Thursday, December 27, 2012

The Accountability Gap - An Update

As discussed previously in this blog, a primary means of ensuring that charities are using donated funds to benefit the public good is the IRS requirement that they complete annual financial reports (Form 990 or a variant) to maintain their nonprofit status.  The notable exception to this is that churches and certain religious groups are exempt from annual filing requirements.  Though many church groups have been pushing for like-minded religious organizations to voluntarily provide this information to the public in order to promote accountability, compliance is the exception, not the rule.  A recent development may close this accountability gap, however.  A lawsuit has been filed by the American Atheists to eliminate what they view as discrimination against secular charities that takes the form of requiring an annual Form 990 of secular but not religious charities.  In my view, this is one to keep an eye on -- whatever your religious beliefs, it is hard to argue with the lawsuit's premise.  And, the outcome of the lawsuit has the potential to drastically change financial reporting for charities, especially religious ones.

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