The Ben Ladner affair

Our current tax policy is to exempt certain eleemosynary organizations from taxation, in light of their good works that benefit society. In return for this favored treatment, such organizations are expected to operate within certain limits, and are expected to conduct their affairs in a transparent manner.

Of late, there have been some notable abuses by the tax-exempt organizations. Indeed, Congress has shown an interest in improving the transparency of how the tax-exempts operate. You can expect enhanced scrutiny of the tax-exempts in the foreseeable future.

One tax-exempt entity is American University. And now, there is a big tempest regarding the generous severance package granted to its former president Ben Ladner, who was terminated for cause on account of, inter alia, his lavish spending habits with University funds.

[This is reminiscent of former NYC Mayor David Dinkins, who seemed to confer plaudits, praises and rewards to the lawbreakers, thus giving the rats cookies when they should have received electric shocks.]

Well now, it seems that the Senate Finance Committee is interested in American University's fiscal practices with respect to Ben Ladner. Senator Grassley has written a letter to the AU Board, requesting lots of documents.

I have mixed feelings about this all. I certainly applaud Grassley's tenacity, and certainly believe that AU should be held accountable for its fiscal actions (as should Ladner). But now it seems that the Senate is playing the role of the IRS auditor. I'm not entirely comfortable with that.

On the other hand, isn't that what the Federal system of checks and balances is all about?