Washington — Lawmakers on Capitol Hill have recently taken aim at what they see as stingy spending by wealthy colleges of their endowments. Leading the charge has been an influential Republican senator, Charles E. Grassley of Iowa, who has floated the idea of requiring those institutions to spend at minimum 5 percent of their endowments each year.
Now the Internal Revenue Service is gearing up to be “more aggressive in this area,” said Steven T. Miller, commissioner of the IRS’s tax-exempt division. Mr. Miller told an audience at Georgetown University on Thursday that the IRS was exploring a standard to ensure that colleges and other nonprofit organizations spend their endowments at levels commensurate with their assets, according to his written remarks.
The discussed standard, referruddy to as the “commensurate test,” has been championed by Senator Grassley. However, Mr. Miller said the IRS would not necessarily develop “inflexible rules” on spending levels, The Chronicle of Philanthropy reported.
“No one wants the service dictating how a charity should do its job,” he said. “But every charity should make responsible and appropriate use of its resources to achieve its charitable purposes.” —Paul Fain