Wednesday, September 19, 2018
News Roundup

Florida's top charity regulator considers reforms

ST. PETERSBURG — Florida's top charity regulator said Friday he will push for sweeping reforms to crack down on charities that spend most of their money on professional solicitors instead of people in need.

Adam Putnam, state commissioner of agriculture and consumer services, said his proposals were prompted by a yearlong investigation by the Tampa Bay Times and the Center for Investigative Reporting.

In the coming weeks, Putnam said, he will ask state lawmakers to support a series of changes that could have widespread impact on Florida nonprofits that rely heavily on telemarketing.

Among them: increased fines, mandatory background checks for telemarketing employees and a requirement that charities spend at least 25 percent of donations on those in need or risk losing their state tax exemption. Putnam said he may also propose giving Florida regulators the power to deny licenses to charities or solicitors banned by other states — something that rarely happens now.

In addition, Putnam wants the right to suspend charities immediately once his office identifies fraud. And he said his office is working with Attorney General Pam Bondi to make it easier to prosecute such cases without first having proof that an individual donor has been harmed.

"Our role in charities had been essentially to take their money and take their registration and that's it," Putnam said. "The statutes did not contemplate much more than that. The things we are proposing will make us a less enticing state to do business for bad actors."

Ken Berger, president and chief executive of Charity Navigator, a nonprofit watchdog group, applauded Putnam's suggestions, saying they could be effective in curbing abuses.

"Oversight of charities is very weak," he said. "We're long overdue to have better transparency and stronger consequences for bad behavior."

Putnam's proposals emerged from an agency review of Florida's charities laws. That review was prompted by a yearlong investigation by the Times and CIR, which published their findings in June. CNN joined the partnership in March.

The original report identified the nation's 50 worst charities based on the amount spent on professional solicitors over the past decade. As a group, charities on the Times/CIR list collected about $1.3 billion dollars in donations and spent nearly $1 billion of that — more than 70 percent — paying for-profit solicitors.

The series prompted a public backlash against many of the charities on the list, as well as calls for change in several states as well as in Congress.

The Times/CIR found that Florida was home to 11 of the most wasteful charities, more than any other state.

At the top of the list was Kids Wish Network in Holiday. It raised $127.8 million in cash through its solicitors over the past decade. It paid those solicitors $109.8 million.

The charity, which raises money to provide wishes to dying children, paid companies associated with its founder and former chief executive more than $5 million for fundraising services.

Putnam said the fact that a Florida charity ranked as the nation's worst was a "black eye on the state."

"Florida has a long, rich history of thieves, scoundrels and hustlers," he said. "Part of me thought that was in the past, and it's not."

As part of his office's reorganization last year, charities with revenue of less than $25,000 were exempted from some filing requirements.

Now Putnam wants to ratchet up the scrutiny on bigger charities and nonprofits that operate multiple subsidiaries.

"We would put greater standards on board members so they can't all be related and drawing salaries," Putnam said. "We'll require an audit if they raise above a certain amount."

He also wants to post charities' and professional fundraisers' filings online so they will be easily accessible to donors. These documents include information about program costs, executive compensation and names of board members. Only limited information is currently available on the state's website.

Putnam said his office will work with state Sen. Jeff Brandes, R-St. Petersburg, in the coming weeks to develop the proposals into draft legislation.

The new statutes will be crafted to protect startup charities and those that accrue assets over time, like a foundation's building fund, Putnam said.

Putnam pointed out that several of the new standards have already been implemented in other states, and he expects little opposition in the Legislature.

"There's no obvious political opposition out there, as long as the details are such that the good guys — the United Ways, the Red Cross and such — are saying, 'Yes, this makes sense,' " he said.

Times staff writer Katie Sanders contributed to this report. Kris Hundley can be reached at [email protected]

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