ANOTHER PROBE? - AT 7:10 A.M. ET:  From The Wall Street Journal:

WASHINGTON -- An Internal Revenue Service official warned nonprofits to be mindful of executive-compensation practices amid public ire over large bonuses at insurer American International Group Inc. and other Wall Street firms that have received federal aid.

Lois Lerner, the IRS's director of tax-exempt organizations, told a gathering of lawyers representing charities Monday that scrutiny of nonprofits' pay practices is likely to increase. Nonprofit leaders should be sure to practice due diligence in making sure their executive pay can be justified through data on comparable practices at similar organizations, she said.

"If you're not looking, we're looking," Ms. Lerner said at Georgetown University Law Center's Representing & Managing Tax-Exempt Organizations conference here.

The IRS has intensified oversight of charities recently, through reports and an overhaul of nonprofits' annual tax form.

COMMENT:  John McCain once said that all causes eventually become businesses.  We have to be uneasy that, once again, the federal government is stepping into the private sector to examine private decisions.  At the same time, there have been appropriately raised eyebrows about the pay scales of some "nonprofits."  (I put it in quotes because some of the "executives" make hefty profits.)  The nonprofit sector should have cleaned itself up years ago, and the boards of directors of nonprofits should be practicing tighter oversight. 

I assume "nonprofits" includes universities.  Someone, preferably a team of tough investigate journalists, should examine the way they spend some of the contributions they solicit each year.  The team might also examine the sources of some of those contributions, like the Saudi government, which spends tens of millions each year to buy influence in the American educational system.  How much have you read about that in the mainstream media?

April 7, 2009