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House of Representatives
Session of 2015 - 2016 Regular Session


Posted: April 24, 2015 09:53 AM
From: Representative Marguerite Quinn
To: All House members
Subject: Charitable Organization Regulation
Donating to a charity is protected by our first amendment rights, as an expression of our freedom of speech. When our constituents donate their hard earned dollars to charity, they do so believing that the money will support the named cause. I believe that most of our constituents are not aware that in many cases, their donation is being solicited and processed by a third party professional fundraising counsel or professional solicitor.

The Department of State (DOS) is statutorily required to publish the Pennsylvania Annual Charities Report annually, which is available on their website. Unfortunately, after studying this report for the last 2 completed fiscal years, I found in too many examples, that the average amount of money that actually goes to the charity is remarkably low. In both FY 2012-13 and FY 2013-14 the net amount of donations returned on average to the charity was just 36.7%. The third party professional fundraiser on average kept a whopping 63.3% of the contributions for their expenses ($1.52 billion of the $2.41 billion raised over the 2 fiscal years). In many cases, the percentage going to charities is in single digits numbers or even a negative amount!

A 2014 report published by the Tampa Bay Times and The Center for Investigative Reporting used federal tax filings from the latest 10 years to see how much cash charities spend to raise money and how much was spent on the people they're supposed to be helping. Of the 48 charities listed in the report as the worst charities in the nation, three are listed as being based in Pennsylvania. The fact that the other charities are not based in PA does not mean that they do not systematically solicit funds from our constituents.

In the near future, I will be introducing legislation that would amend the “Solicitation of Funds for Charitable Purposes Act”, Act 202 of 1990. My goal with this legislation is to ensure that those soliciting funds on behalf of a charitable cause are doing so in the best interests of Pennsylvanians. I intend to enhance the requirements for third party solicitors by including a licensure requirement, adding new disclosure methods, background disclosures, and prohibiting them from soliciting funds if having been convicted of certain crimes.

The DOS, through its Bureau of Corporations and Charitable Organizations, currently requires fundraising counsels and charity solicitors to register annually. My proposal would add the necessary qualifying requirements, penalties and increase the fees.

The legislation will also modernize registration fees and fines and establish a dedicated funding stream for the Department’s enforcement agency to assist with added enforcement and transparency measures required under the legislation. Finally, the legislation would place certain disclosure requirements for any solicitation related to a specific disaster or crisis with at least $50,000 in contributions.

It is imperative that we take measures that protect and educate our generous constituents so that the money they donate is handled appropriately.

Introduced as HB1240