Vol. V, No. 1
January - February 1997
Nebraska Repeals Solicitation Law
The State of Nebraska has repealed its
Charitable Solicitor registration laws (Chapter 28, Article
14(g), Revised Statutes of Nebraska) in response to a State
Supreme Court decision which invalidated large portions of
them. Greg Lemon, Deputy Secretary of State, told FSC his
belief that the court struck down the registration
requirement for being too broad and vague. The repealed laws
had required every nonprofit that solicited funds to
register with the state and pay a registration fee. As of
March 1, 1997 those who solicit in Nebraska are not required
to register. That's the good news.
The bad news is that a state senator
wants to re-regulate nonprofit solicitation. State Senator
Dianna R. Schimek, of Lincoln, Nebraska (District 42), a
former chair of the Nebraska Democratic Party, has
introduced legislation (Legislative Bill 383) that would
again require every nonprofit soliciting in the state to
register.
According to Janet Anderson, an aide to
State Senator Schimek, the purpose of re-registration is to
"keep track of solicitors." However, the Nebraska
registration law (still in effect until February 28, 1997)
provides no real benefits to donors. FSC called the Nebraska
Secretary of State to ask what information they had on
certain nonprofits. In every instance, the only information
disclosed was whether the nonprofit had registered with the
state. Moreover, Ms. Anderson could not identify a single
incident in which registration information had been used to
prosecute fraud. Ms. Anderson said that she did not know
what financial impact the proposed regulations would have on
nonprofits. She further told FSC that she had "no intention"
of learning what adverse impact registration would have on a
nonprofit. However, Ms. Anderson promised to have Senator
Schimek telephone FSC to explain why she believes the
legislation is necessary. Despite two reminder calls to her
office, Senator Schimek has not yet responded.
FSC members and friends should contact
Nebraska officials (see below) and explain how state
registration of charitable solicitation is unnecessary,
expensive to administer, and wastes the scarce resources
that donors give to nonprofits. The information that Sen.
Schimek seeks to compile (and force nonprofits to provide)
is already available to the public in a number of
ways:
Call the nonprofit directly and
ask for a copy of their Federal Tax Return Section 1313 of
the Taxpayer Bill of Rights 2 (Public Law 104-168, effective
July 30, 1996) requires nonprofits to provide copies of
their IRS Form 990 to any individual who asks (previously,
nonprofits only had to allow inspection). Individuals who
come to a nonprofit's office in person must be provided a
copy "immediately." Requests in writing must be fulfilled
within 30 days.
Search the internet for a
nonprofits' web site and/or other information.
Many nonprofits, as well as those who
support and oppose them, maintain detailed information on
the nonprofit's mission, purpose and finances.
If a prospective donor can't find the
information they need, they can choose not to give.
Ultimately, no amount of information may be sufficient to
convince a prospective donor on a nonprofit's
worthiness.
Diverting nonprofits' resources to comply
with meaningless registration, and having over 40 state
governments warehouse the same information, serves no
purpose.
FSC members should write, call, fax or
email members of the (unicameral) Nebraska Legislature and
the Governor and tell them to leave nonprofits alone. L.B.
383 has been referred to the Committee on Judiciary chaired
by Senator Kermit Brashear of Omaha, coincidentally a former
chairman of the Nebraska Republican Party.
Senator Kermit Brashear
Chairman, Committee on Judiciary
Room 1515, State Capitol, Lincoln, NE 68509
tel. (402) 471-2621
email: kbrashear@unicam3.lcs.state.ne.us
Governor E. Benjamin Nelson
Executive Suite
State Capitol
P.O. Box 94848, Lincoln, NE 68509-4848
tel. (402) 471-2244
U.S. House Requires Truth in Testimony
Individuals from non-governmental groups
testifying before U.S. House of Representatives committees
will be required to disclose how much money in grants and
contracts the group has received from the federal government
in the previous three years. The "Truth in Testimony" rule
&emdash; advocated by a group of nonprofits, headed by the
Heritage Foundation &emdash; was adopted the day Newt
Gingrich was re-elected as Speaker.
The rule, Section 10 of House Resolution
5, applies both to nonprofit groups that receive grants and
businesses that have government contracts.
Noncompliance with the rule allows a
chairman to hear objections "to including the witness'
written testimony in the hearing record," according to the
Congressional Record.
Committee chairmen are to require
disclosure to the extent "practicable" from any
nongovernmental witness "to the extent that such information
is relevant to the subject matter." According to Dave Mason,
a senior fellow with the Heritage Foundation who worked to
establish the rule, the measure should not preclude or
hinder anyone from testifying. Moreover, he told FSC that
"testimony by government grant recipients is a necessary
part of the hearing process. If a witness doesn't know if
their grant is relevant to the issue before the committee,
they should disclose it and let committee members evaluate
the value of the information."
Menendez Bill Would Limit Nonprofits
Compensation
Congressman Robert Menendez (NJ-13)
introduced the so-called "Tax Exemption Accountability Act"
(H.R. 239) on January 7, 1997. If enacted, the measure
would:
Limit the compensation of officers of nonprofits.
Create a federally funded "clearinghouse" offering
copies of tax returns.
Ban managers of nonprofits from selling or leasing
property to the organization.
In a statement before the U.S. House,
Congressman Menendez said, "Given the current events
[apparently Speaker Gingrich's House Rules
Violation], we need greater accountability by tax exempt
organizations because they control substantial 'public
wealth' and offer temptation that some have been unable to
resist manipulation [sic]." FSC opposes H.R. 239 in
that it contains unnecessary and restrictive burdens on
nonprofits.
Hearings a Prelude to Punishing Nonprofits
Advocacy?
Representative Nancy Johnson (CT-6)
plans to hold hearings and introduce legislation that could
radically redefine (and potentially damage) the operations
of nonprofit advocacy groups. Johnson chairs the powerful
Oversight Subcommittee of the House Ways and Means
Committee. She has indicated that she seeks legislation that
would attempt to differentiate between nonprofits'
"educational" and "advocacy" functions.
Free speech supporters should contact
Congresswoman Johnson and express their opposition to any
legislation that takes away a nonprofit's tax status simply
because it exercises its First Amendment rights.
Congresswoman Johnson can be reached at: 343 Cannon House
Office Building, Washington, D.C. 20515, tel: (202) 225-4476
fax: (202) 225-4488.
McIntosh Bill Would Close Loophole in
Lobbying Disclosure Act
Congressman David McIntosh (IN-2) has
proposed legislation (H.R. 233) to end an alleged loophole
in the Lobbying Disclosure Act of 1995 (2 U.S.C. 1611).
Under McIntosh's bill, "an organization described in section
501(c)(4)... which engages in lobbying activities or
affiliated organizations shall not be eligible for the
receipt of Federal funds constituting an award, grant, or
loan." Chip Griffin, a legislative aide to Congressman
McIntosh, told FSC that the bill closes a loophole in the
Simpson/Craig Amendment which prohibited IRC Section
501(c)(4) nonprofit advocacy groups from receiving federal
grant funds. Some nonprofits created IRC Section 501(c)(3)s
to accept grant funds and then use those funds to pay
overhead expenses for the advocacy group, evading the
purpose of the Simpson/Craig Amendment. Mr. McIntosh's bill
precludes not only 501(c)(4)s from receiving federal grant
funds, but also 501(c)(3)s that are "affiliated" with an
advocacy organization.
FSDEF Rescues Christian Action Networks
Lawsuit
The Free Speech Defense and Education
Fund, Inc. rescued the Christian Action Network (CAN) when
it looked as if CAN was unable to pursue its appeal after
the case was accepted by the West Virginia Supreme Court.
FSDEF asked free speech supporters to fund costs associated
with the appeal. FSDEF agreed to contribute $5,000 to
complete the appeal.
As previously reported in FREE SPEECH,
the State of West Virginia successfully sued the Christian
Action Network (CAN), an IRC section 501(c)(4) organization
incorporated in Virginia, seeking a court order to force
CAN's compliance with the state's Charitable Solicitation
law. Donations to CAN are not tax-deductible and the
organization conducts a vigorous lobbying program.
Nevertheless, a state trial court decided that CAN is a
charity, because it "is, or holds itself out to be, an
educational, religious, philanthropic, benevolent, or
patriotic organization." The court also ruled that the state
could mandate a government written "disclosure statement"
allegedly because it promotes the government's "substantial
interests." Finally, the court ruled that the state can
force CAN to supply its solicitation materials to the
government so they can somehow "ensure" that funds are
appropriately spent.
CAN's attorney, David Carroll, Esquire,
presented his case before the West Virginia Supreme Court on
January 22, 1997. A written decision will be forthcoming.
The Free Speech Defense and Education Fund, Inc. is a
501(c)(3) nonprofit. Contributions to FSDEF can be sent to
8180 Greensboro Drive, Suite 1070, McLean, VA
22102-3860.
The Free Speech Coalition, Inc. is a
nonpartisan, nonprofit 501(c)(4) organization which
educates, lobbies, and litigates to defend the rights of
advocacy organizations and their members. FSC needs your
support to continue its fight to protect the rights of
citizens to associate together and exercise their First
Amendment right to petition their government for redress of
their grievances. Contributions to the Free Speech
Coalition, Inc. are not tax-deductible.
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