The nonprofit sector the American economy is big and important, and, regrettably, many nonprofits are dominated by liberals. It is also a sector that is highly regulated at both the state and federal levels. The character -- and expense -- of charity regulation is an important topic.

In today's Washington Times, former White House Counsel C. Boyden Gray takes on Media Matters for America, the George Soros-financed attack dog that has virtually declared war on Fox News and other conservative media (American Thinker has been attacked by them as well).

Gray writes:

David Brock, the conservative turned liberal advocate, has recently garnered a considerable amount of press coverage for his attacks on Fox News for, among many other things, allegedly taking over leadership of theRepublican Party. What the news coverage has ignored is his use of tax-free funds for his organization, Media Matters for America (MMA), for these attacks - a form of government support for activities that clearly do not merit tax-exempt status and that as a result infringe on Fox News' First Amendment rights.

MMA was originally established as an Internal Revenue Service Section 501(c)(3) organization, that is, an organization that can receive tax-deductible contributions to engage in educational activities. The more precise purpose was to counter alleged media bias and so to "identify occurrences of excessive bias in the American media, educate the public as to their existence, and to work with members of the media to reduce them."

What MMA actually is doing, however, moves far afield from identifying possible bias to mounting a campaign to undermine a major media outlet and to promote the Democratic Party and progressive causes associated with it. Mr. Brock himself has described this new strategy as "a war on Fox," an effort "to disrupt [Rupert Murdoch's] commercial interests" and look for ways to turn regulators against News Corp.'s media outlets.

MMA's activities should disallow its tax-exempt status in two fundamental ways. First, IRS rulings make clear that attacks on individuals, statement of positions that are unsupported by facts and use of inflammatory language and other distortions will cost an organization its tax-free status. Second, in declaring "guerrilla warfare" on Fox as the "leader" and "mouthpiece" of theRepublican Party and in developing a sophisticated Democratic-leaning media training boot camp, MMA has transformed itself into an aggressive advocate for Democratic and progressive causes and thus produced a second deviation from exempt educational activities.

For too long, the left has been able to get away with cloaking poltiical activites in the guise of tax exempt organizations. But that is far fromt he only issue with charity regulation.

Today, an important new blog debuted, Charity Regulator Watch. Founded by my friend, and AT contributor Mark J. Fitzgibbons, CRW is keeping an eye on the charity regulators who influence not just what charities legally can do, but how much it costs them to be regulated. From its mission statement:

Nonprofits mostly don't want to talk about it.

I estimate charitable solicitation laws divert more than $500 million in donor money each year from its intended purposes - helping nonprofits help their causes - into compliance with charitable solicitation laws.

The thing is, state officials and bureaucrats called charity regulators could better protect the public for far less.

Charity regulators are a rip off to both taxpayers and the nonprofits they regulate.

Politicians, by the way, use charitable solicitation laws to limit competition for donor money and suppress criticism.

Charity regulators are also the biggest violators of the laws governing charities - mostly because they are not accountable.  They need a spotlight shined on them.

Too often, nonprofits and the agencies that are regulated by charity regulators either don't want, or are afraid, to rock the boat when their rights are being violated - or they may not even know thattheir rights are being violated.

Charity Regulator Watch seeks to expose law-breaking regulators, and provide some guidance about what to do in response to them.

We'll also expose the politicians who are part of the problem.

 It is an important job, and I am glad CRW is doing it.