When people give money to a good cause out of kindness, it’s despicable to divert (as in steal) that money for other purposes.
Some organizations sell themselves as charities but use only a small amount of the donations — as low as 2.7 percent — for the intended programs. Yet, there hasn’t been any way to protect folks from these rip-off outfits other than to alert the public.
Laws prohibiting certain charities from soliciting donations were ruled unconstitutional by the U.S. Supreme Court in 1980 because it attempts to restrict a charity’s ability to solicit donations thus violated its First Amendment rights.
But Oregon has come up with an idea, thought to be the first in the nation, aimed at punishing nonprofit organizations that don’t properly fund the cause they represent. It is also expected to pass constitutional muster because there are no actual restrictions on fundraising.
The law, recently approved and signed into law by Gov. John Kitzhaber, eliminates state and local tax subsidies for charities that spend more than 70 percent of donations on management and fundraising over three years, according to the Statesman-Journal newspaper.
Since Oregon has a state income tax, those donating to the poorly run (or outright bogus) charities can’t claim those as deductions for tax purposes. That will make folks give a second thought to donating to the worst charities.
“These organizations have found the business model of using a nonprofit as a cover for what’s basically a telemarketing for-profit firm,” said Jim White said, executive director of the Nonprofit Association of Oregon. “They’re giving charities and nonprofits a black eye and need to be gotten out of our midst.”
Oregon has 17,152 charities registered to solicit funds, according to The Associated Press. About 23 percent of those are based out of state.
The Oregon Department of Justice already has identified the 20 worst charities, all from out of Oregon, that spend less than 21.7 percent of their money on programs and services The very worst was a Michigan-based law enforcement charity that spent less than 2.7 percent of the money it collected on programs over the past three years.
The rest of the nation should keep an eye on Oregon’s effort. If it works as expected, it could serve as way to keep people from being ripped off and help real charities receive needed donations.