Calls for Increased Oversight and Accountability in America’s Charitable Sector

There is a growing demand for increased oversight and accountability in America’s charitable sector. With the burden of providing social services falling more on charities due to calls for governmental fiscal restraint, it is crucial that these organizations, which receive significant tax breaks, are accountable to regulatory authorities, donors, and the communities they serve.

Currently, the governance of charities largely relies on unpaid part-time volunteers serving on the Board of Directors. While most board members fulfill their responsibilities conscientiously, there is a lack of mechanisms to address issues such as laziness, lack of commitment, and over-delegation to the CEO.

The number of nonprofits in the United States has nearly tripled since 1995, with over 1.54 million organizations today. This rapid growth has led to concerns about duplication, inefficiency, and poor management within the sector.

Despite the presence of online evaluation entities like Charity Navigator and GiveWell, there is still a lack of comparative data on charities compared to other sectors. This scarcity of information hampers the ability to assess the performance of charities effectively.

To improve oversight and accountability, several recommendations have been put forward. Firstly, denying tax-exempt status to new entities planning to duplicate the work of existing charities could help prevent unnecessary additions to the sector. Independent accreditation approaches, similar to those used in other industries, could be considered for reviewing charitable applications.

Periodic independent evaluations of charities, focusing on financial management, governance, stewardship, transparency, and performance, are also necessary. Charities failing to meet requirements over time could risk losing their tax-exempt status unless improvements are made.

Additionally, when a nonprofit’s tax-exempt status is up for renewal, the accrediting entity should publicize the review process to allow clients, other nonprofits, and the public to provide input on whether renewal is justified.

Lastly, it is crucial for charities to actively seek feedback from the individuals they serve and act upon it. Regular client listening sessions could help gather feedback on service quality and inform future programming.

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