IRS Releases Training Materials on Governance Matters

July 24, 2009

IRS Releases Training Materials on Governance Matters

The Internal Revenue Service has publicly released educational materials on governance matters that it has been using recently to train its agents and employees.

The materials are of interest to charities because of controversy over the IRS’s role on the topic of governance. The federal tax code does not explicitly set out governance standards for the IRS to enforce, but the tax agency has shown increasing interest in keeping an eye on charity governance practices.

For example, the IRS’s newly revised Form 990 informational tax return, the primary document that charities file each year, includes a series of questions about nonprofit organizations’ governance policies and practices.

In a speech last year, Steven T. Miller, who was then the IRS’s top charity regulator, said, “the effects of good or bad nonprofit governance cut across virtually everything we see and do in our work. It impacts whether the organization is operated to further exempt purposes and public, rather than private, interests. It dictates whether the organization’s executives are compensated fairly or excessively. It influences whether the organization makes informed and fair decisions regarding its investments or its fund-raising practices, or allows others to take unfair advantage.”

However, a committee of nonprofit experts that advises the IRS urged the tax agency last year to be cautious in its stepped-up efforts to promote good governance by charities, saying such efforts are “fraught with complexity.”

On an opening page of the tax agency’s training materials, the IRS says, “It is not our job to determine the organization’s governance structure, policies, or practices, or to make decisions for them.”

In a speech last month, Sarah Hall Ingram, the current top charity regulator at the IRS, said that once the tax agency had posted the training materials on its Web site, “I invite all who are interested or concerned about what we are up to to review them.”

She added: “We are not finished with the topic. We intend to provide our employees with additional training on governance. So please let us know whether and how you think we should improve or supplement the materials and our training program. We welcome your input and ideas.”

— Grant Williams

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