tess.org
Most members of the American public believe that charities are closely regulated, solicitations are carefully scrutinized, and the interests of donors and those being served are well protected. They are mistaken.
It isn't that America's non-profit groups lack for overseers--or for forms to fill out. From official regulation by the Internal Revenue Service and state attorneys general to the demands of independent watchdog groups, professional organizations, journalists, federated campaigns, and individual donors, the work of non-profit organizations is constantly under watch.
The problem is that the various oversight efforts don't link together into a comprehensive structure of accountability. What's more, the absence of a coherent policy-making process means that hastily conceived and ill-advised regulations continue to be devised by local, state, and federal lawmakers--usually in response to a scandal that erupts in the news media over wrongdoing by a charitable organization. Even defenders of the present system must concede that there is little that encourages consistency and no mechanism for coordinated administration.
While non-profit executives often complain about the frustration they face dealing with the thicket of regulations, they are as much to blame for the continuation of the ineffective system as anybody else. Too few charity leaders have been far-sighted enough to join efforts to press for a new accountability system that would truly protect the public-and, at the same time, not bury charities in a blizzard of paperwork. As a result, the haphazard expansion of the regulatory system is likely to continue, and there will be little chance of doing what it takes to fix the problems.
Under the present system, even charities with an upstanding commitment to candor and the social good can--and often do--make mistakes in how they report their finances.
In one recently published study, for example, Janet Greenlee and Teresa Gordon found that nearly 35 per cent of the registered charities in Pennsylvania reported no fund-raising costs in the first half of the 1990s. That statistic in itself may not raise any red flags. But about a third of those same organizations simultaneously reported to the Commonwealth of Pennsylvania that they had contracted with professional fund raisers. Either those fund raisers worked for nothing, or the groups' reporting wasn't accurate.
Almost certainly, only a very small percentage of those misfilings involved willful misrepresentation. More likely, the staff members and advisers who filled out the documents were trying their best to keep up with the maze of often-conflicting regulations and accounting procedures to which they were subjected.
Unfortunately, that maze also provides cover for those relatively few officials who have their own interests at heart, rather than those of society. The fact that regulatory staffs are at inadequate levels at the I.R.S. and elsewhere only exacerbates the problem.
What's needed is a legitimate forum in which the entire range of well-intentioned charities can come together to hammer out ways to deal with the problem. Sadly, however, the essential precondition for such a process is lacking: Too many non-profit leaders have no sense of shared responsibility for the effective functioning of the non-profit world as a whole. Indeed, many regard as an indefensible extravagance even nominal dues for membership in the national and local associations that attempt to bring together the diverse elements of the non-profit world. Many leaders are all too willing to rely on others' generosity and energy to meet common needs.
All non-profit organizations--big and small, endowed and hand-to-mouth, national and local--have an interest in participating in a process to develop a unified regulatory system. Such a system would meet the public's legitimate expectations that charities be well regulated.
Creating that system, however, will take hard work, courage, and a willingness to compromise. Broad and frank discussion of policy goals and direct engagement with state and federal officials are both required.
By extending themselves to support a genuine effort at self-regulation, America's charities can fulfill the promise of their charitable intentions. It's a small, but critical step: Complement the good works that are done millions of times a day in communities all across the country with a determined effort to insure continued public confidence in the valuable institution of the non-profit world itself.
© 1998 The Chronicle of Philanthropy :: http://www.philanthropy.com.