Legislation in Oregon Seeks to Punish Bad Charities

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March 16, 2011; Source: OregonLive.com | After producing a list of the state’s 20 worst charities (PDF), many of which raise funds on a national basis, Oregon’s attorney General, John Kroger, filed a bill that would punish any charity that spent less than 30% of the money it raised on the services for which the money was given. The Bill would strip the bad charities of their tax exempt status and force them to disclose that the gifts given to them would not be tax deductible. For every instance where a disclosure was not made, the offending group could be sued for up to $25,000 under the Unlawful Trade Violations Act.

The list of 20 raised a combined $56 million nationwide last year and the top three earners spent less than 10% on services. Oregon did once have a law that prohibited these kinds of scams but it was repealed in 1989 after the U.S. Supreme Court ruled that these types of provisions violated free speech.

We are pleased to report that the board of the Nonprofit Association of Oregon voted to back the bill and their executive director, Carrie Hoops testified in its favor in front of the Senate Committee on Finance and Revenue.

In a more disappointing (to NPQ) and vaguely confusing statement (as reported by this paper), James Phelps, the Development Director of the ACLU of Oregon and the president of the local chapter of the Association of Fundraising Professionals commented, "Some telemarketing is OK…Do I want to be called at dinnertime? No. But for some charities, that is how they raise their funds and some are very legitimate." Phelps went on to say that it was the business of donors to inform themselves.

The bill is getting little formal opposition at this time but it may also be challenged on free speech grounds. – Ruth McCambridge