Nonprofit Sector Facing A Major Scandal?

by Gary Snyder

The nation's nonprofit sector is proliferating, just as resources available to federal and state oversight arms shrink or stagnate. Marcus S. Owens has observed troubling trends since stepping down as director of the Internal Revenue Service's exempt organizations division 14 years ago.

The number of American nonprofits filing annual returns nearly doubled in the past decade, up to nearly 1.1 million in 2013, IRS data show.

Meanwhile, the IRS lost the equivalent of more than 12,000 full-time positions and nearly $1 billion. In 2013, the IRS examined 0.71 percent of charitable organizations, down from 0.81 percent in 2011 and lower than rates for individuals (1 percent) and corporations (1.4 percent), the Government Accountability Office wrote in a report this month.

“The agency's attitude toward tax-exempt (oversight) seems to be moving to one of, ‘It's not worth the hassle,' ” said Owens, who spent 25 years with the IRS before taking a job as a Washington attorney.

“I think it's setting the stage for a real scandal down the road.”

Its big money:

By the numbers....

• $137 billion — Government paid to American nonprofits in grants and contracts for services in 2012

• $48 billion — Cost of federal tax deductions for contributions to charities in 2013

• 1.63 million — Tax-exempt organizations in United States

• 274,000 — Charities filed tax returns in 2013

• 0.71 percent — Charities audited by IRS in 2013 (source)

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)