Vol. III, No. 1 February 1995

Another FSC Amicus Brief: The Center for Auto Safety v. Athey
The Free Speech Coalition will file a friend-of-the-court ("amicus") brief to support the Public Citizen Litigation Group's efforts to have the U.S. Supreme Court hear the case Center for Auto Safety v. Athey. The Center for Auto Safety is a nonprofit public advocacy organization working to educate and research improvements in vehicle and highway safety. Less than 6 percent of the Center's members are in Maryland. The organization's only contact with the state is through fund-raising by mail.

The State of Maryland charges fees to nonprofits (like the Center for Auto Safety) based upon the total contributions received nationally, not only contributions from Maryland. The state argues that large charities' registration forms require more time to review, therefore it is permitted to calculate fees based on nationwide contribution receipts. User fees which merely cover the cost of protecting the public have been upheld even when the regulated activity involved protected First Amendment speech.

The Center questions whether Maryland undertook any analysis of its registration at all, and describes the fee as a tax. The Center does not challenge Maryland's right to regulate charities, but it challenges Maryland's power to impose on regulated organizations whatever fees it wishes to receive, to support whatever level of regulation it wishes to impose. Counsel for the Center, David Vladek, Esquire, argues that high fees have shut new and small organizations out of the "marketplace of ideas," and that the problem could worsen.

In its brief, FSC points out to the court the collective burden imposed by state charitable solicitation fees across the country. FSC argues that the fee structure interferes with interstate commerce as well as with nonprofit organizations' rights of free speech and petition.

FSC Calls for Arter's Removal
At the January 26, 1995 Legislative Briefing Breakfast, FSC announced that it is calling for the removal of Steven Arter, from any position involving responsibilities over nonprofits in the Pennsylvania Attorney General's Office. Arter, a recent President of the National Association of State Charitable Officers (NASCO), publicly announced in October 1994 that he tells those citizens that they generally should not give donations to nonprofits that use direct mail or telemarketing appeals. FSC views Arter's admitted bias against nonprofits' legitimate use of legal fundraising methods as rendering him unfit to regulate this industry.

The issue also affects the economy in Pennsylvania. As Arter's comments affect the revenues of nonprofit groups, they will not be able to implement their charitable, educational, or social welfare programs. As groups hire fewer people and purchase fewer goods and services, Arter's bias can affect the livelihood of taxpayers in Pennsylvania (and other states)who benefit from services of nonprofits, and even those who make their living in industries such as printing and marketing.

FSC leaders pledged to follow-up their call for his removal by educating the nonprofit and business community in Pennsylvania about Arter, his comments, and FSC's position.

A New “C3”: The Free Speech Defense and Education Fund
On February 7, 1995, the organizational meeting of the Free Speech Defense and Education Fund was held. This new group will assume most of the educational and litigation efforts of the Free Speech Coalition, which is a IRC section 501(c)(4) organization, and will be tax- exempt under IRC section 501(c)(3).

The new organization's Board of Directors are: Mike Beard, Coalition to Stop Gun Violence; Sandy Butler, United Seniors Association; Dick Dingman, Free Congress Foundation; Edythe Ledbetter, Center for Marine Conservation; Ron Robinson, Young America's Foundation; and Bill Cook, CPA. Edythe Ledbetter will serve as President; Ron Robinson will be Vice President; Bill Cook will be Treasurer, and Dick Dingman will be the Secretary. Mike Beard and Dick Dingman will serve as Co-Chairs of the Board of Directors.

President Ledbetter announced that the new Fund will not begin operation until the IRS affirms its nonprofit status expected in early spring. At that time, she said, it will establish criteria for its litigation program. In addition, the Fund will oversee the annual fall conference that has been sponsored by the Free Speech Coalition and the Freedom Forum, as well as conducting other educational efforts. Tax-exempt status under IRC section 501(c)(3) will allow the fund to obtain foundation support as well as tax-deductible contributions.

Legislative Briefing Breakfast Called "Great Success"
On a wintry morning, January 26th, seventeen stories above Tysons Corner, a dozen people presented briefings of the problems and issues facing the nonprofit community. Over eighty organizations were represented at the annual legislative breakfast.

Former Congressman Jim Bilbray (D-NV) described the ideological diversity of the Coalition as a great strength. He pointed out that, right now, the Postal Service is winning the argument with many Congressmen against continuing special third-class mail rates. Most people think that nonprofit mail is subsidized and if its rates are raised, other mail rates could be less.

Howard Segermark, FSC Legislative Director, reported that Senator Stevens (R-AK) has not lessened his opposition to nonprofit groups' use of special third-class rates. His position as Chairman of the Senate Subcommittee on the Postal Service provides him ample opportunity to act on his views. Segermark noted that there is currently no "logical bill on which he might attach an amendment which would accomplish his goal, but there almost certainly will be before this session of Congress is over." FSC will monitor this matter carefully.

Jennie Thompson, with Craver, Matthews, Smith & Company, serves as co-Treasurer of the Coalition. She announced that the 1995 budget is approximately 50 percent larger than 1994, but FSC's workload will be 100 percent larger.

Harriet Trudell, with the Feminist Majority, co-chair of the FSC Membership Committee, reported that membership continues to grow among for-profit and nonprofit groups.

The burdens on nonprofit organizations, according to Joe Levin, Southern Poverty Law Center President and FSC Executive Committee member, require organizations and individuals to work together. He described the Free Speech Coalition as the organization most vigorously attacking the roots, branches and leaves of over-regulation. He urged groups to make the Coalition bigger and more active in 1995.

Federal Trade Commission Attaches Burdensome Fines on Late Premium Deliveries
The Federal Trade Commission (FTC) issued proposed regulations which heavily burden all those who use premiums as an incentive to solicit contributions. The FTC regulations would require solicitations which promise premiums to deliver those premiums to the solicited person within thirty days or clearly mention the time those premiums will be received by the persons solicited.

If a premium is not received within the stated time frame, or within thirty days, the FTC can file deceptive competition charges against that organization. Fines can total $10,000 per incident. Katherine Boland, Esquire, at Bayh, Connaughton, Fensterheim, and Malone, P.C., reminds FSC members that the $10,000 fine applies to each violation. If ten books arrive late into the hands of contributors, the fines could total $100,000, $10,000 for each violation charged by the FTC.

Comments on the proposed regulations are due by March 31. Please call the FSC legislative office at 202-547-2222 for a copy of the proposed regulations.

Lobbying Registration and Disclosure
It's back. Senator Bill Cohen (R-ME) introduced S. 101, which is nearly identical to the lobbying disclosure bill the House-Senate Conference reported in the last Congress. The bill contains the double-reporting requirements that FSC fought in the 103rd Congress, but it has dropped the list-disclosure requirement that led to the bill's defeat in October.

Congress may consider some kind of gift ban after it concludes consideration of the provisions of the GOP's Contract With America. Early action in the Senate is not expected. However, such action may have been accelerated when the President called for lobbying reform legislation in his State of the Union address and received a sustained standing ovation.

Around the States
The State of California
The Attorney General's office in California agreed in writing not to enforce a new state regulation restricting fundraising, set to take effect January 1, 1995, until a lawsuit challenging it has been settled. Represented by Errol Copilevitz, Esquire, the National Federation of Nonprofit Mailers is suing the state of California, contesting the controversial limit on fundraising costs to 50 percent of the fundraising campaign. The new state law would effectively shut the door on prospect mailing. Particularly new and small organizations would face a massive barrier to entry if the limit were allowed to remain in place.

The City of Columbus & the State of Ohio
A Columbus, Ohio, ordinance prohibits fundraising within the city unless the charity registers, pays an annual fee, and files annually. Professional fundraisers must file a $5,000 bond to solicit contributions in the city. The law in Columbus is additional to the Ohio statute requiring registration. The state of Ohio requires a $25,000 bond for all professional fundraisers. Like Maryland and other states, Ohio charges all fundraisers a fee, based on contributions received nationally, rather than statewide receipts. Charities and professional fundraisers must separately file and register under both the Ohio statute and the Columbus code.

The State of Hawaii
Since January 1, 1995, the state of Hawaii has required nonprofit organizations to inform individual donors of their right to have their names deleted from nonprofits' lists before the lists are sold, traded, or rented. The statute has effectively made it impossible for nonprofit organizations to sell or rent mailing lists with Hawaii names. The state attorney general's office claimed the statute protected Hawaiian residents from mainland charities that take dollars away from Hawaiian charities. However, the law also requires that all charities raising money in Hawaii _ including those in the islands must have the donor's permission, in advance, to be solicited, stifling all charities.

Bureaucratic Baloney
With some frequency, the Free Speech Coalition learns of bureaucratic arrogance, idiocy, or just plain stupidity. We would like to hear from all FSC members and friends of their run-ins with regulators and regulations.

The Free Speech Coalition, Inc. is a nonpartisan, nonprofit 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. For information on FSC legislative programs and membership, please call 202-547-2222.