Lessons from the Unintentional Fifty-Year Longitudinal Study: The Nonprofit Regulatory Structure in the US

This commentary grows from a conclusion that the federal oversight structures created in 1974 to address administration of the rules applicable to tax-exempt organizations by the Internal Revenue Service ("IRS") and the rules applicable to federal elections by the Federal Election Commission ("FEC") have failed to achieve their stated goals.The commentary is focused on the oversight of two categories of economic activity that are deeply embedded in the ethos of the United States: charities, including similar tax-exempt organizations, and political organizations. 1 Both categories have demonstrated significant fundraising capacity and both an out-sized impact on the country that together all but guarantee the need for regulatory attention to ensure legal compliance.Charities touch the lives of virtually all persons in the United States through their role as providers of a broad array of critical social services including education and healthcare, as well as the structures through which many individuals express their religious beliefs.Political organizations, of course, form the backbone of our democracy and the processes by which the country selects its leadership.Despite the differences in focus, both categories share some common elements that distinguish them from the structures which comprise most economic life in the United States.Those distinguishing characteristics include non-commercial purposes and institutional structures that eschew private ownership of the assets by individuals.Both categories are also subject to organizational and operational standards codified in statutes, regulations, agency-generated administrative rules and court decisions.