State Charity Regulation Proposals Listed

The National Council of Nonprofit Associations (NCNA) has published a list of 24 legislative proposals to regulate charities that are pending in 15 states. A list summarizing 2004 results in 19 states was also published. Both are available on the NCNA website. The topics covered in the bills primarily include financial accountability, increased reporting and fundraising. Some states are responding to financial pressures caused by cutbacks in federal funds by putting limits on property tax exemptions for nonprofits. This is a double-whammy for nonprofits since they, too, face cutbacks in federal funds. It is surprising that states would try to reap money from nonprofits. States continue to face long-term financial pressure from the soaring cost of Medicaid, with costs rising 8.1 percent to $119 billion in 2004, according to the Centers for Medicare and Medicaid Services. But according to a USA Today survey, seven of 15 states surveyed (accounting for 46 percent of the U.S. population) reported their tax collections have grown more than 10 percent so far in this budget year. The same states had reported 2004 tax collections 7.2 percent greater than in 2003, for a record combined total of $600 billion, the biggest increase since 2000. Revenue in 2005 appears to be even better based on early reports with many states reporting double-digit increases through April. Analysts at the National Conference of State Legislatures report state revenues are at or above what they expected this year. NCNA released a statement May 23 that reported increased interest in regulation of charities by state governments "in the context of continuing pressure on state budgets, high-profile scandals captured by media across the country, federal attention to nonprofit regulation" and other factors. The lack of coordination between state and federal efforts raises the possibility of duplicative but inconsistent reporting requirements and governance standards. NCNA Executive Director Audrey Alvarado said, "this state activity is going largely unnoticed, even though it has far more serious consequences for the day-to-day operations of charities across the country." The list for 2005 includes each state's bill provisions, status and last day of its legislative session. NCNA plans to update the 2005 list with bills passed or defeated. The 2004 list summarizes the provisions and notes whether the bill passed. In 2004, six bills primarily addressing financial reporting were signed by the governors of California, Hawaii, Iowa, Massachusetts, Maine and New Hampshire. While several bills have been approved by legislatures so far this year, none has yet been signed by the state's governor.
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