Here’s a most interesting piece of legislation, one that ought to go national: A new law just signed by Gov. John Kitzhaber makes Oregon the first state in the nation to crack down on charities that spend only a small fraction of the donations they rake in on actual charity.
House Bill 2060 will eliminate state and local tax subsidies for charities that spend more than 70% of donations on management and fundraising, rather than programs and services, over a three-year period. The law allows Oregon’s attorney general to disqualify charitable non-profits from receiving contributions that are deductible for purposes of the state’s income tax and corporate excise taxes.
And as someone who lived in that state for more than a decade, I can assure you Oregon has a hefty state income tax, since there is no general sales tax.
“No other state has done this,” Jim White, executive director of the Nonprofit Association of Oregon, told the Salem Statesman-Journal. “We’re the first in the country, and we should be proud of that.”
Actually a number of states, including Oregon, had similar laws prohibiting registered charities from soliciting donations if too big a percentage of those funds went to executive salaries and fundraising costs. But a 1980 Supreme Court decision ruled that state laws restricting a non-profit’s ability to solicit donations violated the First Amendment.
However, Oregon’s new law would survive a legal challenge because it doesn’t restrict a charity’s ability to do fundraising, according to Jeff Manning, an Oregon Department of Justice spokesman. Instead, donors to those charities could no longer claim a state tax deduction, and the charities would lose their local property tax exemptions.
“[Some of] these organizations have found the business model of using a nonprofit as a cover for what’s basically a telemarketing for-profit firm,” White said. “They’re giving charities and nonprofits a black eye and need to be gotten out of our midst.”
If only Oregon’s approach could be applied to such cheaters as the Humane Society of the United States, which according to the watchdog group HumaneWatch, gives less than 1% of its nine-figure annual fund-raising monies to the actual local pet shelters that carry its brand (though not its actual affiliation). They’re the hard-working, underfunded agencies whose dedication to rescuing unwanted and abandoned pets is the cover story HSUS uses to fleece its donors into thinking the checks they write are saving the animals.