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NJ Backs Down On Giving Regs

By Mark Hrywna - August 19, 2011

New Jersey has shot down a trial balloon that would make it mandatory for nonprofits to provide donors an opportunity to designate a specific program when they make their gifts.

Organizations that raise $250,000 or more annually would have been required to provide a way for donors to designate the programs to which they wish to direct gifts at the time of donation.

Linda Czipo, executive director of the New Brunswick, N.J.-based Center for Nonprofits, said she received a phone call yesterday (Aug. 18) from the state’s Division of Consumer Affairs (DCA), indicating that the regulation would not be pursued.

The pre-proposal process is designed to “take the temperature of a community, and that’s what happened here,” Czipo said, adding that the state might issue a formal notification in the New Jersey Register. “Comments sent to us had a high degree of concern about this,” she said.

The DCA introduced the pre-proposal in the June 6 New Jersey Register and had accepted public comments about the pre-proposal until Aug. 5. In a statement released today (Aug. 19), DCA Director Thomas Calcagni said the pre-proposal was floated to get constructive feedback about informing donors of their right to direct gifts to specific programs highlighted in a charity’s solicitation.

“Our concern is with those charities who tout a particular program to generate donor interest, but then devote little, if any, of their donation dollars to that particular program,” he said.

“Many of the responses were helpful in explaining the cost and difficulty in implementing such a concept, and some nonprofits provided useful insight on alternative ways to generate donor awareness about the right to designate,” Calcagni said.

DCA did not have details immediately available about how many comments were received about the pre-proposal.

The pre-proposal would “not only fail to achieve the goals that it seeks to advance, but would also prove significantly damaging to charities in the process,” Czipo wrote in a July 25 letter to Calcagni. She cited several primary concerns in her 2½-page missive:

* Encouraging donors to restrict their donations would undermine the effectiveness of charities and hamper their ability to respond to community needs.

* The proposal fails to recognized administrative, fundraising and overhead as integral to an organization’s overall health, and implies that administrative and fundraising costs are “inherently bad,” rather than a necessary part of running an organization.

* The proposal would actually increase administrative and fundraising expenses for many charities because compliance would be “extremely onerous undertaking for most organizations.”

* Although some charities provide donor designation options voluntarily, establishing a regulation to require it is a “needlessly intrusive, unfunded mandate.”

Czipo concluded that the DCA already has “a wide array of enforcement and education tools at its disposal” that are far better alternatives to the pre-proposal.

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