Principles Aimed at Guiding States

LETTERS TO THE EDITOR

To the Editor:

The opinion piece by Henry Goldstein, “Charity Regulation Should Focus on Scam Artists” (October 5), requires a response to help set the record straight.

The board of directors of the National Association of State Charity Officials released a draft of the “Charleston Principles: On Charitable Solicitations Using the Internet” for public comment in September.

The National Association of State Charity Officials is developing the Charleston Principles because state charitable-solicitation laws appear to require a charity to register in every state if the charity’s Web site contains a charitable-solicitation appeal.

Our preliminary analysis, contrary to Mr. Goldstein’s conclusion, is that state charitable-solicitation laws, and therefore the registration and annual reporting requirements, are triggered when the charitable solicitation on the Internet specifically targets residents of that state or if the charity receives contributions on a repeated, ongoing, or substantial basis from residents of that state. State authority to fight fraud is unchanged whether a charity scam solicits contributions through the Internet or through any other medium.

While Mr. Goldstein is not sanguine about the viability of e-philanthropy, many others do not share his pessimistic views. Because of the questions about how current laws apply to this new medium, the National Association of State Charity Officials has engaged a process to try to answer these important questions.

The association’s goal is that, after considering public comment, the Charleston Principles will become advice from the the association’s board of directors to state charity offices around the country as these offices establish their own policy on Internet fund raising consistent with their state laws. But let’s be clear that the individual states are the decision makers. The association’s Charleston Principles are intended only to serve as a resource to assist or guide these decisions.

Why are we doing this? Simply put, state charity officials are charged with a legal duty to enforce state laws. These laws require state charity officials to focus on charitable solicitations. By law, state charity officials have the responsibility to ensure that promises made to donors are promises kept with the charitable beneficiaries. Our protective role requires a good charity to fulfill its promises to its donors and to its beneficiaries, too. In uncovering a charity scam, the devil is in the details.

Registration requirements may not, in and of themselves, deter charity scams. It is undeniable, however, that the registration process provides state charity officials with the necessary information to combat and punish those who deceive donors or otherwise breach their duty to the charitable beneficiaries. State charity officials can and must do a better job.

Forging effective partnerships between federal and state authorities is key to more effective oversight of the charitable sector. To this end, the National Association of State Charity Officials works as closely as possible with the Federal Trade Commission, the U.S. Postal Service, and the Internal Revenue Service.

Many state charity officials are frustrated with the current paper-based registration and reporting system. Creating a more efficient registration system is a priority of the National Association of State Charity Officials. During the 1990s, the association, in collaboration with the Multistate Filer Project, built a consensus among state charity officials for uniform registration and uniform reporting practices. Today, almost every state that registers charitable organizations accepts the uniform form.

This year nine states are embarking on a pilot project with the National Center for Charitable Statistics and Philanthropic Research Incorporated (the operators of the Guidestar Web site) to make electronic filing of the Form 990 a reality. Ultimately, an electronic filing system that uses uniform reporting practices could create a one-stop Web site for multistate registration and reporting.

When we finally harness the power of currently available information technology, we will create a more efficient regulatory system. With a few minor but important changes in federal law, we will create a more effective partnership between federal and state governments. Donors and charitable beneficiaries will be better served when we achieve these important goals.

Daniel Moore
President
National Association of State Charity Officials
and Registrar of Charitable Organizations
New Mexico Attorney General’s Office
Santa Fe