The number charitable organizations in the U.S. grew from 819,008 in 2000 to 1,186,915 in 2008, an increase of nearly 45 percent. But during that same period, the number of IRS employees charged with overseeing those charities went from 845 to 837. Such a large increase in the number of organizations to watch over, coupled with an oversight staff that has basically remained flat, has resulted in renewed calls for some form of restructuring of nonprofit organization oversight by the federal government.

Proposals have ranged from establishing an entirely new federal agency charged with charity oversight to simply adding staff to the IRS exempt organization oversight division. Somewhere in the middle, former IRS exempt organizations chief Marc Owens supports the creation of a new public-private organization that would be overseen by the IRS. This public-private organization would oversee charities similarly to how the Financial Industry Regulatory Authority (FINRA) regulates independent securities firms while being overseen by the Securities and Exchange Commission.

Proposals for changing how the government monitors charities are nothing new. In recent years, proposals, legislation has been proposed which would place the oversight of fundraising activities of charities under the watch of the Federal Trade Commission, which already oversees certain advertising practices of commercial businesses.

Those who argue that the IRS does a poor job of monitoring charities often point to the fact that the primary objective of the service is to collect income taxes from entities and individuals who don’t pay their fair share. Asking the IRS to monitor charities and enforce rules that do not produce income taxes runs counter to the primary measuring stick and culture of the service.

While this argument may not give adequate credit to the IRS, it gets the attention of lawmakers. And the current political climate seems ripe for change in how the government goes about its business. Don’t be surprised if some drastic changes in nonprofit organization oversight are proposed and seriously considered in 2010.