For nearly 15 years, Sen. Charles Grassley has been one of the most aggressive watchdogs of how well charities serve the public, investigating allegations of misconduct at nonprofits and demanding transparency and accountability.
The Iowa Republican says he isn’t worried that Americans have lost trust in all nonprofits just because of the bad actions of groups he and other government officials, as well as the press, have singled out for attention.
Mr. Grassley made the remarks after he was asked about poll findings by The Chronicle showing that the percentage of people who think charities do a “very good job” of “helping people” has fallen steadily since 2003.
“Public confidence might drop after high-profile cases involving a lack of transparency and accountability or high administrative costs that take away from the charitable mission,” he said. “People want to know that their donations are getting the most bang for the buck.”
Oversight Failure
Mr. Grassley, who has represented Iowa in the Senate since 1981, began investigating nonprofits after the September 11, 2001, terrorist attacks. Citizens asked him to find out how their donations to support recovery efforts were being used. At the time, he was a senior member of the Senate Finance Committee, which has jurisdiction over the Internal Revenue Service, the agency that monitors nonprofits.
His inquiries earned him a reputation for shining a light into dark corners of the nonprofit world, he said, and he took up that mantle, peering into the inner workings of the American Red Cross, The Nature Conservancy, university endowments, and nonprofit hospitals. In 2004, he proposed a sweeping set of proposals to overhaul the regulation of nonprofits. The move prompted Independent Sector, a coalition of charities and foundations, to develop an approach involving greater self-regulation.
Mr. Grassley now leads the Judiciary Committee. But he kept a seat on the Finance Committee — and his eye on nonprofits. Charities could do much to raise confidence in their operations by being more open, he said.
The senator’s basic philosophy, he told The Chronicle in an interview, is that “transparency brings accountability.”
When asked what nonprofits owe the public, his reply was simple: “Everything.”
“They’ve got a responsibility to the tax laws that the money is used for the purpose for which it was given, and they’ve got that same responsibility to people that contribute,” Mr. Grassley said.
It’s the job of the board of directors to ensure those standards are met, he added, citing board inattention as “the overriding theme of most of the problems we run into.”
Call for Greater Transparency
Mr. Grassley said he doesn’t get most of his information about nonprofit wrongdoing from the IRS or even his own staff members. Rather, he gets “90 percent of it from whistle-blowers and 10 percent of it from investigative reporters.”
Though he doesn’t believe new legislation is needed to better regulate nonprofits, he said they do “require oversight by Congress, somebody saying ‘This isn’t right’ and bringing about congressional pressure to bring about specific changes.” It’s a role he plans to continue playing.
To improve transparency, Mr. Grassley thinks nonprofits should make more information available on the Internet and present it in a way that is “truthful, complete, understandable.”
And, except in the immediate aftermath of disasters, the senator said charities should be prepared to provide detailed answers to questions about how they’re spending the money they receive.
“For things that are planned for recovery, it seems to me we ought to have a defined goal of what you’re accomplishing, because you aren’t spending the money in an emergency at that point,” he said. “You expect solid answers.”
