Oregon Charity Law Punishes ‘Worst Of The Worst’

Oregon’s new charity law is a first, as it eliminates state and local tax subsidies for charities that spend more than 70 percent of their donations on management and fundraising. It is the first law in the nation to target charity organizations who spend too little on their elected missions.

Oregon’s charity law, House Bill 2060, was signed by the governor in June. There are just over 17,000 charities registered in Oregon, and the state’s Department of Justice has identified the 20 worst offenders (all based out-of-state), which all spend less than 30 percent of their money on actual charity.

“No other state has done this,” said Jim White, the executive director of the Nonprofit Association of Oregon. “We’re the first in the country, and we should be proud of that.”

Some of the “worst of the worst” charities will be targeted by the legislation, designed in an effort to encourage charities to either do their jobs or close shop by virtue of tax pressure.

Among the “worst of the worst” are the Michigan-based Law Enforcement Education Program, which only spent 2.7 percent of its funds on charity programs over the last three years.

“These organizations have found the business model of using a nonprofit as a cover for what’s basically a telemarketing for-profit firm,” White continued. “They’re giving charities and nonprofits a black eye and need to be gotten out of our midst.”

Some states had laws prohibiting charities from taking donations if they were paying too much to themselves and their fundraisers. These laws were all repealed by the U.S. Supreme Court in 1980, but Oregon’s new charity law will probably survive such a challenge because it doesn’t actually keep charities from soliciting donations.

Instead, they just can’t claim a state tax deduction, and will lose their local property tax exemptions.

What do you think of Oregon’s charity law? Does it unfairly target charities, or do the “worst of the worst” among these groups need some accountability and reform? Sound off!

[Image via: winnond / Shutterstock]