Congress should boost penalties for not-for-profit directors, trustees and executives who approve or receive excessive compensation, according to a report by the nonprofit panel of the Independent Sector, a nonpartisan coalition of approximately 500 organizations.
The report was presented to Sen. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee.
The Internal Revenue Service should overhaul not-for-profits' annual tax filings to require a detailed breakdown of executive compensation, including base salary, benefits, bonuses, long-term compensation, interest free-loans or other financial transactions, according to the report. The 166-page report updates an interim document released in March and includes 120 not-for-profit governance and regulatory recommendations for charities, Congress and the IRS.
Not-for-profits with $1 million or more in annual revenue should be required by Congress to undergo an audit, the final report said. And an independent accountant should be required to review financial statements of charities with $250,000 to $1 million in annual revenue -- a change from the panel's March interim report, which set the threshold for an audit at $2 million and review by an accountant at $500,000 to $2 million.