Non-profits' executives avoid scrutiny, valid reforms

USA Today ^ | 2/12/2004 | Jonathan Turley

[staytrue]

At a time when efforts to reform the corporate world are getting all of the attention, there is another group of chief executives who remain insulated from the effects of scandals at Tyco, WorldCom and the like. They are America's not-for-profit profiteers: the executives who cash in at universities, foundations and other tax-exempt organizations.

[staytrue]

It is time to end tax deductions for non profits. Most of it goes to symphonies, Sierra Club, ivy league schools, etc. Nothing for the poor from the limosine liberals.

[weegee]

A bigger scandal that Big Media consitantly overlooks are all the 501(c)3 violations that prevent such charities from lobbying congress or endorsing for/against a candidate or party.

Defund the left.

[Damocles]

Don't throw the baby out.

I work for a small company that has endowed a foundation for community efforts. There are thousands of small businesses that attempt to be good corporate citizens, and as usual a few well publicized abuses elicit a knee jerk reaction in legisaltion ultimately hurting communities that will lose valuable sources of funding.

Not all non-profits are run by limousine liberals. I look at it as the last effort of the private sector to provide help to the needy before they attatch to the government teat.

[staytrue]

We need to eliminate the tax deduction for non profits and take the money to reduce the tax rates.

If someone wants to donate to these groups, I have no problem with that. It is their money. I do have a problem when my tax rate goes up because these guys are taking a deduction.

Besides most of these groups like "the american muslim association" are bogus as tax exempts, frauds or occasionally dangerous.

[gdani]

Not all non-profits are run by limousine liberals

Exactly.

Furthermore, I'll bet we can find all of the same goings-on at any/most of the non-profit groups on the right and even in many 501(c)(3) church organizations.

I, for one, fail to see what the issue is re: executive salaries. It may mean I won't donate to them (example = United Way/Aramonie scandal) but that's my right. Just as it is their Board of Directors' right to set staff salaries.

[Damocles]

Call me confused, but how is your tax rate affected by non-profits?

[gdani]

A bigger scandal that Big Media consitantly overlooks are all the 501(c)3 violations that prevent such charities from lobbying congress or endorsing for/against a candidate or party.

It's not a scandal because if a 501(c)(3) group wants to lobby or endorse they can merely change their organizational structure & tax designation in such a way as to allow them to do that.

When a organization registers as a 501(c)(3) they know full well what the restrictions are. Given that, I just can't muster much pity for them when they start barking about the rules.

[spudsmaki]

Sarbanes-Oxley, for all its faults, now requires nonprofits to conform to Generally Accepted Accounting Principles. That means having to pay your employees proper overtime, or time and a half compensation time. It also bans nepotism, cushy consulting deals with your auditing CPA, firing of whistleblowers (routine), and all sorts of other shenanigans.

Small nonprofits are notorious for cheating employees out of overtime pay, worse than anything WalMart does. They misclassify flunkies as having jobs requiring independent judgement, especially.

See mip.com/emagazine/sarbanes_oxley.asp

Many nonprofits do great work, but most of the boards are just clapper boards. Course, the new Fair Labor Standards regs will undo all this. See www.dol.gov/esa/regs/fedreg/proposed/2003033101.pdf. Thanks George.

[weegee]

My problem with the 501(c)3s is that they are very rarely prosecuted for tax fraud in this regard. It goes on and on.

[Mr. Bird]

If someone wants to donate to these groups, I have no problem with that. It is their money. I do have a problem when my tax rate goes up because these guys are taking a deduction.

"Non profit" does not necessarily designate an organization that accepts tax deductible donations. Typically, a non profit designated as such does work that would otherwise be funded with tax dollars. So if you wish to cripple private funding of non-profits (which the tax deduction encourages), you would definitely see pressure on your tax rate to rise.

It is quite a conservative view to favor the administration of social programs through non-profit endeavors rather than via the government. It is quite a liberal view that espouses eliminating tax deductions, effectively raising rates. Which are you?

[gdani]

My problem with the 501(c)3s is that they are very rarely prosecuted for tax fraud in this regard

In what regard? Endorsements? Lobbying?

I don't know if you are talking about, for example, candidates speaking at churches to the congregation or not but that seems to come up a lot on FR.

In that instance, it's usually entirely legal so long as there is no endorsement. Now, there might be a "wink wink" endorsement just by virtue of their appearance but that doesn't make it illegal. And groups across the political spectrum do similar things on a daily basis.

[Tacis]

I'll give you an example. Look at the Society for Human Resource Management (SHRM). It is not a 501(c)(3) but is a tax exempy organization, 501(c)(6), I believe. The top executive made more than a half million dollars a year (more than the schlump would earn in a lifetime on the outside) plus wonderous benefits. I haven't bothered to check the guy who signed on a year or two ago, but I bet the old guy is still drawing a fortune. The outfit spent a lot concealing this fact and made it impossible to get current IRS 990s, despite what the law says.

[staytrue]

Most non profits are about tax evasion and money laundering both of which reduces the taxes collected by the feds which means they must tax regular taxpayers like me, more.

Tax evasion scheme 1: You make a million, donate to non profit, make yourself chairman of non profit, as chairman you get a travel and expense account, vacation condo, etc.

End result, you get a lot of stuff tax free that you normally would have had to pay tax on.

Tax evasion scheme 2: Madonna paints a horrible painting.
Donates it to non profit for charity auction. Madonna get tax deduction for auction price of painting. Person buying painting may even get a tax deduction too, (not sure about that).

Avoiding estate taxes. You take 50 million and found a foundation. Foundation has your kid as chairman. Your kid gets salary taxed at 35% (plus non taxes perks) instead of 55% estate tax. Plus interest from the 50 million is not taxed and can pay a lot of the kids salary. Plus you can form an informal trading game where you can put other rich kids on the board, if your kid gets put on other boards.

Making politial donations tax deductable. You don't like GWB. You make a foundation "people for a better america". You give to foundation, and take a tax deduction. Foundation runs series of adds criticizing GWB on some issue and says to viewer, "tell GWB he is a horse's ass for doing this"

[weegee]

Churches have been fined for circulating "candidate lists" that highlight election choices.

I've been in the lobby of Pacifica Radio and seen Green Party literature there.

RockTheVote had a "Vote NO On Propxxx" banner ad on their website.

One of the memos from Memogate I (the judicial nominee memos) was from the NAACP lobbying a Democrat to block the nominations process until an afirmative action decision came down in Michigan (they didn't want one of the nominees involved in the decision).

Do these qualify?

[weegee]

Those ads could call GWBush a "horse's ass" but those ads could not say "Help get GWBush out of office this 2004" or even "Bush Out Now!"

[staytrue]

"Non profit" does not necessarily designate an organization that accepts tax deductible donations. Typically, a non profit designated as such does work that would otherwise be funded with tax dollars. So if you wish to cripple private funding of non-profits (which the tax deduction encourages), you would definitely see pressure on your tax rate to rise.

You are talking out of both sides of your mouth. You say non profits often do not take tax deductible contributions but removing the tax deduction of contributions would cripple said non profits.

You are a worthless shill for non profits.

If a non profit only takes non deductible contributions and pays tax on interest earned or profits from memoribili sales etc. I have no problem with that.

I want to remove tax deductions to non profits and take the revenue and reduce income tax rates as an offset to the added revenue.

[weegee]

Al Gore and John Kerry would like to see an end to tax deductions for charitable contributions; it's bit them on the ass in election years when people hear how little money these millionaires have donated (they are much better at allocating other peoples' money).

[staytrue]

ping

[Dinsdale]

It is time to end tax deductions for non profits.

Unless they operate in a completely open book fashion.

I'd add religion to the list, (I'd treat them just like any other non-profit).

You are certainly not endorsing a religion by taxing its operations.

[Mr. Bird]

You are talking out of both sides of your mouth. You say non profits often do not take tax deductible contributions but removing the tax deduction of contributions would cripple said non profits. You are a worthless shill for non profits

Well, at least I'm not illiterate. Let me say it again: you can deduct donations to only some non-profits. These are non profits engaged in activities that would otherwise be supported by public funding. Charities that help blind people, charities that help the homeless, charities that provide free medical care to orphans. That sort of thing. By making contributions to these do gooders tax deductible, the rich pick up the tab and don't pay taxes on it. It's win-win, you doofus.

If you take away the tax deduction for donations to these types of organizations, they will likely fold. Then, someone will need to pay for the blind people, the homeless, and the orphaned urchins that were previously paid for by the Heinz-Kerrys of the world. And guess who that will be? Joe Taxpayer. What a nice conservative notion you endorse, you class-warfare promoting shill for the liberal left.