Stop New Jersey From Compelling Charities to Offer Donors Restricted Contribution Option

New Jersey is proposing a new rule that would require charities that solicit for more than one named program to inform donors that they can earmark their contributions to fund a specific program. The proposed regulation implies that if a donor chooses to restrict a contribution to support a particular program, then the charity would not be allowed to use any part of the contribution to cover administrative or fundraising costs, including the underlying cost of the mailing or phone solicitation.

This proposed rule raises significant concerns and threatens a charity's ability to effectively raise funds to carry out its mission. Existing laws adequately protect donors by requiring charities to honor any donor restrictions, but this proposal goes too far, effectively enticing donors to restrict their donations. It may, in fact, sway donors to fund a less important but more appealing program while leaving mission-critical programs underfunded. In addition, essential funding needed for operational and fundraising costs could take a significant hit. Moreover, the costs of complying with such a rule should not be underestimated. Charities would be forced to segregate their donor lists for New Jersey residents, create New Jersey-specific solicitations, and separately track those donations.

The New Jersey Division of Consumer Affairs Charitable Registration Unit is seeking comments to the rule proposal until August 5, 2011. If your organization solicits contributions in the State of New Jersey, we strongly recommend that you submit a comment to the proposal. Below is a draft comment which you may use in its entirety or modify at your discretion. It should be directed to Thomas Calcagni, the Division's Acting Director, by mail or e-mail.

Thomas R. Calcagni
New Jersey Division of Consumer Affairs
P.O. Box 45027, Newark, NJ 07101

askconsumeraffairs@lps.state.nj.us

Dear Mr. Calcagni:

The proposed rule requiring charities that solicit for one or more named programs to inform donors that they can earmark their contributions to a designated program will significantly impact our charity's ability to prioritize our program needs and effectively carry out our mission. We always honor donor intent, and laws already exist that require charities to honor any donor restrictions. This regulation, however, goes too far by instigating donors to restrict their donations in ways that could lead to significant underfunding of mission-critical programs and general operational funds. It will also significantly impact our organization's fundraising and administrative costs as we would be forced to separately create and print New Jersey mailings as well as separately track donations from New Jersey residents.

While the proposal may have the well-intended purpose of preventing what is likely a very small number of organizations that may be intentionally misleading donors through their fundraising efforts, New Jersey would better serve the public by targeting its efforts towards those that commit donor fraud rather than by penalizing the entire philanthropic community through this proposed rule.

Very truly yours,