Regulating Nonprofits

Are tax-exempt groups too political?


Some feed the hungry, some agitate to ban abortion, still others fight to protect the environment. Such organizations enjoy tax-exempt status granted by the federal government to encourage a voluntary sector devoted to causes not handled by government or business. The proliferation of nonprofits in recent years, however, has exposed a downside to the American fondness for joining groups. Corruption scandals and some political misuse of tax-exempt privileges have brought scrutiny of how nonprofits operate and earn their tax-privileged classifications. An effort by Republicans in Congress to rein in their lobbying and advocacy has caused a furor in the nonprofit community. Proposals to regulate election-year advertising by independent groups have stirred a defense of the rights to free speech and association.

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