States picking up regulatory pace.As nonprofits face the possibility of congressionally-imposed regulations, increasingly states are looking to establish their own rules on how charities operate.
"It's a mixed bag of legislation," Adam Hoffman, a public policy analyst with the National Council of Nonprofit A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive.
Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. Associations (NCNA NCNA National Council of Nonprofit Associations
NCNA New China News Agency
NCNA North Carolina Nurses Association
NCNA North Carolina Numismatic Association
NCNA National Career Networking Association
NCNA National Council on Noise Abatement ) said of the 24 bills, which deal with the nonprofit sector that state legislators have either introduced or adopted this year.
So far in 2005, 15 state legislatures A state legislature may refer to a legislative branch or body of a political subdivision in a federal system.
The following legislatures exist in the following political subdivisions:
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
"The only theme in the various legislation," Hoffman said, "is that there is a lot of action out there."
The NCNA has been looking at states and the laws they introduce concerning nonprofits because many nonprofits, especially the smaller ones, don't have the staff to monitor the laws that are being introduced and adopted. And, most of them don't have teams of lawyers to advise them how the laws will affect them, "so we work to be that source, Hoffman explained.
Some of the legislation is aimed at getting more revenue from the nonprofits, while other laws propose easing reporting restrictions and still other laws look to hold nonprofits more accountable and seek to make them more transparent.
Hoffman said as more states see revenue shortfalls from their more traditional funding sources--state income taxes, property taxes and sales taxes--they are seeking alternate sources, such as on the backs of nonprofits.
"And, it could get worsen' said Gary Bass Gary D. Bass is the founder and Executive Director of OMB Watch.
Dr. Bass received a combined doctorate in psychology and education from The University of Michigan. He was President of the Human Services Information Center before founding OMB Watch in 1983. , executive director of the Washington, D.C.-based public policy research group OMB Watch OMB Watch is a 501(c)(3) nonprofit organization based in Washington, DC. OMB Watch was formed by Gary Bass in 1983 to lift the veil of secrecy shrouding the White House Office of Management and Budget (OMB). . Many of the states' proposals that try to raise revenue via additional fees for nonprofits are missing the point, Bass said. "It's the wrong solution to the problem. The shortfall in revenue that states are suffering is structural." Much of the shortfall comes from federal tax cuts and changes in federal grants to nonprofits. Because nonprofits are seeing less money from the federal government, states have to increase their allocations to local social service nonprofits, which leaves a revenue shortfall, Bass said.
By way of an explanation of all the proposed legislation, Hoffman said he believes that it's because of the federal Senate Finance Committee's hearings on the nonprofit sector. He said state policy makers are watching what's going on What's Going On is a record by American soul singer Marvin Gaye. Released on May 21, 1971 (see 1971 in music), What's Going On reflected the beginning of a new trend in soul music. and want to do something in their states. "There is little if any cooperation between the federal government and the states when it comes to nonprofit regulation," Hoffman added.
Some of the proposed legislation, "is a governance problem," said Kay Guinane, counsel for OMB OMB
Office of Management and Budget
Noun 1. OMB - the executive agency that advises the President on the federal budget
Office of Management and Budget Watch's Nonprofit Advocacy Project. "We need to look at both the states and the Senate Finance Committee for more consistency. Both are squeezing nonprofits. It's a confluence confluence /con·flu·ence/ (kon´floo-ins)
1. a running together; a meeting of streams.con´fluent
2. in embryology, the flowing of cells, a component process of gastrulation. of a federal wave and then a state wave."
"The federal government needs to cough up more money for the nonprofits," Bass said, so that states do not have to make up the difference.
"There needs to be more of a dialog between the federal government and state governments," Guinane said. Groups such as the Urban Institute and the National Association of State Charity Officials try to work together with the federal government but there needs to be more work done, she added.
Bass asked rhetorically rhe·tor·i·cal
1. Of or relating to rhetoric.
2. Characterized by overelaborate or bombastic rhetoric.
3. Used for persuasive effect: a speech punctuated by rhetorical pauses. , "bow can things be coordinated when we don't know Don't know (DK, DKed)
"Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. what the nature of the problem is?"
The Senate Finance Committee has been holding hearings to see what controls--if any--need to be placed on nonprofits, while legislators from Maine to California seek to adopt legislation that solves problems, which Bass said no one is sure if they even exist, in their states.
"My solution is to understand the problem," Bass explained. "Is it a systemic systemic /sys·tem·ic/ (sis-tem´ik) pertaining to or affecting the body as a whole.
1. Of or relating to a system.
2. problem that the public does not have enough information, or is it something more than that?"
A problem that both Bass and Guinane see with many state laws is that they are often one-size-fits-all propositions.
"One size doesn't fit all," Guinane said. A state can set threshold limits to target only larger charities, base it on the size of the organization's budget or the type of charity.
For instance, in Kansas, the governor signed legislation in April that reduces some costs for smaller nonprofits, said Jesse Borjon, a spokesman for the Secretary of State's office. The state requires that all nonprofits operating in Kansas file a financial statement. It also requires charities that raise more than $500,000 to file an audited financial statement. Prior to the passage of the new law any charity that raised more than $100,000 had to submit an audited financial statement, Borjon said. "We wanted to ease the financial burden so they would not have to go to the expense of getting an audited report," Borjon explained.
Bass suggested, as have many others in the last few years, that rather than both Congress and states' legislators passing laws that add to the number of hoops nonprofits must jump through to operate, they should "enforce existing laws." In many cases, states should be the ones to hold nonprofits' collective feet to the fire to force them to be accountable to their donors. The majority of the charities operating in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. are local in nature, so, according to Bass, who better to monitor them? Hoffman said that 72 percent of charities have assets of less than $500,000 so any additional regulations end up increasing the operating costs operating costs npl → gastos mpl operacionales for these small charities.
In addition to having states enforce existing laws holding nonprofits accountable, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. should also better enforce existing federal laws, Bass said.
Enforcement costs money, but Bass and a number of other nonprofit pundits believe the answer lies in the federal tax on foundations. The tax runs between 1 and 2 percent each year and Bass suggests flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. it to 1 percent and giving some to the IRS so that it can step up its enforcement operations and give the rest to the states to use for their enforcement efforts.
"However, there does not seem to be the political will in Washington to do it," Bass explained.