House, Senate Differ on Disclosure of Corporate Ties to Nonprofits - Nonprofit Accountability

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Published: 06/24/2002

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House, Senate Differ on Disclosure of Corporate Ties to Nonprofits

On April 24, the House passed the "Corporate and Auditing Accountability, Responsibility, and Transparency Act" (H.R. 3763) in response to the scandal surrounding the collapse of Enron. A provision of this bill requires the Securities and Exchange Commission to develop rules that require a corporation to report contributions to a nonprofit organization if any of the corporation's directors or members of their immediate family are members of that nonprofit's board.

This applies to contributions over $10,000 made by the corporation or any officer of the corporation in the last five years, as well as any other activity that provides a "material benefit" to the nonprofit, including lobbying.

While OMB Watch supports disclosure of corporate ties to the nonprofit sector, this legislation leaves a few unanswered questions. The definition of "material benefit" is left vague except for the inclusion of lobbying, and there is no minimum threshold as there is for cash contributions. Also, it is unclear if the $10,000 threshold applies only to contributions directly from the corporation, or if it includes contributions from all employees engaged in workplace giving programs. Further, it is unclear if the $10,000 threshold applies to both cash and "material benefit" contributions, or if a $9,999 cash contribution requires no disclosure but a 5-minute lobbying call does.

While this bill has not been taken up directly by the Senate, the Senate version of accounting reform legislation was debated and passed by the Banking committee last week. The legislation,"The Public Company Accounting Reform and Investor Protection Act" was developed by Sen. Paul Sarbanes (D-MD) and does not include a similar disclosure requirement.