March 01,2007

Grassley Expresses Alarm at Poor Executive Compensation Disclosure from Top Non-profits

Sen. Chuck Grassley, ranking member of the Committee on Finance, is conducting a wide-
ranging review of non-profit practices to ensure accountability from non-profits to taxpayers and
donors, and to protect non-profits from abuse.  He made the following comment on a new report
from the Internal Revenue Service showing that hundreds of charities failed to adequately disclose
executive compensation.

“Public charities are in a social compact.   They get very generous tax breaks in exchange for
their good works.  In exchange, they have to disclose how they’re compensating their executives.
It’s amazing how many of them fail to uphold their end of the bargain.  The lack of transparency is
inexcusable. The IRS found that of its sample of 50 public charities with over $250,000 in
compensation, none had filed required schedules detailing compensation paid to officers or
employees.  More than 30 percent of the charities the IRS contacted had to amend their returns after
being contacted by the IRS.  Public disclosure is supposed to be a pillar of accountability in the
charitable sector.  Unfortunately, that pillar is crumbling.

“The IRS’ chief counsel personally committed to me that the IRS would revisit the guidance
and regulations regarding executive compensation after the IRS completed this study.  The IRS study
and the recent revelations of the champagne lifestyles of certain non-profit executives make it clear
that the IRS needs to send clear signals of what’s acceptable for disclosure and compensation at our
nation’s charities.  Sadly, some individuals running charities view it as an opportunity to do well for
themselves as opposed to doing good for those in need.  Our charities are too important to allow that
to continue.  The chief counsel will brief the Finance Committee on the steps he’ll be taking in this
area now that the report is completed.”