Eric Franklin Amarante, ‘Unregulated Charity’

The vast majority of charities in the United States operate in a regulatory blind spot, as they are neither meaningfully evaluated when they apply for charitable status nor substantively monitored after they receive charitable status. Driven by severe budget constraints, the IRS decided to essentially ignore any charity that claims it will realize less than $50,000 in annual gross receipts. From a practical perspective, the IRS’s decision makes sense. To the extent smaller charities are less likely to cause harm, it is reasonable (perhaps even preferable) to subject them to less scrutiny. This type of prioritization, known as risk-based regulation, has become increasingly popular as regulatory budgets have continued to shrink. But however intuitive, reasonable, or widespread, the fact remains that the IRS has effectively absolved itself of the duty to oversee the majority of charities …

Amarante, Eric Franklin, Unregulated Charity (August 6, 2018).

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