On June 21 the Senate Finance Committee published a Staff Discussion Draft of Proposals for Reforms in the Tax-Exempt Accounting and Best Practices that is "based on staff investigations and research as well as proposals from practitioners." The document notes that specific proposals are meant to generate comments and additional suggestions "as the Finance Committee continues to consider possible legislation." It focuses on changes for nonprofits, while other legislative proposals focus on deductibility issues and abuses by donors. The proposals address exempt status eligibility, conflicts of interest, grantmaking, federal-state coordination, reporting and disclosure, boards of director responsibilities, best practices and funding for enforcement. One of the most significant changes is a proposed "five-year review" that would require nonprofits to file detailed information with the Internal Revenue Service (IRS) every five years showing that it continues to operate for tax-exempt purposes. Groups that fail to file would lose their exempt status. In addition, charities could lose their exempt status if they are found to be accomodating tax shelter transactions. The staff proposal addresses abuse of exempt status problems by creating tougher conflict of interest standards and reporting and disclosure requirements. For example, it recommends extending "private foundation self-dealing rules to public charities", so that excise taxes would be imposed on self-dealing transactions between a charity and persons with substantial influence over the organization. The annual nonprofit return, IRS Form 990, would be revised to standardize filing rules and require information about affiliates. Organizations with budgets over $250,000 would be required to file detailed descriptions of annual performance goals and measures for meeting them. Form 990 would have to be reviewed by an independent auditor, whose report would be a public document. Charities with budgets over $250,000 would be required to have an annual independent audit, and groups with budgets between $100,000 and $250,000 would have to revieed by a certified public accountant. The governance proposals include a list of general management practices, but get specific in some cases, such as requiring boards be made up of between 3-15 members and prohibiting anyone convicted of fraud within the past five years from serving. Grantmaking is addressed in specific proposals on donor-advised funds and foundations. Donor-advised funds, which are public charities with no specific regulations, allow donors to take a tax deduction and advise the charity on how their money is spent. Although the law requires the donor to give up control of the funds to the charity, lack of specific regulations and enforcement has lead to abuse of this system. This includes directing funds to pay personal expenses, such as college tuition. IRS Commissioner Mark Everson told the committee that over 100 individuals are being audited for abusing these funds. The committee staff proposed a long list of controls on donor advised funds, including a prohibition on making grants to indivuduals or private foundations, a requirement to pay out at least 5 percent of assets in grants each year and disclose its donor-advised status on Form 990. The staff discussion draft would require foundations with administrative expenses over 10 percent to "file additional supporting material with the IRS, which would be publicly available." If the IRS found the additional expenses were unreasonable or unnecessary they would not count toward the foundation's annual payout requirement. The report suggests a cap of 35 percent of total expenses on administrative costs that could count toward the payout requirement. The report also places limits on travel costs and suggests a ceiling be placed on fees for foundation trustees (no specific amount is recommended). The report recommends that taxes paid by foundations on their net investment income be used to fund enforcement activities at the federal and state level, and to fund nonprofits that "education other tax exempot organizations on best practices".