LSC is a private, nonprofit corporation that is federally funded for the purpose of making federal resources available to support local providers of civil legal services for low-income people, with the goal of providing equal access to the justice system “for individuals who seek redress of grievances” and “who would be otherwise unable to afford adequate legal counsel.” Since LSC was federally chartered by statute over three decades ago in the LSC Act, Congress has been making annual appropriations to LSC to provide grants to eligible legal service providers to carry out the purposes of the LSC Act’s requirement “to provide the most economical and effective delivery of legal assistance.” Since 1996, LSC has been required to select its grant recipients through a competitive award process. Today, LSC funds grant recipients in all 50 states, as well as the District of Columbia and all five U.S. territories. In fiscal year 2006, LSC reported distributing a total of $313.9 million in grants. Local legal service providers employ staff attorneys to assist eligible clients in resolving their civil legal problems, often through advice and referral. According to LSC, in a typical year the largest portion of total cases (38 percent) concern family matters, followed by housing issues (24 percent), income maintenance (13 percent), and consumer finance (12 percent). LSC reported that most cases are resolved out of court. In 2007, LSC reported that three out of four clients were women, most of them mothers. Most clients were at or below 125 percent of the federal poverty threshold, currently an income of approximately $25,000 a year for a family of four. The type of legal assistance that LSC funding supports is subject to certain legal restrictions. By law, for example, LSC cannot provide funds for legal services for a proceeding related to a violation of the Military Selective Service Act or participation in litigation related to abortion or a criminal proceeding. In 1974, Congress enacted the LSC Act to transfer the functions of the Legal Services Program from the Executive Office of the President into a private corporation. Through the LSC Act, Congress chartered LSC in the District of Columbia as a private, nonmembership, nonprofit corporation that would not be considered a department, agency, or instrumentality of the federal government. Under its federal charter (the LSC Act), LSC may only pursue activities consistent with the corporate purpose of “providing financial support for legal assistance in noncriminal proceedings or matters to persons financially unable to afford legal assistance.” To direct the corporation, the LSC Act provides for a bipartisan Board of Directors consisting of 11 voting members who are appointed by the President of the United States with the advice and consent of the U.S. Senate. Neither the President nor the Senate has the power to remove a director. A director can only be removed for cause, such as a persistent neglect of duties, by a vote of at least 7 directors. Although the LSC Act does not require board members to possess management or financial expertise, it does include some membership requirements: no director may be a full-time U.S. government employee, a majority of the directors must be attorneys belonging to the bar of the highest court of a U.S. state, and at least one director must be from the legal service client community. The LSC Act requires the board to meet at least four times each calendar year and prohibits board members from participating in any decision, action, or recommendation related to a matter that directly benefits the board member or pertains specifically to any entity with which the board member has been associated in the past 2 years. The LSC Act prohibits LSC personnel and grant recipients from engaging in certain prohibited activities, such as legal assistance related to a criminal proceeding or participation in litigation related to an abortion, and the LSC Board of Directors, which is charged with managing the affairs of the corporation, is responsible for ensuring compliance with these restrictions. The LSC Act requires the Board of Directors to appoint the LSC President and any other necessary officers, and provides that the LSC President may appoint any employees necessary to carry out LSC’s purposes. LSC officers and employees can be fairly easily appointed and removed, creating essentially at-will employment relationships. In addition to the power to appoint and remove LSC employees and to serve as an ex- officio, nonvoting member of the Board of Directors, the LSC President, who is the only officer specifically provided for in the LSC Act, is authorized to make grants and enter into contracts that bind LSC. As a D.C. nonprofit corporation, LSC generally possesses all the powers conferred on such corporations under the D.C. Nonprofit Corporation Act, which includes a number of general corporate powers, such as the power to sue and be sued in its corporate name, exercise a number of rights related to real and personal property, enter into contracts, and borrow money and issue debt obligations. Other corporate powers include investing and lending money, appointing officers and agents and defining their duties and fixing their compensation, making bylaws to administer and regulate corporate affairs, and “hav and exercis all powers necessary or convenient to effect any or all of the purposes for which the corporation is organized.” LSC’s exercise of such corporate powers, however, is restricted where inconsistent with the LSC Act. For example, the LSC board’s discretion in fixing its officers’ and employees’ compensation is limited by an LSC Act provision prohibiting LSC from compensating its personnel at rates in excess of the rate of level V of the Executive Schedule. Unlike most D.C. nonprofit corporations, LSC’s exercise of its corporate powers has received additional oversight since 1988 when Congress subjected LSC to the Inspector General Act of 1978, as amended (IG Act). As an independent office within LSC, the LSC OIG is authorized to carry out audits and investigations of LSC programs and operations, recommend policies to improve program administration and operations, and keep the LSC board and Congress fully and currently informed about problems in program administration and operations and the need for and progress of corrective action. Also, unlike most D.C. nonprofit corporations, LSC is subject to congressional oversight through the annual appropriations process as well as responding to congressional inquiries and participating in hearings. In its annual appropriation for LSC, Congress regularly appropriates a specific amount for the OIG. For example, Congress appropriated about $2.54 million for the LSC OIG in fiscal years 2006 and 2007. Because in fiscal year 2007 LSC received an increase in its annual appropriation of about $17.78 million that was not allocated for a specific purpose, LSC officials told us that LSC, consistent with congressional guidance, used $430,000 of this amount to increase funding for the OIG from about $2.54 million in fiscal year 2006 to $2.97 million in fiscal year 2007. (See fig. 1.) It has been three decades since LSC was last comprehensively reviewed and reauthorized in the Legal Services Corporation Amendments Act of 1977, and LSC’s statutory framework has undergone only limited changes since then. Today LSC is governed by the powers and restrictions in its federal charter (the LSC Act) and, where not inconsistent, the D.C. Nonprofit Corporation Act, as well as the IG Act, the federal tax law requirements for tax-exempt status for nonprofit corporations, and LSC’s annual appropriations acts, which since 1996 have included a number of administrative provisions imposing additional grants management duties. Unlike most private, nonprofit corporations, the vast majority of LSC’s funding comes from annual federal appropriations, which originally were authorized under the LSC Act. The LSC Act specifies that the appropriated funds authorized under the act are available until expended and shall be paid to LSC in one annual installment at the start of the fiscal year. Although annual appropriations for LSC have not been authorized since fiscal year 1980 under the LSC Act, Congress has continually enacted annual appropriations to be paid to LSC to carry out the purposes of the LSC Act. For fiscal year 2007, Congress appropriated almost $349 million for LSC. The LSC Act permits LSC to receive and retain nonfederal funds, but LSC’s recent audited financial statements show that for fiscal years 1991 through 2006, approximately 99 percent of LSC’s revenues came from federal appropriations. In addition to direct funding through annual appropriations, the LSC Act makes certain indirect federal support available to LSC by providing that the President of the United States may make support functions of the federal government available to LSC. For both governmental and nonprofit entities, governance can be described as the process of providing leadership, direction, and accountability in fulfilling the organization’s mission, meeting objectives, and providing stewardship of public resources, while establishing clear lines of responsibility for results. Accountability represents the processes, mechanisms, and other means—including financial reporting and internal controls—by which an entity’s management carries out its stewardship and responsibility for resources and performance. To provide accountability to Congress, the LSC Act provides for Senate advice and consent on the selection of board members, annual appropriations that constitute virtually all of LSC’s annual revenues, and treatment of LSC as a federal entity in limited situations either by directly subjecting LSC to certain federal laws or indirectly by modeling provisions in the LSC Act after provisions in laws existing in the 1970s. For example, the LSC Act makes LSC subject to provisions in the Freedom of Information Act (FOIA) and the Government in the Sunshine Act, compensation limits imposed on officers and employees at level V of the Executive Schedule, and employer contribution requirements for participation in certain employee benefits programs, as well as requiring LSC to engage in notice- and-comment rule making and to provide us with access to its records.