California could increase its resources to identify and weed out charities that violate state law under legislation sent today to the Assembly floor.
AB 2077, introduced by Assemblyman Travis Allen, R-Huntington Beach, would allow the attorney general’s office to direct more of the estimated $7 million generated from charity and professional fundraiser registration fees to enforcement.
State law requires charities that fundraise in the state to register with the attorney general. The Department of Justice estimates that there are 52,000 delinquent charities in California. At least 130,000 additional charities operate in California despite having failed to register, according to an Assembly staff analysis.
The bill passed unanimously and is set to be heard on the Assembly floor next week.
Allen said more resources were needed to combat “scam charities.” He cited a yearlong investigation by The Center for Investigative Reporting and Tampa Bay Times exposing rogue charities that collected millions in the name of veterans, police and terminally ill children but spent little money on their programs. The series, America’s Worst Charities, identified 50 charities that combined raised more than $1.3 billion but spent $1 billion on fundraisers and consultants.
Roughly 4 out 5 of those charities have registered with the state to raise money in California, records show.
Allen also cited Orange County Register reporting on a local charity that gave 3 percent to the intended cause.
The state’s Registry of Charitable Trusts has been described by lawmakers as a massive filing cabinet. About a dozen employees are responsible for keeping up with the 1.2 million pages filed every year by about 230,000 charities and fundraisers registered to do business in the state.
“The need for the bill stems from the fact that these ‘scam charities’ are essentially phone banks that say they are calling on behalf of a local organization (firefighters, police, etc.) and then when they receive money from unsuspecting Californians, they turn around and send a check to the organization for 3 percent of the money raised and profit the rest for themselves,” said Allen in a written statement.
Before formally introducing the legislation in February, the assemblyman discussed much stronger legislation that would have required nonprofits to spend a certain amount on their charitable programs, the Orange County Register reported. This version of the bill is a first step, Allen’s office said.
Since the Times/CIR series was published, charity regulators in five states have opened investigations. The Florida Legislature recently passed a comprehensive overhaul of the state’s charity laws, giving regulators more tools to crack down on fraudulent nonprofits.