On December 4, 2012, the Commission on Accountability and Policy for Religious Organizations (the “Commission”) published a 91-page report to Sen. Charles Grassley (R-IA) related to a variety of issues that the Senator had raised concerning religious organizations and other nonprofit organizations. The Senator’s focus was on tax and policy issues and addressed the broad question as to whether more policy and legislation might be necessary to help regulate the nonprofit sector. - OConnor Davies - New York CPA Firm

1. Non-Profit Notes Newsletter
Religious Leaders Respond to Senator Grassley
Inquiry
By Jerry O’Neil, Partner
On December 4, 2012, the Commission on Accountability and Policy for
Religious Organizations (the “Commission”) published a 91-page report
to Sen. Charles Grassley (R-IA) related to a variety of issues that the
Senator had raised concerning religious organizations and other
nonprofit organizations. The Senator’s focus was on tax and policy
issues and addressed the broad question as to whether more policy and
legislation might be necessary to help regulate the nonprofit sector.
The Commission was convened by the Evangelical Council for Financial
Accountability (“ECFA”) and comprised some 80 leaders from the
religious, accounting and legal sectors. Sen. Grassley was particularly
asking for ECFA’s help to determine whether his concerns could be
addressed without legislation, stating, “I believe that legislation should
be the last resort. However, ideas for reform often inspire informed and
thoughtful discussions which, in turn, lead to self-correction and
eliminate the need for legislation.”
Commission Chairman Michael Batts writes in the report, “We cannot
allow the behavior of a few outliers in the religious and nonprofit sector
to threaten the freedoms of those who are not the problem—those who
are doing the good work. Federal policy should continue to encourage
the public to financially support such organizations and it should not
burden them with harsh or excessive legislation or regulation.”
Some of the highlights of the Commission’s report are as follows.
1. The Commission believes that the federal laws and
penalties already exist in the event that there may be
excessive compensation for leaders of religious
organizations and that these rules do not need to be
modified. However, those rules should be strongly
enforced and more clarity and education surrounding
them is necessary.
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2. 2. The Commission urges the IRS to modify Form 990 and
Form 1023 (application for exempt status) so that sensitive
information which could expose people or property of an
organization to considerable risk not be required in those
forms. Such information about foreign locations is already
not required to be disclosed in Form 990. The Commission
is seeking to expand this waiver to locations of certain
domestic operations (e.g. shelters for those subject to
domestic abuse) and to similar information now required
in Form 1023.
3. Even though churches are exempt from having to file IRS
Form 990, they should adopt the same policies of good
governance suggested in that form for other nonprofits. In
particular they should be ready to provide financial data to
their donors so that those parties can be more
knowledgeable about the practices of the organization,
and therefore be more engaged, in order to make
informed decisions. The report, however, specifically
states that the IRS should not require churches to submit
Form 990 or some abbreviated version thereof.
See www.religiouspolicycommission.org for a complete copy of the
Commission’s report.
So what happens next? Will Senator Grassley be satisfied with this
report or will he and his committee continue to press further into the
nonprofit and religious sector? What we do know is that the
Commission will issue a second report in 2013 to Grassley dealing with
the subject of what is appropriate political expression by religious and
other nonprofit organizations.
O’Connor Davies will continue to monitor and inform you of the next
developments. For further information please contact Jerry O’Neil,
partner, at joneil@odpkf.com.
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