New rules for non-profits, sort of, except not, maybe

The U.S. Treasury Department has issued new "voluntary best practices" for non-profits to ensure that they aren't being used as conduits for funding for terrorist groups. The Council on Foundations, after working to get the new federal guidance altered, now says the feds should drop the whole idea. They argue that the new procedures would impose significant administrative burdens on non-profits without much benefit because only a teeny fraction of them have ever been even accused of terrorism-related financial dealings.

Reading the entire Treasury document left me scratching my head. After nine pages of restating the blindingly obvious (charities should write down their missions?? gosh!), the feds propose a series of doublechecking practices aimed at being sure that no money is going to terrorist groups...accompanied by lengthy footnotes explaining why all that effort may not work in practice. That's it.

Those doublecheck steps do sound fairly onerous, the likely effect is that only large staffed groups would ever make grants to or hire people from outside the U.S. Would that gain a worthwhile tradeoff in making it harder for terrorists to raise money in the U.S.? I dunno, and the feds offer no data or argument about it. But anyway it's not at all clear whether this is actually required. The federal document calls it "voluntary" but the CoF says that IRS agents have questioned groups about complying with it. (How many IRS agents? How many times? Did the groups respond, and if not what happened then? They don't say.)

I'm not finding the Council's arguments on this very persuasive but the feds' approach seems incoherent. If those are to be the new rules of operating as a tax-exempt organization then let's call them rules and have a fact-driven debate about whether they make sense in practice. Perhaps a couple of large groups with staff attorneys could do a service by openly refusing to comply with these "voluntary best practices" and forcing the feds to decide whether they mean it.

That smell from the Smithsonian is not pleasant

Sitting in Chicago I'm imagining the local reaction if the Field Museum were to announce that HBO would now get "semi-exclusive" dibs on filming in its halls, or the Art Institute sold to Disney the "semi-exclusive" use of its artworks in movies. Yea that was about my response too, upon learning early this year that the Smithsonian Institution had sold a tidy piece of its soul to Showtime. The recent Government Accountability Office report on the deal is not even slightly reassuring.

Basically, the museum traded that "semiexclusive" use of its image and contents for promises of national television exposure plus some cash. The GAO found that the Smithsonian "followed its internal contracting guidelines" (whew!) and found no specific ways that the publicly-funded institution violated any laws. But it's not hard to read between the lines that the GAO staff think that the museum was dazzled by Showtime's shiny beads and sold out cheap: "The Smithsonian contends that it will be able to accommodate the same level of filming activity (outside of Showtime) as it has in the past based on its historical analysis of filming contracts. GAO found that this analysis was unreliable because it was based on incomplete data and oversimplified criteria."

And for government auditors this line is pretty scathing: "In addition, concerns have been raised about damage to the Smithsonian’s image and the appropriateness of limiting the use of the collections [which are] held in trust for the American public." What they said!