The Senate Judiciary Committee on Thursday approved a measure by Iowa Sen. Chuck Grassley to tighten requirements for nonprofit organizations that receive federal grants through the Second Chance Act.

Grassley offered his amendment to a proposed piece of legislation that would reauthorize grant programs to help prisoners re-enter society and open up the eligibility for grants to nonprofit groups. The bill would increase funding for the program to $650 million over five years from $160 million over two years.

“The government has to be more selective than ever about the criteria for the organizations that receive tax dollars through federal grants,” Grassley said in a press release. “If organizations are holding money offshore to avoid paying taxes, they shouldn’t be getting federal grants. If they accept federal grants, they should have to be transparent about executive compensation and fringe benefits. These are common-sense principles.”

As part of an inquiry conducted last year, Grassley and his colleagues found that the Boys and Girls Clubs of America held more $50 million in offshore equity and partnerships, including hedge funds and limited partnerships.

“While this practice isn’t illegal, it’s a loophole that I saw exploited in the many investigations and hearings I conducted as the chairman and ranking member of the Finance Committee,” Grassley said. “As a senior member of that committee, I’ll continue to work to close that loophole for all charities. For now, it makes sense to question why the federal government should award taxpayer dollars, in the form of grants, to nonprofits that are holding millions of dollars in offshore bank accounts for the purpose of evading the tax code.”

Grassley said the amendment is also intended to shine light on executive-level compensation packages at nonprofit organizations that receive federal grants.

“I’ve said repeatedly that the compensation studies used by charities to justify executive compensation have resulted in a race to the top,” Grassley said. “Making these studies available to the public for review would bring more accountability to the compensation-setting practices of nonprofits receiving grants under this program.”

Other provisions of the amended proposed legislation include a requirement that nonprofits be defined as those recognized as tax-exempt charities by the Internal Revenue Service, a requirement that 10 percent of grant recipients be audited to verify compliance with grant requirements, and a prohibition to the attorney general from providing any taxpayer-funded grants to nonprofits that hold money in offshore accounts for the purpose of avoiding paying unrelated business income tax.

Other provisions of the amended proposed legislation include a requirement that nonprofits be defined as those recognized as tax-exempt charities by the Internal Revenue Service, a requirement that 10 percent of grant recipients be audited to verify compliance with grant requirements, and a prohibition to the attorney general from providing any taxpayer-funded grants to nonprofits that hold money in offshore accounts for the purpose of avoiding paying unrelated business income tax.