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States As Laboratories For Charitable Compliance: An Empirical Study, Eric Franklin Amarante

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Each year, the IRS awards 501(c)(3) status to thousands of unworthy organizations. As a result, these undeserving organizations do not have to pay federal taxes and donations to these entities are tax-deductible. This is because the IRS, facing increasingly severe budget cuts, adopted a woefully inadequate application process that fails to identify even the most obvious of unworthy applicants. The result of this regulatory failure may prove to be catastrophic. As unworthy charities proliferate, the public will lose faith in the entire charitable regime. As trust dissipates, donations are certain to follow, and the charitable sector will lose a vital …