Michael Schrage, an MIT researcher who ran a global philanthropic education initiative for a U.S. investment bank, recently opined in a Financial Times commentary that, “perversely, today’s FTSE or Nasdaq companies are far more transparent, accountable and responsibly governed that the typical wealthy foundation or charity.” He added, “More damning, corporate results are measured in the marketplace while philanthropic results are not. That invites mischief and mismanagement.”
For the business executives who are reading this column, keep Schrage’s words in mind the next time some activist group claims your company isn’t transparent, and that you need to be more “socially responsible,” or that your firm isn’t paying enough taxes. Just remember that in the United States, activist groups are not required to practice what they preach, and they certainly aren’t obliged to be as transparent or accountable as the corporations they attack. And, never forget that federal and state lawmakers have rewarded these groups with the ultimate privilege—the privilege to pay no taxes.
I never thought that I would find myself encouraging the U.S. Congress to follow the lead of the Germans, the British and the Australians on matters involving the regulation of tax-exempt activist groups. The fact is that efforts by a few brave souls to reform the laws governing tax-exempt organizations in the U.S. have been thwarted by a powerful activist lobby. Given the makeup of the current Congress, I have no expectation that the situation will change anytime soon. Reform will require a majority in the House and Senate to stand up to the special interests and proclaim that what is good for the goose is, indeed, good for the gander. Until that happens, the goose that is being cooked belongs to the American taxpayer.
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