California Quarantine

The call to the explorer and thrill-seeker “Go west, young man” has long been attributed to Horace Greeley, the founder and editor of the New-York Tribune. Here’s another phrase: “There’s gold in them thar hills.” That exclamation was in Mark Twain’s book The American Claimant, but corrupted from a Georgia assayer who is alleged to have said “there’s millions in it,” when urging people to head to California.

Right now the only people making money in California are lawyers and lobbyists, as the state has become a flashpoint for attacks on the digital viability of the nonprofit sector. It’s draining the pockets of nonprofits nationwide. Whether it is databases or the Internet, charities and their for-profit partners are under siege.

The most expensive defenses are to beat the California Consumer Privacy Act (CCPA) and the sale of the Public Interest Registry (PIR), which controls the .org domains, to a venture capital firm and the push on donor-advised funds (DAF). These are all issues that should get the attention of nonprofit leaders across the nation. These are not just the problem of regulators and investors in California – bless their hearts.

When it comes to the CCPA, the bottom line is that if you live in California, you can ask firms soliciting where the prospect name was obtained and to delete or tell firms to not sell or rent the name and data. Good luck with that when it comes to the chain of custody to fundraising lists that have been swapped so often that the gene pool resembles a scene from “Deliverance.”

Next in line is the California Assembly bill, which is expected out of committee by May 15, to regulate donor-advised funds. The hands of fundraisers are already restrained thanks to the CCPA and now sponsors of DAFs would have to “disclose information about individual funds or accounts” on top of the existing Form 990 requirement of reporting on grants of $5,000 and more. California is the first state to introduce legislation that attempts to regulate DAFs.

The proposed sale of PIR is now being examined by the attorney general in California. It’s a little convoluted, but, the distilled situation is that the California Attorney General’s Office has jumped into the proposed sale of PIR and the .ORG domain to a venture capital firm, Ethos Capital, for $1.13 billion. It involves the Internet Corporation for Assigned Names and Numbers (ICANN) which can block the sale. The National Association of State Charity Officials (NASCO) and six members of Congress have ratcheted up the pressure on ICANN to stall the sale.

NASCO highlighted concerns regarding the conversion of charitable assets to a for-profit entity with undisclosed minority investors. NASCO also cited the potential removal of federal and state oversight of charitable assets, governance, and tax-exempt status, loss of the mission of serving the public interest online, the likelihood that a for-profit owner would maximize its profits at the expense of nonprofits, and, the adverse impact on the credibility of the .org domain as an indication that content on websites is published “for reasons other than profit.” There will be decisions made on this by April 20.

If you are a nonprofit manager you should not only be reading about these issues (yes, on the website of The NonProfit Times) but also quizzing your state association leaders about all of these changes. The National Council of Nonprofits, The Nonprofit Alliance, the ANA Nonprofit Federation, NTEN and the Electronic Frontier Foundation all have information on their websites. You can start there.

Other state legislators are watching what is happening in California. The nonprofit sector cannot let them think this can be spread. This needs to be stopped at the border, contained and eradicated.