Senators Question Conservancy's Practices

Mobil Oil Corp. donated to the Nature Conservancy a bird-breeding preserve in Texas City, Tex., that became the site for an oil-drilling rig.
Mobil Oil Corp. donated to the Nature Conservancy a bird-breeding preserve in Texas City, Tex., that became the site for an oil-drilling rig. (By Phillippe Diederich For The Washington Post)
By Joe Stephens and David B. Ottaway
Washington Post Staff Writers
Wednesday, June 8, 2005

The Senate Finance Committee issued a report yesterday raising questions about a range of financial practices at the Arlington-based Nature Conservancy and recommending regulatory changes that would affect many of the nation's nonprofit organizations.

The report, the result of a two-year investigation into the world's largest environmental organization, questions whether the charity's actions at times may have been "inconsistent" with the policy underlying federal tax laws. The committee raises concerns about the size of tax breaks claimed by the Conservancy's supporters, about the group's shortcomings in monitoring development restrictions on some land under its supervision, and about private "side deals" with Conservancy "insiders."

The report refrains from making factual and legal conclusions, stressing a desire to avoid influencing an audit of the Conservancy begun by the Internal Revenue Service in December 2003. But the report spotlights the Conservancy's financial dealings and highlights the organization's failure to fully disclose transactions with Conservancy officials and corporations whose officers sat on the charity's board.

Changes sought by the committee include creation of an accreditation system for conservation groups, limits on tax deductions associated with conservation easements and increased public disclosure for charities.

Committee Chairman Charles E. Grassley (R-Iowa) praised the Nature Conservancy for enacting some reforms on its own.

"This report makes it clear that such reforms were necessary, and I commend the Nature Conservancy for making them," he said yesterday. "Yet, in several areas, such as related party transactions, public disclosure, conservation buyer transactions, and the reporting and payment of taxes, my hope is that this report will encourage the Nature Conservancy to consider additional reforms."

Grassley also called for sweeping changes in tax laws affecting charities. "There are real shortcomings in current law in many areas," he said.

In a statement yesterday, the Conservancy said that the committee's concerns largely focused on past practices.

"The Conservancy remains confident that all of our work is, and has been, in compliance with the law and in furtherance of our mission," it said. "Not everything we tried succeeded, and on occasion we made mistakes, but all of our work was done in good faith and was undertaken to accomplish significant conservation goals."

Conservancy officials are to testify today at a committee hearing.

The panel began investigating the Conservancy in May 2003, in response to a series in The Washington Post. The articles detailed the organization's rapid growth -- its assets last year reached $4 billion -- and described financial transactions that benefited Conservancy supporters, including corporations that had paid pollution-related fines. The articles revealed that the Conservancy had logged forests and drilled for oil under the breeding ground of an endangered bird species, and bought land and services from corporations whose executives sat on the nonprofit's governing board.

The series also revealed that the Conservancy had repeatedly sold land to its own trustees, in transactions that allowed the buyers to claim significant tax breaks.

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