Arizona Charities Losing Their Protection

By Gary Snyder

It seems unbelievable.

Governor Brewer signed Arizona House Bill 2457 into law, repealing Arizona’s solicitation registration laws and doing away with the need for Arizona charities to file annual Charitable Organization Registration or Renewal forms with the Arizona Secretary of State.

With a potent increase in malfeasance throughout the United States, why would a state choose to let down its guard against charity fraud? The only plausible explanation----because it could.

Charity fraud, of all sorts, continues to climb and is currently at $51 billion. A record. 

Because of its uncontained increase, attorneys general are taking a different approach and making every attempt at beefing up their staffs to address fundraising abuse and nonprofit fraud. 

Certainly there were weaknesses in the Arizona system. It may have been antiquated and poorly designed. But certainly a more thoughtful approached would have been to redesign the regulations and their implementation to seek better protections. With little or no chance of enforcement, the ground is fertile for those who want to seize the hard won assets of those to which it was intended. 

In just one state, Michigan, the attorney general has documented more than $300 million in charity fraud. In that same state, the AG has charged just one fundraiser, Associated Community Services, with 230 violations. The AG readily admitted that this is the tip of the iceberg. He said, "Donors might be surprised to know that, on average, only thirty-five cents of each dollar collected through professional fundraisers are passed on to the charity." In many instances fundraisers collect more that 90% of the funds that they raise.

In addition, every charity watchdog is alarmed by the escalation. To the degree that they can afford it, each has elevated its commitment to containing charity fraud and fundraising malfeasance.

Arizona's shortsighted approach will cause harm to rightful recipients and donors rather than benefiting them as they have advertised.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)