Field Meeting of the Panel on the Nonprofit Sector – San Francisco, March 30, 2005

In preparation for the Panel’s Final Report to the Senate Finance Committee, due in June 2005, the Panel has begun holding field meetings throughout the country. On March 30, the Panel’s Executive Director, Diana Aviv, was in San Francisco to engage in a discussion with local leaders of nonprofit organizations about the issues likely to be addressed in the Final Report and the ways we should engage and act in this important public policy arena.

Aviv first described the factors that led to the creation of the Panel. The initial factor was the increased attention given by the media to allegations of illegal, unethical or questionable conduct with respect to the management and governance of nonprofit organizations. Leaders of the U.S. Senate Finance Committee and state legislators from across the country responded by proposing legislative and regulatory action to address the problem. In June 2004, the Senate Finance Committee convened a hearing and a Senate Finance Committee staff discussion draft of possible remedies to problem was issued. This was followed in July by a roundtable at which nonprofit sector leaders responded to the staff discussion draft. In September 2004, the chairman of the Senate Finance Committee, Sen. Charles Grassley (R-IA), and the ranking member, Sen. Max Baucus (D-MT), sent a letter to Independent Sector encouraging it to assemble an independent group of leaders from the sector to consider and recommend actions to strengthen governance, ethical conduct and accountability within public charities and private foundations. In October 2004, the Independent Sector announced the Panel on the Nonprofit Sector, naming 24 distinguished leaders from the sector as its members.

The Senate Finance Committee requested an interim report from the Panel by March 1, 2005 and a final report by June 2005. The Interim Report may be found online at  The Interim Report includes the following areas of recommendations:

  1. Recommendations to improve transparency of charitable organizations
  2. Recommendations to enhance governance in charitable organizations
  3. Recommendations to strengthen government oversight of charitable organizations

The Panel is still considering issues for its Final Report. The additional issues for examination identified in the Interim Report are in four major areas:

  1. Transparency
  2. Governance
  3. Accreditation and standard-setting
  4. Government oversight

Some of the particularly hot button issues are:

  • Periodic review of tax-exempt status – proposal to require 501(c)(3) organizations, other than houses of worship, to file every five years sufficient information to determine whether the organization continues to be organized and operated exclusively for exempt purposes (presumably, a Form 1023-like report)
  • Size of boards of directors – proposal to restrict the size of a charitable organization’s governing board (e.g., 3-15 directors)
  • Board compensation
  • Executive staff compensation
  • Valuation of non-cash contributions – proposal to limit deductions for certain non-cash contributions to the taxpayer’s basis in the property or, if less, the fair market value of the property