Oregon bill aimed at punishing ‘bad charities’ is getting mixed reviews

Oregon Attorney General John Kroger has been soliciting support for Senate Bill 40. If passed, this bill will punish charities by stripping them of their tax-deductible status from donations to charities that spend less than 30 percent of their money, averaged over three years, on programs and services.

For example, Kroger wants to target charities operating in Oregon such as Shiloh International Ministries which raises $900,000 a year in donations but spends less than 4 percent on programs and services. The state would use the nonprofit’s form 990 filed to the IRS each year to measure if the charity is spending at least 30% on services. Yet the bill does have exemptions for new charities and for those working on capital campaigns. Other policymakers point out that it would be very difficult to track nonprofits that raise funds in Oregon but are not operating in the state.

The bill received early support from nonprofits and the Nonprofit Association of Oregon, an affiliate of the National Council of Nonprofits. On April 11, 2011, the bill passed the Senate, 28-2. The bill is now being considered by the House, however, it is losing support. Mainly, many are concerned that it casts a bad light for all Oregon nonprofits.

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