State Mulls Nonprofit Bill

This story was written by Kelli Shaffner, The Daily Iowan
In an effort to increase oversight of nonprofit organizations, the Iowa Senate is discussing a bill that would take an estimated $150,000 away from nonprofit organizations.

The attorney general would use this funding to hire another attorney and support staff to focus on problems nonprofit groups may run into - such as conflicts of interest, executive compensation, and their use of authority.

"Iowa Health pays its CEOs $1.5 million," said Sen. Michael Connolly, D-Dubuque. "And the Iowa Student Loan Corp. is paying its board members $1,000 for a meeting when they're supposed to be focusing on students."

UI law Professor Willard "Sandy" Boyd said general feelings are that the state has not been as active as it should be.

"To have no staff to carry out the basic responsibility of the attorney general for oversight of nonprofits organizations is a great deficiency," he said. "Sort of like if we had a university but no funds to hire faculty."

If passed, the extra money would come in the form of a $25 to $30 fee every two years from local nonprofits, excluding those considered mutual-enefit organizations - such as credit unions, co-ops, and trade associations.

The bill is directed toward the larger organizations, said Iowa Sen. Joe Bolkcom, D-Iowa City, such as the ACT - the college entrance exam group -and larger hospital chains.

With regular corporate structure, stockholders know what's going on, Connolly said. But nonprofits are run by a select few. This bill, he said, would keep them focused on their missions.

Nonprofits control billions of dollars of assets in Iowa, said Eric Tabor, the Iowa attorney general's chief of staff.

"Although the vast majority of nonprofit corporations do an excellent job of governance - and doing the right thing - unfortunately, there are a few that do not," he said. "We want to make sure that all nonprofit corporations are fulfilling their charitable mission."

Only around 3,500 Iowa nonprofit organizations have revenues of $25,000 or more, and 74 percent have revenue of less than $500,000, Boyd said.

After a discussion of the bill Monday in the State Government Committee, Judie Hoffman, a lobbyist for both Iowa Farmers Union and Women Voters of Iowa, said she agrees that more oversight is needed. However, she doesn't think getting that funding from nonprofit organizations is the best option.

"If you're a large nonprofit, such as a hospital, you would be paying the same amount as a small nonprofit," she said. "So it was just the approach. I think everybody is in favor of having inappropriate behavior looked at."

But Tabor said the fee is relatively modest and noted that there is still time for the bill to be revised.

"There is some concern this could apply to various very small nonprofits and Little Leagues," he said. "As the legislation moves along, we'd certainly be happy to talk about some sliding scale that would exempt smaller nonprofits."

Tabor said the problem is that "the attorney general's office does not have adequate resources of an attorney to have full-time to work on those issues."

Iowa Sen. Mark Zieman, R-Postville, also said he doesn't think the bill will pass because "there wasn't anybody - outside the attorney general - at the subcommittee meeting who was in favor of it."

He said "It's just a power grabber" for the attorney general, because nobody else wants it to pass.

E-mail DI reporter Kelli Shaffner at:kelli-shaffner@uiowa.edu
© 2008 The Daily Iowan via U-WIRE
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