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Pennsylvania House of Representatives
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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 17, 2017 01:35 PM
From: Representative Anthony M. DeLuca
To: All House members
Subject: Legislation Requiring Purely Public Charities to Spend Certain Percentages of Their Expenses on Their Program Services
In the near future, I intend to re-introduce legislation (HB 2409 of 2016) amending Act 55 (The Institutions of Purely Public Charities Act) to require charities seeking to enjoy the Sales and Use Tax exemption provided to charities in this commonwealth to expend at least 60 percent of their functional expenses on the charity’s program expenses.

We have all seen the stories of bad charities that have fleeced their donors and the public. Too many of these charities were created with the sole purpose of enriching their founders and CEO’s. Just as tax dollars need to be spent wisely and ethically, charitable dollars need to be spent in the same fashion. Pennsylvania would not be the first state to implement a threshold for charitable expenses. Oregon passed similar legislation only a few years ago.

The Commonwealth loses roughly $275 million annually by granting this Sales and Use Tax exemption across the board. While I do expect that a majority of the charities will be able to meet the 60 percent threshold, any revenue the Commonwealth could save by requiring poorly run charities to pay the Sales and Use Tax would be greatly beneficial to the taxpayers.

Charities and governmental organizations have worked hand-in-hand since the founding of our nation. When government is found to be wasting public dollars, we take action. The same standard should be set for charitable organizations. Please join me in supporting this legislation.

Introduced as HB462