Considering a mandatory donor designation disclosure, the New Jersey Division of Consumer Affairs (NJDCA), is seeking public comment on a “pre-proposal” that would have organizations provide a mechanism for donors to designate funds to specific programs.

According to the proposed rule under N.J.A.C. 13:48-11.2, in the June 6, 2011, New Jersey Register the NJDCA believes that “if particular programs are the inducement for a donor to make a contribution to the charity, the donor should be advised that he or she has the option to direct the charity to use his or her contribution to fund that program.”

Furthering the call for transparency among nonprofit organizations, the proposed amendment stipulates that any nonprofit that receives more than $250,000 in its previous fiscal year, shall include a designation allowing donors to choose where their money is going.

In a seven-page letter addressed to the acting director of the NJDCA, Thomas R. Calcagni, Errol Copilevitz, attorney for the Kansas City, Mo., Copilevitz & Canter, LLC, tackled his own misgivings about the proposal finding a misunderstanding of fundraising by the state.

“The rule fails to recognize a basic axiom of charitable fundraising, to-wit: its costs money to make money,” he wrote.

The proposed rules will mislead donors, wrote Copilevitz, into believing their designation will require “100 percent of their donation to go to program services (when such a request is impossible).

Especially in nonprofits infancy, many times to costs more than $1 to make a $1 but with securing a relationship with donors and a planned giving programs, the tax-exempt can more effectively fundraising once they spent time in the cultivation phase.

In addition, Copilevitz contended that proposed rule would require “a statement to be made that the speaker did not choose. Thus the, the rule mandates a form of ‘compelled speech.’ “

From the precedent of Miami Herald Publishing Company v. Tornillo, 417 U.S. 241 (1979) and Wooly v. Maynard, 430 U.S. 705, 714 (1977), it is been found that compelled speech can only be used to “promote a compelling state interest,” which is not the case in this situation.

Linda Czipo, executive director of the Center for Non-Profits in New Brunswick, N.J., wrote that along with organizations providing with designations already as common practice, the pre-proposal does raise some concerns.

“Although donors always have the option of restricting their gifts,” she wrote, “the regulations would go further by effectively encouraging donors to do so, thereby reducing available funds for general operations, overhead or organizational flexibility to respond to unanticipated community needs.”

Also, the passage would require administrative costs such as printing, fund allocation and bookkeeping, a potential expensive expense for some smaller organizations.

Comments directed at the “pre-proposal” are due by August 5, 2011 and should be sent to:

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