How Oregon’s Law Would Work

Its goal: To disqualify donors from deducting on their state income taxes donations to charities that devote less than 30 percent of their expenses to charitable programs.

Its status: Passed by the Oregon Senate and under consideration in the House.

What would count for program expenses: Average spending on programs on a group’s three most recent annual financial statements.

How potential donors would be informed: If the charities don’t qualify, they would be required to tell potential donors before they contribute. The attorney general would publish the list of “disqualified” nonprofits online.

Groups that would be covered: Many charities with annual revenue of at least $200,000.

Organizations that would not be affected:

• Private foundations, community trusts or foundations, or charitable remainder trusts.

• Organizations that receive less than 50 percent of their total revenue from contributions or grants—for example, groups like hospitals or schools that get most of their money from fees.

• Charities that have operated for four years or less.

• Organizations that do not otherwise qualify to receive tax-deductible gifts or are not required to file annual reports with the attorney general.

Under certain circumstances, groups can get waivers. The attorney general could decide to lift the rules if groups:

• Are accumulating money for a specific purpose, for example a capital campaign.

• Make payments to affiliates that should be considered when calculating program expenses.

• Present other “mitigating circumstances.”

Penalties for violating the law. Charities that violate the law by failing to disclose their tax-exempt status to donors could be fined up to $25,000 per violation under Oregon’s Unlawful Trade Practices Act.

The Bill