Grassley Concerned About Nonprofit CEO Pay, Not Donor-Advised Funds

Sen. Charles E. Grassley (R-IA) is less concerned about regulating payouts from donor-advised funds than the issue of nonprofit executive salaries, the reports.

In a recent interview, Grassley, a vocal advocate of nonprofit transparency, said mandatory payouts or deadlines for donor-advised funds and endowments — for example, requiring that donated assets be disbursed within five years — could limit, rather than encourage, giving. "If we set a payout at 5 percent and they pay out 5 percent, well then they're meeting the law," Grassley told the Chronicle. "We think an attitude is better, because we hope some people will exceed whatever percentage" Congress might choose to impose through legislation.

The chairman of the Senate Judiciary Committee and member of the Senate Finance and Budget committees said that any changes to the rules governing donor-advised funds would make more sense as part of a broader tax-overhaul plan than as a standalone effort.

More pressing than regulating donor-advised funds, Grassley told the Chronicle, is the issue of excessive nonprofit executive pay — an issue he has been reluctant to take up, he said, in part because of pushback from nonprofits. While the can fine nonprofits for excessive compensation, it rarely does, and there are no definitive guidelines for determining what an appropriate salary for a nonprofit CEO might be. Grassley criticized the decades-old IRS guidance to nonprofits that they should seek data from comparable organizations on executive pay, saying some nonprofits have responded by hiring consultants to justify over-the-top salaries. The practice, Grassley added, becomes a "crutch" for trustees who don't want to do their job.

"This organization wants to pay more," he said, "they can't justify paying more, so they go out and hire an organization to say you ought to pay this amount of money."

Rebecca Koenig. "." Chronicle of Philanthropy 09/09/2015.