To Enhance Oversight of Charities, Let’s Build on the Good Work Already Being Done

In an op-ed he wrote last week for The New York Times (Who Will Watch the Charities?), David Callahan claimed that the charitable sector is like the “Wild West” when it comes to oversight. After reading Callahan’s piece, you could not be faulted for walking away thinking that little is being done to regulate the sector and punish wrongdoing. The reality, however, is something quite different.

Here in Florida, our state’s charity regulators have been taking serious action to crack down on fraud and other misdeeds in the charitable sector, working in partnership with philanthropic and nonprofit leaders.  

In 2013, for example, the Tampa Bay Times’ “America’s Worst Charities” investigative report highlighted the unscrupulous practices of for-profit telemarketers used by some charities to solicit donations. Eleven of the charities on the Times’ list of the country’s 50 Worst Charities were in Florida, more than any other state.

Although the vast majority of charities in Florida operate in a proper and responsible manner when seeking contributions, the Times report revealed a handful of organizations that preyed on vulnerable citizens with deceptive and fraudulent practices; spent as much as 90 cents of every dollar raised to generate more donations; and claimed to raise money for worthy causes but actually funneled most of the funds to charity founders themselves and the for-profit telemarketing companies they hired—sometimes with family ties between the two groups.

In response, the Florida Department of Agriculture and Consumer Services, which regulates charitable solicitations in our state, took action last year to propose new regulations to prevent and punish such fraudulent and deceptive solicitation practices. The bill was passed overwhelmingly by the Florida Legislature and signed into law by Governor Rick Scott.

The Commissioner of Agriculture worked closely with the Florida Philanthropic Network and the Florida Nonprofit Alliance throughout the bill drafting and legislative review process. You see, the philanthropic and nonprofit sector has just as much interest in strong oversight of our sector as the regulators do. We want to weed out the few “bad actors” so that the rest of the nonprofits can avoid guilt by association. We want to ensure that donors can remain confident that their charitable contributions are being used as promised to support the causes and organizations they care about.

The heart of the bill imposes tough new regulations on the professional solicitors whose horrific practices were revealed in the “America’s Worst Charities” report. Among other things, professional solicitors are now required to submit to the state any sales information, scripts, outlines or presentations used to conduct solicitations; all locations and phone numbers used to conduct solicitations; and detailed information about all people involved in solicitations. The new regulations ban solicitors who have certain criminal histories in any state, gives Florida the power to revoke the registration of any solicitor who had been ordered to cease operations in another state, and requires solicitors with access to donor information to submit fingerprints and undergo a background check.

This doesn’t sound like the “Wild West” to me, and these new regulations were enacted the right way. A problem was identified in the charitable sector, and regulators developed new rules to address that problem, in partnership with leaders of the sector. What the regulators did not do was use the actions of a few bad actors to make sweeping generalizations about the entire charitable sector, as Mr. Callahan has done, or offer proposals that would punish the vast majority of charities that are doing the right thing and working hard every day to tackle critical needs in our communities.

Mr. Callahan’s solution for improving oversight of the charitable sector is to create a new federal bureau. We do not need more federal bureaucracy. Instead, I agree with Tim Delaney at the National Council of Nonprofits: what we need is to provide more resources to the entities that already exist to oversee the sector, most notably the IRS and state charity officials. (In fact, the new Florida law provided a modest increase in resources for our state’s charity regulator.)

Florida Philanthropic Network’s colleagues in other parts of the country are also working to ensure adequate and proper state oversight of our sector. FPN is part of a national network of regional philanthropic associations, the Forum of Regional Associations of Grantmakers. Representing 5,500 organizations nationwide, Forum members are working with state charity officials and state nonprofit associations all the time, all across the country, to ensure that charity rules and regulations are followed and wrongdoers are punished.

Of course the charitable sector is not perfect and there’s always room for improvement in exposing fraud and enforcing laws, but Callahan’s over-statement of the problem and confused recommendations are not helpful. Instead, we should build on the vast amount of work already being done to oversee the sector. A good start would be to provide adequate funding for the regulatory system that’s in place and to ensure any reforms target the small number of scammers out there, while avoiding the pitfall of generalizations and punishment of the entire foundation and nonprofit sector that works tirelessly and ethically to make our communities and neighborhoods stronger.

–  David Biemesderfer, President & CEO, Florida Philanthropic Network and Chair, Forum of Regional Associations of Grantmakers

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