April 24, 2008

Debate Begins Over Proposal to Overhaul Fund-Raising Disclosure Rules

Mark Fitzgibbons, an executive at American Target Advertising, a prominent direct-mail company, has drafted a legislative proposal to overhaul the way nonprofit groups disclose information about their fund-raising activities. And he is eager to get the nonprofit world talking about it.

The proposed legislation, which he has submitted to several members of the House Oversight and Government Reform Committee, would allow organizations that raise money in multiple states to bypass the current state-registration system and file a standardized online form giving details on issues such as whether they hire outside fund raisers and how they compensate them.

The form would also provide other information that is typically demanded by state regulators — such as assets, executive compensation, expenses, and revenues.

Mr. Fitzgibbons, president of corporate and legal affairs for American Target Advertising, in Manassas, Va., has been fine-tuning his proposal since Congress held hearings last winter into the high fund-raising costs of some veterans charities.

Some lawmakers then suggested that federal action might be needed to get charities to tell donors what percentage of their contributions is spent on programs that directly help people.

Mr. Fitzgibbons says his “direct-to-donor” system would be less cumbersome and costly for charities than registering in multiple states — and make it easier for donors and regulators to find information because it would be posted online. Organizations that did not “opt in” to the new system would be subject to traditional state-registration laws.

The proposal would also force members of Congress to shine a light on their own fund-raising activities. Committees that raise money for federal political candidates, for example, would be required to indicate on the disclosure form whether they have transferred money to other candidates or committees — a practice Mr. Fitzgibbons says is not always disclosed in fund-raising solicitations.

Take a look at Mr. Fitzgibbons’s proposed legislation and disclosure form. Do you think his method would be better than the current state-registration system? Would it help expose charities with questionable fund-raising practices? Can you suggest ways to improve the proposal? Click on the Comment link below to share your thoughts.