When your donations fund insider perks

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http://www.csmonitor.com/2004/0621/p13s02-wmgn.html

When your donations fund insider perks
By Jeremiah Hall | Correspondent of The Christian Science Monitor

SAN FRANCISCO – Charity watchdogs have a new warning for donors: Your favorite philanthropy may be loaning your money to its own executives. It happens at thousands of charities, big and small. And it poses a dilemma for the philanthropic community. Do these perks, used to attract top leaders, ultimately make the charity stronger, better run, and thus more effective? Or do they drain away money that would be better used on the charity's core mission?

The debate over nonprofit benefits is heating up, as some donors and even members of Congress express outrage that charitable funds are being siphoned off. Tuesday, the Senate Finance Committee is scheduled to hold hearings on insider loans and other controversial practices of charities.

"It's appalling that nonprofits are using tax incentives and donor dollars as a personal piggy bank," says Rick Cowen, executive director of the National Committee for Responsive Philanthropy in Washington.

In recent years, more than 10,700 nonprofits have given zero- or low-interest loans to their executives, according to a recent report commissioned by the Chronicle of Philanthropy, a trade publication.