News and analysis
March 21, 2013

Oregon Again Seeks to Crack Down on High Fundraising Costs

The Oregon legislature has resurrected a bill that would deny state tax breaks for gifts to charities with high fundraising and administrative costs.

The House, which let a similar measure die in 2011, adopted it unanimously this month and sent it to the Senate.

The legislation would apply to charities that devote less than 30 percent of their expenses to charitable programs over three years. They would be required to tell potential donors that they could not deduct their gifts on their state income taxes.

The current version would also deny property-tax exemptions to those charities, though that could have limited impact since most of the groups that would be affected by the law are based out of state.

The Nonprofit Association of Oregon, a coalition of the state’s charities, testified on behalf of the bill.

James White, the executive director, said the 30-percent threshold would “easily identify those underperforming charities that year after year devote only a fraction of donated funds to their program mission” and drain away donations from “effective charities.”

Controversial Effort

However, efforts to regulate nonprofits according to how much they spend on overhead are always controversial.

The Direct Marketing Association’s Nonprofit Federation opposed the Oregon legislation when it was debated in 2011, saying in a letter to the state Senate that “spending benchmarks” alone don’t tell donors much.

“Each nonprofit must be assessed in its totality with reference to each donor’s specific value and goals.”

Robert Tigner, the group’s regulatory counsel, said he was unaware that the bill had been reintroduced so was not sure whether the group would intervene again.

Dig deeper: See The Chronicle’s coverage of the 2011 bill and description of how it would work.

Send an e-mail to Suzanne Perry.