Board committees with oversight responsibility for compliance and for mission should note the return of Sen. Charles Grassley as Chair of the Senate Finance Committee.
In his previous service as Chair, Sen. Grassley was well-known for his vigilant oversight of the nonprofit sector, with a particular concentration on tax-exempt health care systems (e.g., IRC Sec. 501(r) compliance and CEO compensation). Based on recent comments, the Senator can be expected to continue this emphasis on oversight, rather than legislation.
Sen. Grassley’s return to Finance Committee leadership comes at a critical time for the tax-exempt hospital sector. The Tax Cuts and Jobs Act exposed elements of Congressional concern as to when and why tax-exempt operations should appropriately be exempt from income taxation. These concerns may become enhanced with the evolution towards large, national tax-exempt organizations (in health care and other sectors).
With Senator Grassley’s return to Finance Committee leadership, all tax-exempt organizations are well-advised to expend greater organizational effort to support a continued claim to tax-exempt status. This includes, at a minimum, a governing board that will be even more engaged in assuring operation of the system as a whole for exempt purposes—especially as the core health care mission evolves away from the traditional inpatient bed tower-centric operations model.