Bill Aims to Punish Charities with High Fundraising Costs

April 12, 2011; Source: Statesman-Journal | The Oregon legislature is moving closer to passing a bill that could prove costly to charities that spend too much to raise funds. Earlier this week, the Oregon Senate gave overwhelming approval to legislation that would allow the attorney general to strip nonprofits of their tax-deductible status if less than 30 percent of the funds they raise are spent for charitable purposes.

Attorney General John Kroger has already made a case against charities whose expenses he feels are excessive by listing some 20 organizations that fail to spend at least 65 percent of their proceeds. The bill, that now goes to the House, would give him power to take action against offending charities, which now can only be prosecuted for other offenses, such as fraud.

The bill had the support of all but two of 30 senators. Sen. Ginny Burdick said she voted for the bill because it “targets the worst of the worst,” which is how she characterizes what she says are “non-profits engaged in unethical fundraising practices.”

For one senator, however, her no vote expressed disappointment that the bill does go far enough. Sen. Joanne Verger said she favors requiring charities to spend 70 percent on programs. If passed, charities could still solicit donations, but that money wouldn’t be tax deductible to donors.—Bruce Trachtenberg