Policy Update

States Propose New Charity Regulations

5/23/2005

Wash., DC (May 23, 2005) – Fifteen states introduced 24 bills this year that would increase regulations on charities, according to a new study by the National Council of Nonprofit Associations (NCNA).

These bills were introduced in the context of continuing pressure on state budgets, high-profile scandals captured by media across the country, federal attention on nonprofit regulation influenced by the passage of Sarbanes-Oxley in 2002, and the process of devolution, which has gradually increased the power of state legislatures.

NCNA recently released a comprehensive list of charity oversight bills at the state level, and plans to update the list as legislatures move forward. The list is available online at www.ncna.org/statepolicy. The data compiled by NCNA reflects charity oversight legislation for 2004 and 2005 to date.

"So much attention has been placed on initiatives to regulate the nonprofit sector at the federal level that this state activity is going largely unnoticed, even though it has far more serious consequences for the day-to-day operations of charities across the country," stated Audrey Alvarado, executive director of NCNA. "When combined with uncoordinated efforts at the federal level, small and mid-sized charities, in particular, may be so over-regulated that their only option is to close."

Topics and severity of proposed bills vary widely from state-to-state. Some states are using legislation to capture new revenue from nonprofits. Popular tactics include curbing property tax exemptions and imposing taxes on unrelated business income from "social enterprise" ventures, as is the case in Massachusetts.

Another popular issue concerns financial disclosure requirements. Legislators in Connecticut, Kansas, Minnesota, and Texas have proposed requirements that would force nonprofits to file an audited financial statement, in addition to a financial report already required by law.

The National Council of Nonprofit Associations represents a network of 37 established and 15 emerging state and regional associations of nonprofits serving over 22,000 member nonprofits nationally.  With its state network and national partners, NCNA helps nonprofits mobilize on public policy matters; manage and lead more effectively; collaborate and exchange solutions; save money through group buying programs; and achieve their missions in community.

###

CONTACT INFORMATION:
Adam Hoffman
Public Policy Analyst
National Council of Nonprofit Associations (NCNA)
1030 15th Street, NW, Suite 870
Washington, DC  20005
(202) 962-0322
ahoffman@ncna.org
www.ncna.org