Charities balk at rule change

You have the right to tell a charity how to spend your dollars. Should you? And should the government force that agency to remind you that you have that right?

These questions were raised by a regulation proposed by the New Jersey Division of Consumer Affairs earlier this summer, which would add disclosure requirements to charitable solicitations. Under the proposed rule change, charities would be required to inform potential contributors of their right to designate which programs they wish to fund with their donation. The charities would also have to make it clear that unless a donation is designated, all or part of it could be used for “administrative and fundraising expenses.”

Where the money goes

Here are the breakdowns for the money the Jewish Federation of Northern New Jersey allocated for the 2011-2012 fiscal year.

The proposal would also require these disclosures to be made in any solicitation, written or oral, that mentioned one or more specific projects. In practical terms, this means among other things that Super Sunday solicitors would have to add a mouthful of required jargon to their fundraising script.

Before the public comment period for the regulation closed last week, a wide range of charities sent in their disapproval. Among them was the New Jersey Association of Jewish Federations, which strongly opposed the proposal.

“With mandatory designation, individuals would overwhelmingly give their gift to the most popular issue of the day and would not necessarily provide funds for feeding hungry seniors or other safety net concerns,” said Ruth Cole, president of the association.

“We’re talking about a dangerous precedent,” said Jason Shames, newly installed executive vice president of the renamed Jewish Federation of Northern New Jersey. “The whole intent of Federation is to balance the competing needs. Individual allocation decisions would have drastic effects on communal allocations.”

Shames noted that it is donors – those who volunteer to serve on the allocation committee and its subgroups – who decide how the money raised by the campaign is spent.

“The entire communal pot is earmarked by donor individuals, by involved lay leadership. That’s why we’re a communal organization,” he said.

The Center for Non-Profits in North Brunswick argued in its comments that the requirement violates Supreme Court First Amendment rulings. It also argued that the proposed disclosure unfairly stigmatized overhead necessary to keep organizations running.

For its part, in proposing the regulation, the Division of Consumer Affairs argued that charities sometimes feature “a particular program or programs in the soliciting materials, which may not be funded to the extent that a contributor might expect from the soliciting material. For example, soliciting material may feature both research and consumer education programs, but one may be funded almost to the exclusion of the other.”

By contrast, “The Division believes that if particular programs are the inducement for a donor to make a contribution to the charity, the donor should be advised that he or she has the option to direct the charity to use his or her contribution to fund that program,” according to its statement.

Put another way, the consumer affairs rule-changers are concerned that charities are using deceptive methods to raise money. The charities, including the Jewish ones, reject that assertion.

At the former UJA-NNJ, Shames disputes the idea that portraying a specific program implies that all donations go toward that program. “We’re not false advertising,” he said.

“One of the things we’re trying to do is make the community aware of everything that the unrestricted dollar does. We have thousands of things we’re doing with the money that comes in.”

Despite the importance of communal planning, he said the federation is interested in helping donors with their individual projects.

“We have the capacity now to work with targeted donors on specific areas of interest, programs and services in high priority areas of the community. If you want to give money for project X and it’s a priority for us, and you are able to underwrite most of it, we have the capacity to do it,” he said.

“The problem we would have is if people earmark to specific projects and there’s not enough money to pay for it.

“Right now, 90 percent of the dollars we receive are unrestricted. Most people understand about Federation giving and allocation and disbursement,” he said.

Of the total dollars spent:

Fundraising expenses: 22%

Administrative expenses: 6%

Programming and allocations: 72%

Allocated money

61% goes to local institutions and programs

39% goes to overseas agencies

Local (not including federation-administered programs)

• Jewish Family Services 48%

• Jewish community centers 19%

• Jewish residential facilities for older adults & individuals with disabilities 12%

• Jewish educational programs 19%

• Smaller agencies & programs 2%

Overseas (not including federation-administered programs)

• Jewish Agency for Israel & American Joint Jewish Distribution Committee 61%

• Partnership with Israel 12%

• Community centers 5%

• Former Soviet Union 7%

• Programs for Ethiopians 5%

• Programs for at-risk/underprivileged youth 5%

• Smaller programs 5%