Regulators Seek Universal Registration, Filing Methods

October 2, 2012       Mark Hrywna      

State regulators are aiming to streamline the oft-criticized charity registration process by creating a single website where charity registration can be done and disseminated to appropriate states. And, a watchdog group is changing the way it looks at standards for for-profit fundraisers.

The National Association of State Charity Officials (NASCO) unveiled the proposal for a Singlepoint Website during its annual conference this week in Silver Spring, Md. NASCO has partnered on the project with the Urban Institute and the Charities Regulation and Oversight Project of the National State Attorneys General Program at Columbia Law Schools.

The Singlepoint Website would allow a charity or fundraising to complete the necessary registration requirements and select each of the states for which they need to register without duplication.

The three-year pilot project would begin with eight of the 40 states that require charities to register: Alaska, Colorado, Connecticut, Hawaii, Massachusetts, Mississippi, Missouri and New Hampshire. The website would be launched during the first year with charities registration and renewals enabled for five of the eight pilot states, according to the proposal, while registration for the other three pilot states would be launched in the second year. Fundraising professional registration capability would be slated in the second year and phased in for the pilot states in the second and third years.

Public access search features would be completed and launched in the second year, and the regulators-only charity analysis stools completed and implemented in the final year.

Information sought by secretaries of state and state attorneys general is similar yet requirements are not identical from state to state. Most accept the Uniform Registration Statement (URS) but there is no uniform renewal form and the paper statement is not accepted by electronic filing states. Officials are aiming for the website to alleviate burdens of data duplication and inefficiencies. “We think you the sector will help drive standardization,” said Karen Gano of the Connecticut Attorney General’s Office, pointing to a timeline of getting the first five states online by 2014, assuming funding can be found next year.

The goal would be to eventually have something akin to TurboTax for charity registration, so some recurring information wouldn’t have to be input each year, said Bob Carlson, past president of NASCO, who heads the charities bureau of the Missouri Attorney General’s Office.

The cost of the pilot project to build and launch the Singlepoint Website is estimated at $3 million. Where that funding will come from remains to be seen. The proposal’s authors concede that dollars will be hard to come by: “…state governments do not have sufficient resources to undertake the upgrades and new systems necessary to implement electronic registration, and no resources to coordinate with other states to implement the far more practical unified electronic registration system.” Still, NASCO and its partners will reach out to the nonprofit sector and foundations for help and Carlson, a past NASCO president, said that’s among parts of the plan that’s still a work in progress.

Mark Greider of Strictly Software said the benefits for nonprofits are obvious, with less data entry, saving time by entering information once that is then sent to multiple participating states. Filling out a Form 990 first, the pertinent information from that form would be populated on the necessary state forms, he said. The charity office benefits by having the complete data and access to multiple states’ data for analysis, and there would less software development required due to the use of existing systems. Eventually, the public also would have access to the nonprofit data. The plan also is to get a common payment system designed.

In theory, the proposal sounded good to attorneys who handle charitable registration but many were unconvinced about its implementation, particularly the suggested timeline. Some worried that the IT infrastructure among charities bureaus is either too far behind or just too incompatible among states. Others questioned whether filing fees that fund enforcement would be eliminated or reduced should efficiencies be realized.

Filing fees are set by individual state legislatures and that will take time, said Carlson, a past president of NASCO. He suggested it would be easier to go to legislatures to reduce fees once the proposal is implemented.

Tim Delaney, president and CEO of the National Council of Nonprofits (NCN), suggested that the effort seems to be more about streamlining the effort to gather data rather than determine what data needs to be gathered in the first place. He questioned whether states will follow the lead of Colorado, which reduced nonprofit fees to $1, effective Oct. 1. "The charitable solicitations law is broken today and nonprofits can’t wait another three or four years for clarity on the laws, Delaney said, noting a lack of consistent interpretations of "The Charleston Principles."

Meanwhile, the BBB Wise Giving Alliance is planning to apply the same standards it sets for nonprofits fundraisers to for-profits.

H. Art Taylor, president & CEO of the BBB Wise Giving Alliance, announced a new initiative to verify the truthfulness of charitable appeals during his keynote speech at NASCO. “We are concerned about the extent to which charities are not providing sufficient oversight over paid fundraising firms,” said Taylor. “These firms sometimes employ more aggressive and potentially misleading tactics to increase donor response.”

The BBB Wise Giving Alliance, along with about 55 local Better Business Bureaus, cumulatively produce more than 11,000 reports on national and local charities using the 20 BBB Standards for Charity Accountability.

“BBB was founded on the principals of truth in advertising,” explained Taylor, “BBB Wise Giving Alliance will launch an expanded review of national charity appeals. We will not only request samples but will select charities that have been the subject of significant inquiry and complaint and will request and review every single direct mail and telemarketing script used in the past year to verify the accuracy of appeal content. This is especially important since the Alliance is the only major national charity monitor that includes truthful solicitation as part of its charity accountability standards.”

Taylor cited the following examples of problem appeals: Exaggerating financial need; sending appeals that look like invoices; omissions of material facts about the charity’s major programs; and, inaccurate financial ratio references.

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