The Law of Fundraising. Bruce R. Hopkins

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Название The Law of Fundraising
Автор произведения Bruce R. Hopkins
Жанр Экономика
Серия
Издательство Экономика
Год выпуска 0
isbn 9781119873457



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rel="nofollow" href="#ulink_f412bba1-6a8b-50bf-bc77-d4f2045596d8">65 was heard.

      The process is by no means wholly an instance of government regulation increasing merely for the sake of increase. The nature of organized philanthropy and the perception of it by the public, lawmakers, and regulators have altered dramatically over the past decades.

      The number of nonprofit organizations remains steadily on the rise. Most of these are exempt from federal and state income and property taxation, many are eligible to attract tax-deductible contributions, and many utilize preferred postal rates. The involvement of these groups in the day-to-day management and change of American life has never been greater.

      Still, notwithstanding this rise in government regulation, all is not well. The malady was evidenced several years ago by a blast from a normally rather staid publication, hurling the following charges against some nonprofit organizations—they:

       Pay their executives fat salaries and allow them generous fringe benefits.

       Award contracts to their trustees and board members.

       Serve as fronts for commercial enterprises with which they have “sweetheart” deals.

       Enjoy special mailing privileges and property tax breaks that give them a competitive edge against tax-paying establishments.

       Engage in wasteful and sometimes fraudulent fundraising with little accountability to the public.66

      This, then, is the dilemma of the charities: abuses appear to be on the increase, triggering greater governmental regulation, which makes operations more difficult for authentic charitable undertakings and creates a public climate that is more critical of these undertakings. The inroads being made by a few unscrupulous and fraudulent operators in tapping the resources of philanthropy are threatening to undermine the seriously needed solicitation programs conducted by legitimate charitable organizations.

      Coincidentally, the public is demanding greater accountability from nonprofit, principally charitable, organizations. The consumerism movement is causing individual and corporate donors to be more concerned and sophisticated about the uses of their gift dollars. The emphasis now is on disclosure; donors—prospective and actual—are demonstrating a greater proclivity to inquire of federal, state, and local agencies, lawmakers, independent “watchdog” agencies, and the philanthropic community itself about the fundraising and fund-expenditure practices of charitable organizations.

      Therefore, in the face of seemingly inadequate disclosure of meaningful information to the public, excessive administrative and fundraising costs, and insufficient portions of the proceeds of charitable gifts passing for charitable purposes, government regulation of fundraising for charity is thriving. Some states that currently lack a comprehensive charitable solicitation act are engaged in the process of trying to enact one. Many states with a charitable solicitation act may be toughening it, either by amending the act or by increasing reporting and similar regulatory burdens. Although the drive for a federal charitable solicitations statute has abated, the IRS continues to regulate in this field, augmented quite frequently by the courts.

      Despite all this activity, the pressure for still more regulation continues, perhaps ultimately to be manifested in some form of a federal charitable solicitations statute. The drive for such a law, now dormant, may be awaiting only the spark of a well-publicized charity scandal to trigger action by Congress. Part of the interest in a federal law in this field derives from dissatisfaction with the present state-by-state regulatory scheme. Critics voice a variety of complaints about the present reach of federal and state regulation:

       There is no requirement (as there is for private foundations and certain supporting organizations) that public charities annually distribute a portion of their funds for charitable purposes.

       There are no common requirements regarding state registration, licensing, periodic reporting, disclosure of financial information, and limitations on compensation of fundraisers.

       There are no uniform accounting standards for public charities imposed by law.

       Some charitable and other nonprofit organizations are escaping taxation of unrelated activities, in part by portraying those activities as fundraising.