N.J. Drops Proposal to Require Charities to Tell Donors They Can Earmark Money

New Jersey regulators have decided not to pursue a proposal to require charities to tell donors they can earmark their contributions for specific programs, an idea that had drawn strong criticism from nonprofit leaders.

Thomas R. Calcagni, director of the state Division of Consumer Affairs, which drew up the proposal, said commenters had pointed out “the cost and difficulty in implementing such a concept.” He said his agency would work with nonprofits to explore alternative ways to educate donors about their right to designate how their money is spent.

The draft plan would have required charities with at least $250,000 in annual contributions to provide forms allowing donors to specify which programs their money should pay for—and to tell them that any undesignated money could go to administrative and fund-raising costs. The proposal would have applied to telephone or written fund-raising appeals that mentioned more than one of a charity’s programs.

The Center for Non-Profit Corporations, an association of New Jersey charities, had criticized the plan, saying it would be an administrative burden and would not allow organizations to decide how best to spend their money. The National Council of Nonprofits, which represents state nonprofit associations, told the agency the rules would force charities to divert administrative money away from accountability and governance issues and impose “excessively burdensome mandates” on nonprofits that raise money nationwide because they would have to create special appeals for New Jersey.

Mr. Calcagni said his agency had floated the idea “to get constructive feedback” about how to deal with “charities who tout a particular program in order to generate donor interest, but then devote little, if any of their donation dollars to that particular program.” He said the agency would “explore ways to further empower consumers without adding to the financial strain of New Jersey’s many reputable charitable organizations.”

Linda M. Czipo, executive director of the Center for Non-Profit Corporations, said her group plans to meet with the consumer-affairs agency in the coming weeks to discuss ways to educate donors about how to make “wise giving decisions” in a way that does not hinder legitimate organizations.

Note: This article was updated with additional information on August 22.