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House of Representatives
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted:	January 25, 2019 10:34 AM
From:	Representative Anthony M. DeLuca
To:	All House members
Subject:	Requiring Charities to Spend Sixty Percent on Actual Program Services

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 accountability standards should be set for charitable organizations. Unfortunately, I have seen instances where charities have spent less than five percent of their income on program services. In instances like these, the lion’s share of what is collected goes to salaries and to expensive fundraising personnel. Most people would be shocked to realize that what they gave out of the goodness of their heart is going to one of the employee’s yachts. While this is not always the case, it occurs more often than most would think. Moreover, these institutions enjoy tax exemptions. The Commonwealth loses roughly $275 million annually by granting this Sales and Use Tax exemption across the board. To avert this I intend to amend Act 55 (Institutions of Purely Public Charities Act) to require charities seeking a Sales and Use Tax exemption to expend at least 60 percent of their functional expenses on the charity’s program services. 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. Last session this was HB 462. Please join me in supporting this legislation.

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