Will High Admin Costs Mean No State Charitable Deduction?

What if high admin costs caused your nonprofit to lose the ability to take donations that received a state charitable deduction? The Oregon legislature is considering a bill that will do just that.

The bill mandates that charities devoting less than 30% of their expenses to their charitable programs over three years will be required to tell potential donors that they cannot deduct their contributions on their state income taxes. The bill will also deny property tax-exemption to such charities.

The Nonprofit Association of Oregon is supporting the bill, stating that it believes the bill will uphold the integrity of the nonprofit sector in Oregon. In a statement, it explained that establishing a “’minimum floor’ of 30% will easily identify those under-performing charities that, year-after-year, devote only a fraction of donated funds to their program mission.”

If the bill passes, may we see copycat legislation in other states, including California? How would this type of legislation affect your nonprofit?

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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