Over the past few years, the IRS has become increasingly interested in monitoring the governance practices of tax-exempt organizations, particularly public charities. This interest has been shown through public statements of IRS officials, the addition of questions about board makeup and policies to the Form 990, an explanation of why the IRS considers governance important, and the development of training materials on governance for IRS personnel. Not all members of the exempt organizations community agree that the IRS should focus on governance. However, the IRS rationale is that a well-governed organization is a tax-compliant organization.
The IRS has now developed and released a governance issues checklist (the Governance Check Sheet) to be completed in each audit of an exempt organization. The checklist provides a very specific roadmap for exempt organizations to compare their practices and policies with what the IRS wants to see and to make adjustments where necessary.
Governance
Independent ACORN Report Says Lax Governance, Rapid Growth Set Stage For Video Controversy
In September, 2009, Proskauer, by way of Scott Harshbarger, was retained by the Association of Community Organizations for Reform Now (“ACORN”) to conduct an independent analysis of the videos that caused this summer’s uproar as well as the organization as a whole, including its core weaknesses and inherent strengths.
The serious management challenges detailed in our report are the fault of ACORN’s founder and a cadre of leaders who, in their drive for growth, failed to commit the organization to the basic, appropriate standards of governance and accountability. As a result, ACORN not only fell short of living its principles but also left itself vulnerable to public embarrassment.
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