Thursday, February 21, 2008

Iowa Legislature Considering "Audit Fee" For Public Charities

According to the The Daily Iowan, the Iowa legislature is considering a bill that would impose an annual fee on state nonprofits. 

In an effort to increase oversight of nonprofit organizations, the Iowa Senate is discussing a bill that would take an estimated $150,000 away from nonprofit organizations. The attorney general would use this funding to hire another attorney and support staff to focus on problems nonprofit groups may run into - such as conflicts of interest, executive compensation, and their use of authority.UI law Professor Willard "Sandy" Boyd said general feelings are that the state has not been as active as it should be.

"To have no staff to carry out the basic responsibility of the attorney general for oversight of nonprofits organizations is a great deficiency," he said. "Sort of like if we had a university but no funds to hire faculty."

If passed, the extra money would come in the form of a $25 to $30 fee every two years from local nonprofits, excluding those considered mutual-enefit organizations - such as credit unions, co-ops, and trade associations.

The effort seems motivated by sensational stories of large salaries and lack of tuition assistance for college students.  Tax Exempt wonks know that IRC 4946 already imposes such an oversight fee on private foundations at the federal level.  I've read anecdotal reports that the money collected via that provision has never really been earmarked for federal oversight of private foundations but has instead but diverted to general purposes.  If Iowa does pass such a bill there ought to be a specific requirement that it be forever used to fund its intended purpose.

dkj

http://lawprofessors.typepad.com/nonprofit/2008/02/iowa-legislatur.html

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