Friday, July 15, 2011

NJ Considering Mandatory Disclosure Requirement

We just put up a new story on the website that may be of some interest to nonprofits in New Jersey.  Our own Sam Fanburg reports that the New Jersey Division of Consumer Affairs (NJDCA) is accepting public comment on a proposed mandatory donor designation disclosure.  If it were to pass, nonprofits would be required to give donors a way to designate funds for specific programs.  Here are some more details from the story:

According to the "pre-proposal" under N.J.A.C. 13:48-11.2, the NJDCA believes that “if particular programs are the inducement for a donor to make a contribution to the charity, the donor should be advised that he or she has the option to direct the charity to use his or her contribution to fund that program.” Any nonprofit that receives more than $250,000 in its previous fiscal year would have to include a designation allowing donors to choose what specific program their contribution would fund.

In a seven-page letter addressed to the acting director of the NJDCA, Errol Copilevitz, a partner in the Kansas City, Mo., firm of Copilevitz & Canter, LLC, tackled his own misgivings about the proposal finding a misunderstanding of fundraising by the state. “The rule fails to recognize a basic axiom of charitable fundraising, to-wit: it costs money to make money,” he wrote.

The proposed rule makes no allowance for cost and would mislead donors into believing their designation will require “100 percent of their donation to go to program services (when such a request is impossible),” according to Copilevitz. Especially in a nonprofit’s infancy, many times it costs more than a dollar to raise a dollar, but securing that initial relationship with donors allows an organization to cultivate future contributions.

As you can see, there are some concerns being raised about this proposal.  In addition to Copilevitz, the Center for Non-Profits in New Brunswick, NJ also has some issues with it.  Among other things, they believe it could lead to additional administrative costs such as printing, fund allocation and bookkeeping.  If your organization wants to make any comments on the proposal, send it to this address:

Thomas Calcagni, Acting Director
New Jersey Division of Consumer Affairs
P.O. Box 45037
Newark, NJ 07101

And be sure to read the full article on The NonProfit Times website.

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