On June 22, the Panel on the Nonprofit Sector released its Final Report on reform for charities, saying the measures are "intended to strengthen the ability of the nation's 1.3 million charities and foundations to serve as responsible stewards of the public's generosity." The 116-page report, which makes over 120 recommendations in 15 areas of nonprofit governance and financial reporting, was well received by Senate Finance Committee Chair Charles Grassley (R-IA) and Internal Revenue Service (IRS) Commissioner Mark Everson. The panel involved "thousands of people representing diverse organizations," according to the final report, in which many of these organizations are listed. Independent Sector, a coalition of leading nonprofits, foundations and corporations, put considerable resources into shaping the final recommendations to Congress. For example, they created working groups to assemble recommendations. Interim recommendations were developed and presented in local, state, and regional meetings. Moreover, Independent Sector presented information about the recommendations on conference calls and accepted comments via the Internet from coalition members and other stakeholders. Despite this effort, which remarkably was completed in a matter of months, the process was largely an inside-the-beltway style of operation that mostly engaged very elite players. The panel membership did not reflect the diversity of the sector: small groups, community-based organizations, and rural groups were not on the panel. Community-based groups, to the extent they were consulted, were invited to comment on recommendations that were already developed and limited to a narrow scope of topics. Independent Sector argued that limits had to be placed primarily because of time constraints imposed by the Senate Finance Committee. The Senate committee required recommendations to be made by this summer in order for that the committee to use the input in developing its own legislation regarding nonprofit oversight and governance. In this context, the panel moved with incredible alacrity. The panel's first recommendation was greater IRS enforcement of current laws and increased funding by Congress to allow the IRS to accomplish this. The panel further recommends modification of the law to allow the IRS to share information with state charity regulators. Many feel that this is the heart of the problem; in fact, Everson praised the idea of changing the law to allow the IRS to share information with state enforcers. For years the nonprofit sector has argued that the IRS needs greater resources to implement effective enforcement. Several have pointed out that recent abuses identified by the news media were mostly violations of existing law that could have been prevented by improved enforcement. Strikingly, even though the first recommendation of the panel's report was aimed at enforcement, the main message, conveyed by the panel, its director, a press release, and even the report's title, is that of encouraging self-regulation and voluntary compliance (e.g., greater transparency). Many in the nonprofit sector resist new requirements and greater intrusion by government. It appears the panel tried to balance these competing interests of self-regulation and governmental regulation, but may have missed the mark. The panel provides tough-minded recommendations in a very small number of areas (e.g., donor-advised funds), but avoids some of the biggest issues, such as abuses by foundations. It proposes no caps for foundation trustee fees; nor does it make recommendations on compensation for board members, beyond suggesting the reimbursement for expenses be subject to explanation and disclosure. These issues have emerged in the news media as potential abuses, yet go unaddressed by the Panel. It appears the panel mostly developed recommendations that were responsive to a paper developed by the staff of the Senate Finance Committee. That paper, prepared last year, provides a number of recommendations in a wide range of areas. This raises a broader question about the purpose of the panel's recommendations. The panel provides no introduction that describes the problem that needs to be resolved. Are there systemic violations of law? Are there gaps in laws that need to be addressed? Is there a problem with existing enforcement? Should that enforcement be controlled by the federal government, state governments, or both? The report never defines the problem to be corrected, but rather establishes a rebuttal to the Senate staffer's paper of last year. In the end, the report seems like recommendations in search of a problem. This is not to say that the panel's recommendations are bad or wrong-headed. It is simply that it is difficult to evaluate the need for them. For example, the panel report relies heavily on the numerous changes to the Form 990, the tax return nonprofits file annually, as a means of establishing nonprofit transparency. However, many in the nonprofit sector, lead by the Urban Institute, have been proposing improvements to Form 990 for years. The IRS has been in the process of revising it for a long time, without result. Yet there is no evidence that having myriad check-offs on the 990 will create greater accountability. It certainly will, however, create more busy work for nonprofits. Greater detail in financial reporting, along with increased penalties proposed, is a move in the right direction. But what is the objective to be achieved by more 990 check-offs? There are other recommendations, such as development of performance-based measurements that should be disclosed on the 990, that seem highly controversial. The federal government has been unsuccessfully trying to develop performance measures for federal programs for some years. The problem stems from uncertainty about the appropriate benchmarks to use when it comes to social values and services, along with a heavy emphasis on quantification of such measures. Applying performance measures to nonprofits will be equally difficult and will have the added challenge of assuring consistency from one organization to another on what measures are used. The role of state charity regulators is not given adequate attention, beyond information sharing with the IRS, and the report fails to follow through on the potential this sharing can have. For example, as the primary regulators of nonprofits, many states require all organizations to file annual reports, or register if they raise funds in the state. The National Association of State Charity Officials has a Unified Registration Statement program (see http://www.multistatefiling.org) that is "an effort to consolidate the information and data requirements of all states." Yet, the recommendations would create a largely duplicative annual reporting requirement for nonprofits that are so small they do not file Form 990. The panel's report should prove useful as the Senate Finance Committee begins to draft legislation addressing the oversight of nonprofit organizations. The committee recently held a hearing on the subject and appears to be headed toward legislation addressing conservation easements, donor advised funds, abusive tax shelters and other accountability measures. What we find most striking about the panel's effort to develop recommendations is the speed with which the nonprofit sector took action. Clearly, leaders in the nonprofit sector see the need to address governance and oversight issues and provided the resources to make things happen quickly. So the question remains: why can't the nonprofit sector leadership address other high-level crises with the same vigor and commitment of resources? Nonprofits today are concerned about the rapidly diminishing public resources available for social service programs, infrastructure that supports education, transportation, health and safety protections, environmental protections, the arts and humanities, and other basic government services. Why can't the leadership of the nonprofit sector -- from foundations to grantseekers -- put the same level of energy and resources into challenging the threats that nonprofits really face as it has into addressing the threat of abuse by a few bad apples?