Treasury Secretary Scott Bessent is looking to recruit a new “top cop” to police nonprofits that “use and abuse” their charity status to dodge taxes, The Post has learned.
Bessent wants to appoint a new senior official at the Treasury Department to scrutinize the finances of charities that engage in excessive political activities, lobbying, or even fraud.
The secretary’s recently departed chief of staff, Michael Friedman, was tasked with drumming up some names for possible candidates before he left to join the SEC three weeks ago.
It comes after The Post broke the news in December that the Treasury Department was eyeing a crackdown on nonprofit organizations that enjoy cushy tax-free benefits amid fears that some groups have been funneling “dark money” into shady political activities.
The official will be “empowered to act as an interagency government task force to tackle ‘abusive’ 501(c)3 organizations,” said a source briefed on the matter, referring to the parts of the IRS code that govern how charities are treated.
“That person has to be committed for the next three years and not someone who is going to use it as a stepping stone,” the insider added.
A Treasury Department spokeswoman referred The Post back to a Jan. 9 statement that said Secretary Bessent “remains committed to preventing fraudulent nonprofits from taking advantage of the American taxpayer.”
The search for a charity cop comes after the Minnesota Somali fraud scandal, when it emerged that nonprofits falsely claimed to provide meals to needy children and skimmed off federal funds to spend on luxury travel and real estate.
During the scandal, a letter signed by Rep. Jason Smith (R-Mo.), the chair of the House of Representatives’ Ways and Means Committee, alleged that a charity called Feeding Our Future had ties to the Al-Shabaab terrorist group.
The leader of the organization was convicted last year of hatching a $250 million welfare fraud scheme. It shuttered its doors in February 2022, when the FBI first opened an investigation into allegations of corruption.
The Israel-bashing Council on American-Islamic Relations, or CAIR, has also come under scrutiny.
The Post broke the news earlier this month that it could lose its nonprofit status under Bessent’s crackdown.
CAIR, a key organizer of pro-Palestinian rallies on US campuses, has long been accused of accepting money from entities close to Qatar.
In November, Texas Gov. Greg Abbott designated the group a terrorist organization, accusing it of having direct ties with Hamas and vowing to have the state attorney general “sue to shut them down” in Texas. Florida Gov. Ron DeSantis followed suit in December.
The Post has sought comment from CAIR.
“Of course, there are conservative groups that are set up as nonprofits, as well, but they aren’t being funded by foreign adversaries,” said one well-placed source.
A 501(c)(3) is a nonprofit organization recognized by the Internal Revenue Service as tax-exempt because it operates for a public benefit.
This designation covers groups dedicated to religious, charitable, scientific, literary, or educational purposes.
While political campaigning is banned, lobbying is permitted, but only within very strict limits.
If an organization devotes too much time or money to influencing legislation, it risks being reclassified as a different type of entity that does not offer tax deductions to its donors.
Jonathan Schanzer, the executive director at the Foundation for Defense of Democracies, warned that any steps taken against such groups must be “apolitical” and grounded in facts and law.
“If this looks like it is score settling on the part of the administration, it will undermine the whole effort,” he told The Post. “It’s got to be done by the book.”
