Nonprofits wary of proposed federal disclosure law

Published 5:00 am Friday, September 24, 2004

NATCHEZ – More than 6,000 nonprofit organizations in the statecould be impacted by pending federal legislation seeking additionaldisclosure and other information, said Mark McCrary, executivedirector of the Mississippi Center for Nonprofits.

The Senate Finance Committee is considering the legislationwhich, among other changes, could increase fees for filingnonprofit forms with the IRS, increase penalties for noncomplianceand other violations, and limit the size of governing boards.McCrary said some of the changes are “bothersome.”

“Some of it is what I consider very intrusive,” McCrarysaid.

Working with national nonprofit representatives to help shapethe legislation, McCrary met Thursday with leaders of several AdamsCounty and area nonprofit organizations. The gathering was thefirst of several “listening sessions” to be held around thestate.

The goal of the sessions is to help identify topics where thelegislation and nonprofit leaders are in agreement, issues thatneed more study, subjects over which the government should notintervene and areas that are best handled by nonprofit selfregulation.

McCrary told the group that the legislation was developed after”a very few” nonprofit organizations were found to be operatingwith questionable ethics and not using their resources in the bestinterests of the public.

Nonprofit organizations leaders voiced some concerns about aproposal to have their nonprofit status reviewed every five yearsand charging a processing fee to do it.

Lamar Braxton, chief executive officer of the AJFC CommunityAction Agency, whose service area includes Lincoln County,suggested a financial threshold for determining what organizationswould be subject to the reviews. Having to pay a fee for the reviewcould also detract from the organization’s efforts.

“That’s takes it out of services and puts it in administrativecosts,” said Martha Mitternight, of Catholic Charities.

Ronald Miller, executive director of the Historic NatchezFoundation, said the size of the organization should be consideredwhen processing fees are involved.

“I don’t think it ought to have a fee,” he said, “but if thereis a fee, is ought be sliding (scale).”

Other topics discussed included revoking nonprofit status fororganizations merely serving as tax shelters and providing $25million in funding to educate and inform small charities aboutbetter management practices. Representatives agreed with thoseproposals.

Regarding accreditation, representatives said the practiceshould be encouraged but not required, especially by a governmentagency. Mitternight cited the benefits of organizationalaccreditation.

“It is a great structure for making sure nonprofits are doingwhat they’re supposed to be doing,” she said.

McCrary said there are 6,074 nonprofit organizations inMississippi. The average size of a nonprofit organization is$42,000.

Collectively, nonprofit organizations in the state spent morethan $4 billion in 2002. That was higher than the state’s generalfund budget of $3.7 billion that year, McCrary said.

McCrary touted the roles and benefits that nonprofitorganizations provide in their communities.

“If you’re going to make a change in a community, chances are itis going to be a nonprofit that does it,” McCrary said.