Print This Post Print This Post

An example of how states eschew the law and common sense

June 30 is the deadline to file fundraising counsel renewals in Rhode Island.  RI added a curious if not unlawful filing requirement about two years back.  Registrants must file documents on CD-Rom.  Paper filings are rejected.

The RI Department of Business Regulation handles charitable solicitation licenses.  It also regulates and issues liquor licenses (anyone understanding the connection between liquor licenses and charities, please explain it to me).

The registration statute gives the Department of Business Regulation absolute discretion about what must be filed, which is unconstitutional on its face.  The statute uses the term “in the form prescribed by the director” (along with a $240 fee).  That’s unconstitutional under a long line of licensing cases, including American Target Advertising, Inc. v. Giani out of the Tenth Circuit.

The CD-Rom process is a minor inconvenience compared to the larger issue, which is that state charity regulation offices violate all sorts of laws, small and large, all the time.  So-called “consumer protection” is usually code for trampling on rights.

When First Amendment rights are in play, government officials may not be given discretion to set the conditions, and then deny licenses when registrants don’t meet them.  Lots of civil rights marches were prevented through such licensing discretion.

I deal with Alicia Mildner in the RI office, and she’s an absolutely delightful person.  My online registration disclosure proposal would save her a lot of work.

Before explaining the online disclosure system, let me first say that charitable solicitation laws are prior restraints on what the Supreme Court has acknowledged to be protected by the First Amendment.  If newspapers, books and movies (where consumer payments may be required) may not be subjected to prior restraints based on speech and publication rights, neither should nonprofit communications that ask for contributions.  That being said, the current system of prior restraints on charitable solicitation remains in place.

The online disclosure system I proposed back in 2008, which the National Association of State Charity Officials (NASCO) bad-mouthed, would give registrants the option to register in the state in which they are located, and then post their registration materials online instead of filing separately in the many other states with prior restraints, er, registration laws.  Nonprofit written communications with requests for contributions would provide a URL where donors and state officials across the country could check the same information that currently goes into bureaucratic black holes.

All the existing penalties on lawbreakers would apply.

My proposal would allow nonprofits to choose from one of two options.  Those that don’t opt in to the online disclosure system would need to continue to register in 42 states where their registration materials are never seen by donors.

The online disclosure proposal would save registrants time and money, and would provide state officials with just as much information as they now require, even more in some states.

Years ago, charity regulators were defeated in court trying to force charities and fundraisers to make certain disclosures to donors.  My system is an opt-in alternative that gives donors direct access to information.  The online opt-in system therefore has the added benefit that the current system does not have of providing information directly to donors.

The proposal makes sense, and would be better than the current system for charities, donors and legitimate law enforcement.  That’s why NASCO opposes it.

What’s that tell you about NASCO?

Don’t worry, Alicia, my CD-Rom and registration fee are on the way.



Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>