Congressman Bunnings Hearings Against Nonprofit
Mail On Track
Last March, the Free Speech Coalition first learned that Congressman Bunning, Chairman of the Social Security Subcommittee of the House Ways and Means Committee, had pledged to hold hearings on nonprofit organizations' mailing practices. He accused certain nonprofits of "demagoguing for dollars," and said reform of Social Security would never be possible if nonprofit groups were free to oppose proposals for change. Wholly without regard to the issues regarding the Social Security program, FSC defended the rights of nonprofits to participate in the political dialogue, and immediately urged Bunning to cancel plans for those hearings.
Recent conversations between FSC members and Congressman Bunning and his staff revealed that Bunning now will focus on the cost of nonprofit fundraising and on nonprofit mailing practices which allegedly cause nonprofits' letters to be confused with official federal government mailing. Current laws already prohibit "look-alike mail," and the use of words and terms describing federal agencies. Nevertheless, Bunning apparently wants to press the issue.
FSC believes that, at best, these hearings will not accomplish much. However, the hearings may encourage additional regulation, imposing additional costs on nonprofit groups. New and small nonprofits would be hit hardest by the imposition of additional regulation.
Congressman Bunning dismisses the effect of additional regulation on nonprofits' exercise of free speech. If his effort to silence certain nonprofits succeeds, the question arises how many more restrictions will be imposed by Congress and federal agencies in the effort to prevent Americans from hearing the viewpoints of organizations unpopular with those in power.
These hearings indeed may chill free speech, at least on the Social Security issue. But it is not yet clear whether other nonprofit organizations will also be caught in the net thrown out to silence debate.
Congressman Bunning's subcommittee currently lacks jurisdiction to regulate nonprofit mailing practices. Mailing practice reform is under the jurisdiction of the Postal Service Subcommittee of the House Government Reform and Oversight Committee. Bunning's subcommittee also lacks jurisdiction to change the tax treatment of nonprofit organizations, which belongs to the Oversight Subcommittee of the Ways and Means Committee.
FSC encourages nonprofit organizations to contact Chairman Bunning and other Members of the Social Security Subcommittee. Nonprofits are also encouraged to visit the Offices of Subcommittee Members to explain the practical and Constitutional concerns raised by Congressman Bunning's proposed regulation of nonprofits. FSC Legislative Director Howard Segermark will coordinate visits to the offices of Subcommittee members (202-544-1114). We hope all members and friends of the Coalition will make additional contacts.
Members of the Social Security
Subcommittee: Republicans Jim Bunning (KY-4), Sam Johnson
(TX-3), Michael "Mac" Collins (GA-3), Rob Portman (OH-2),
Philip English (PA-21), Jon Christensen (NE-2), and Melton
Hancock (MO-7); Democrats Andy Jacobs (IN-10), Barbara
Kennelly (CT-1), Lewis Payne (VA-5), and Richard Neal
Congressman Mica Seeks to Strip Some Nonprofits
Access to Federal Employees Payroll Contributions
The Free Speech Coalition opposes Congressman Mica's proposed legislation, which would disqualify so-called "advocacy" nonprofits from future participation in the CFC. Congressman Mica wrote to Office of Personnel Management Director James B. King, stating that he was "deeply troubled" by the presence of political and ideological advocacy groups in the CFC. He would like to restrict CFC eligibility to so-called "traditional health and welfare groups." The Congressman, Chairman of the House Subcommittee on Civil Service, described the present operation of the CFC as a "travesty."
Congressman Mica's concern is curious. He says he wants "advocacy" groups banned. Yet, true advocacy groups are tax-exempt under IRC Section 501(c)(4), and do not qualify for the CFC under present rules. Further, even Mica's proposed restrictions on nonprofit charities listed with the CFC would not limit many health and welfare charities that spend large sums on lobbying Congress.
Congressman Mica identified several current nonprofits participating in the CFC which he would describe as "advocacy groups," including the NAACP Legal Defense Fund and the Heritage Foundation. Mica stated that these two groups, one considered liberal and one considered conservative, do not provide "human services" in his opinion.
The politics of these proposals are hard
to read. After November's change in Congressional control
from the Democrats to the Republicans, some nonprofit
leaders believed that controls on nonprofits would not be
tightened further, expecting that Democrat Congressional
leaders' move to minority status would end the efforts in
the last Congress to silence nonprofits. Recent initiatives
suggest that Congressional hostility to nonprofits is
non-partisan, and derives from the nature of Congressional
power: Members don't like criticism. They blame those groups
for the heat they receive. In the last Congress, one Member
was said to have complained, "How are we supposed to govern
with all this pressure?"
U.S. Supreme Court Refuses to Hear Center for Auto
Safety v. Athey
State Charitable Solicitation Laws: Limited Relief in
Ms. Giani explained that Utah has targeted professional fundraisers with such tough laws because a growing number of scams have cheated unsuspecting consumers while claiming to fund charitable activity. While other professions, such as realtors, are also regulated, Giani identified fraudulent fundraising appeals as one of the easiest ways to defraud consumers, particularly the elderly.
Regulators in Kentucky apparently agree. Last July, the Bluegrass state passed a statute instituting mandatory background checks for all professional solicitors and fundraising consultants. Only two other occupations face similar checks for criminal convictions: child care providers and school teachers.
Kentucky officials said that the background checks enabled the state Consumer Protection Division to identify "about a dozen phone solicitors" with prior records of defrauding the public, according to Program Coordinator Jean Hanks. Ms. Hanks expressed her belief that "bad guys" would now steer clear of Kentucky.
However, Edythe Ledbetter of the Center for Marine Conservation warned that "Increasingly, the non-profit community must fend off significant regulatory challenges at the federal, state, and even local level." Ms. Ledbetter, who serves on the board of the Free Speech Defense and Education Fund (the educational and legal defense arm of FSC), stated that these challenges "have a chilling effect on our ability to express ourselves to our members, supporters, and the general public."
Current charitable solicitation laws impose growing volumes of often confusing and redundant paperwork, escalating bonding and registration fees, as well as criminal background checks. Yet there is hope.
Virginia recently modified its requirement that nonprofits submit both a certified financial statement and an IRS Form 990 when registering with the state, enacting a new statute in March. Now nonprofits may file either a certified financial statement or a Form 990. Earlier, in October 1994, FSC notified its members and friends when Virginia had solicited comments on the burdens of its current regulatory requirements. FSC requested that its members write the state Department of Agriculture and Consumer Services and request (among other items) that the state limit its annual submission requirements to a Form 990.
While FSC members cannot know whether
these efforts helped lead to Virginia's most recent
reduction in nonprofits' regulatory burden, the recent
Virginia statutory change should encourage FSC members to
contact those in state government and speak out whenever an
unfair law is proposed or enacted. Likewise, FSC will
continue to monitor activity at the national, state, and
local levels, and issue a call for action when
AICPA Releases Exposure Draft of Proposed Audit &
Accounting Guide for Nonprofits