Putnam's plan to stop bad charities in Florida

Adam Putnam called a bad charity a “black eye on the state.” DIRK SHADD   |   Times
Adam Putnam called a bad charity a “black eye on the state.”DIRK SHADD | Times
Published September 13 2013
Updated September 20 2013

Florida is home to 11 of the worst 50 charities in the country, which too often take people's money, then enrich their executives and fundraisers but spend little on the charity's ostensible cause. It is a multimillion dollar legal fleecing that Adam Putnam, Florida's commissioner of agriculture and consumer services, says is about to get new scrutiny. With the help of Florida lawmakers, Putnam wants to create stronger regulations. His leadership is needed to make it less attractive for wasteful charities to call Florida home.

Putnam's attention was sparked by the yearlong investigation by the Tampa Bay Times and the Center for Investigative Reporting that laid bare the big business of bad charities. The series by reporters Kris Hundley and Kendall Taggart unearthed charities that exploited kids and veterans and other sympathetic causes to collect tax-free contributions to richly reward the charity's operators and for-profit fundraising companies while pennies on the dollar went to the advertised beneficiaries. The worst charity was in Florida — a "black eye on the state," Putnam says — and named Kids Wish Network, which raised $127.8 million through solicitors in the last decade. Its solicitors kept $109.8 million. The nation's worst charities overall did relatively little actual good, paid fundraisers the lion's share of contributions and often had family members on boards of directors who benefited financially.

People wrongly assume that the state aggressively ensures that charities spend donations on the needy. Putnam wants to make a series of legal changes to start meeting people's expectations. He suggests treating for-profit fundraising companies as telemarketers with mandatory background checks; increasing fines for nonprofit wrongdoing; establishing standards for charity boards of directors; and increasing reporting requirements. He is working on a legislative package with Sen. Jeff Brandes, R-St. Petersburg.

One of Putnam's most important reforms is to get more information into donors' hands. He intends to create an easily navigated website that highlights how much charities spend on their advertised cause compared to administration and fundraising. And he would like to see a requirement that charities spend a set portion of donations on the charity's express purpose or lose their state tax exemption. That idea that has been opposed by mainstream nonprofits before and is tricky to enforce. But large, established charities should welcome the opportunity to stand against the hucksters in their midst.

One area that needs attention is increasing cooperation among states. Operators of some of the worst charities and fundraising operations know that if they are shut down in one state, they can open up in another. Putnam wants the power to reject licenses for any charity or solicitor banned by another state, which is an essential reform. And he wants to be able to suspend charities immediately if his office identifies fraud.

If the Legislature toughens the regulations, Putnam will need to direct sufficient resources toward enforcement. Bringing real scrutiny to the state's nonprofit sector would do wonders to dissuade unscrupulous charity operators and fundraisers and make clear that Florida is not open for their kind of business.