The Honolulu Advertiser's series, "Unguarded Giving: Who's Regulating Hawai'i's Charities?," was an informative look at the regulatory relationship between nonprofits and state government, specifically the attorney general's office.

The series supports the case for Hawai'i nonprofits to register with the AG and for paid, full-time staff in that office to put those registrations to use as enforcement tools. In the last session of the Legislature, a legal assistant position was approved. We expect the next shoe to drop soon: introduction of a bill to require nonprofits to register with the state.

Hawai'i has more than 5,100 public charities with federal tax-exempt status. Of these, about 1,600 have annual revenues exceeding $25,000 and must file a Form 990 each year with the Internal Revenue Service. Those detailed filings are available to the public and state regulators at www.guidestar.org or from the charities themselves.

The IRS is now extensively revising the Form 990 for the first time in decades. Starting next year, it will require nonprofits to report more information and the 990 will, we hope, be better organized and useful. It should also be timelier as more organizations file electronically.

The other 3,500 public charities in Hawai'i don't file such reports, however. Those with less than $25,000 in annual revenue aren't required to do so.

Historically, these organizations disappeared from the view of regulators once they received tax-exempt status. They drew up articles of incorporation and bylaws, registered as businesses with the state Department of Commerce and Consumer Affairs and applied to the IRS for tax exemption. Once the exemption was granted, that was it.

That changes next year. The IRS will require small nonprofits to file a Form 990-N by May 15, 2008, for the 2007 tax year. The new "epostcard" filing includes the name and mailing address of the organization, any other names used, the address of its Web site if it has one, the name and address of its principal officer, and confirmation that the organization's annual gross receipts are $25,000 or less.

Charities that fail to file for three years in a row will lose their tax-exempt status and either have to reapply or be subject to federal taxes — in other words, it's file or die.

The IRS's new federal filing requirement is reasonable, fills a significant gap, will generate useful information and won't be an undue burden. Other proposals to increase nonprofit accountability would, however.

For example, proposals to require small charities to have annual financial audits contradict efforts to reduce administrative overhead and management guidelines, such as the Better Business Bureau's standard that charities should direct at least 65 percent of their income to direct program services.

A $10,000 audit by itself would be 4 percent of the budget for a charity with an annual income of $250,000 per year and seriously impact its direct services. Clearly, when it comes to regulation, one size does not fit all.

Nonprofits, especially large ones, are held to account already by their boards of directors, members, funders, donors, contractors, volunteers, auditors, accrediting organizations, professional licensing boards, the IRS, the news media and the community at large. They live or die on their reputations for honesty and the contributions they make to the community.

Not every charity is perfect but, given the thousands of charities here, their records of service and how rarely abuses occur, Hawai'i should be proud of and grateful to its nonprofit sector — just as charities are grateful that our community is one of the most giving in the nation.

Hawai'i nonprofits recognize that some have taken advantage of tax-exempt status to defraud contributors or otherwise abuse public trust for personal gain. We support government's efforts to root out abuses and we want authorities to have the tools and resources for effective enforcement.

We caution, however, against imposing unnecessary administrative burdens on organizations working hard to maximize their impact and fulfill worthy missions.

John Flanagan is president and CEO of the Hawai'i Alliance of Nonprofit Organizations. He wrote this commentary for The Advertiser.