US State Cracks Down on Charities With High Fundraising Costs

Legislators in the US State of Oregon have passed a Bill that seeks to strip Not for Profits of their tax-deductible status if less than 30 percent of the funds they raise are spent for charitable purposes.

The Oregon Attorney General John Kroger has praised the Oregon Senate for its strong bi-partisan 28-2 vote in favor of a landmark bill that aims to crack down on charities that spend more than 70 percent of their donations on fundraising and management.

Attorney General Kroger says most charities in Oregon provide badly needed support for veterans, children and other worthy causes, but unfortunately some Not for Profits do little to benefit the public.

A statement from the Oregon Department of Justice says every year, millions of dollars in charitable donations go to waste because they are given to Not for Profits that spend most of their donations on fundraising and management.

In response, Attorney General Kroger introduced Senate Bill 40, which proposes to eliminate public tax subsidies for organisations that spend less than 30% of money raised toward their purported charitable cause.

If the organisation fails to meet this requirement, donations to them will no longer be tax deductible for Oregon tax purposes.

If SB 40 is approved by the House and signed into law by the governor, Oregon will be the first state to eliminate tax subsidies for Not for Profits that do little to benefit the public.

Oregon is the 33rd US State on the Pacific north-west coast with a population of just under four million.

As the home of many large corporations including the likes of Nike, there are 800 public and private foundations and in 2010 there were 15,322 registered public charities with total assets of more than $50 billion.

The Nonprofit Association of Oregon has supported the Oregon Attorney General’s efforts to expose and publicise questionable charities that routinely use most of the funds they collect for fundraising, rather than for programs benefiting the community.

It says the Senate Bill 40 would impose mandatory disclosure requirements for charitable organisations that are subject to disqualification orders; with provisions for mitigating circumstances and the Bill would have no impact on the Federal deductibility of donations.

According to Carrie Hoops, the Association's Executive Director the problem is not widespread in Oregon, but it is serious for those donors whose trust is abused by a few organisations.

Hoops says the Association supports this effort to crack down on fundraising abuses and assists organisations in being good stewards of their resources through training and consulting programs.

This has been a big issue in the US recently with high profile people being paid huge amounts of money to promote charitable causes.