June 10, 2011; Source: Philadelphia Inquirer | Last week, the NPQ Newswire covered the 17 percent shrinkage of the official roles of federally tax-exempt 501(c) organizations because they had persistently failed to submit even the most basic of requested information attesting to their existence and operations. Most observers imagine that the groups that lost their tax-exempt status probably went out of business over the years (and failed to notify the IRS) or barely existed as organizations – and for the most part, that might be true.
In Jones County, Mississippi, the list of groups losing their tax-exempt status includes the Sertoma Club of Laurel, the Military Order of the Cootie, North American Texel Sheep, and the Jim Bain Evangelistic Association, along with volunteer fire departments, American Legion posts, and, oddly, a couple of local affiliates of national labor unions.
Twenty organizations in Loma Linda, Calif., were dropped from the rolls, including Chowa Community Services Inc., the Sunshine Emergency Shelter, Japanese Adventist Views, and the Southern California Tumor Registrar Association.
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Remember that the origin of this effort was to encourage groups that were previously too small to be required to file 990s, to file 990 e-postcards – to show that they were still alive or, in some cases, whether they were ever alive. But in Philadelphia, the longtime and deepening corruption scandal at the Philadelphia Housing Authority has ensnared a nonprofit affiliate created by the disgraced and dismissed CEO, Carl Greene. The Philadelphia Housing Authority Development Corporation, which had raised nearly $70 million during its brief tenure, failed to submit even an e-postcard since 2006, though given its size, an e-postcard wouldn’t have sufficed.
The oversight imperils $30 million in PHADC projects, including $10 million redevelopment of the Queen Lane public housing project, though the organization also funded Greene’s pet projects such as a $20 million planned renovation of the PHA’s headquarters. Greene was fired last September, but somehow the need for PHADC to file with the IRS escaped the attention of his successors and the PHA personnel who staffed and ran the nonprofit.
The PHADC is a far different now-no-longer-tax-exempt entity than the Mustang Owners Club in Chatsworth, Calif., for example. In this instance, public sector corruption, pure and simple, has led to the loss of a tax-exempt nonprofit that might have been helpful to poor people in Philadelphia.—Rick Cohen