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Pinellas Charitable Solicitation Ordinance Designed to Generate Paper, not Prevent Fraud

May 24, 2002

Pinellas Charitable Solicitation Ordinance Designed to Generate Paper, not Prevent Fraud

Groups Suing County Request That Judge Enjoin County From Enforcing Ordinance

TAMPA, Fla. – The purpose of a Pinellas County ordinance regulating solicitations by charitable organizations appears to be requiring groups to produce reams of duplicative paperwork that gets stuffed in a file cabinet – not preventing fraud, according to a legal brief filed in federal court on Friday.

The brief was filed in the U.S. District Court for the Middle District of Florida as part of an ongoing lawsuit against the county alleging that the ordinance is unconstitutional. The brief asks the judge to determine that no debate exists as to the law’s unconstitutionality and to enjoin the county from enforcing it against charities. Those suing the county include the national nonprofit consumer advocacy organization Public Citizen, Greenpeace, American Charities for Reasonable Fundraising Regulation, and the Nonprofit Federation, a division of the Direct Marketing Association that represents hundreds of nonprofit organizations.

The groups, who sued in May 2001, contend that the ordinance is unduly burdensome and violates both the First Amendment and the Commerce Clause. The law requires charitable organizations to provide highly detailed and invasive information as a condition of obtaining and keeping a license to solicit contributions from Pinellas County residents. It gives the county discretion to deny groups the right to solicit donations based on a review of the wording of solicitation letters—a form of censorship. The law also requires nonprofits to register with the county simply because they receive an unsolicited contribution via the Internet, thereby sweeping within its reach charitable groups worldwide that have no connection whatsoever to the county, although the county has announced its intention to repeal that provision.

Already, charities file extensive information with the state of Florida and the IRS. Several aspects of the Pinellas law go well beyond that, seeking information that is of questionable value and would be almost impossible—and possibly illegal—to obtain. For example, the ordinance requires each charity to provide highly personal information about its officers and directors, such as their dates of birth and drivers’ license or Social Security numbers—information that is rife with the potential for abuse. Similarly, the law requires disclosure of whether any director, manager, or specified official has ever been employed by or a member of another organization registered in Pinellas County. Answering this would force charities to take the unusual step of investigating not only the employment and professional histories of its various directors, officers and employees, but also their affiliations with other groups, whether political, religious, or social. The law also demands charities to make detailed financial disclosures that exceed what either the IRS or the state of Florida require, and are so extensive that a charity attempting to register would have to totally revise its accounting system to provide the data in the manner requested.

Pinellas County does not have the staff, expertise or procedures in place to stop charitable organizations from making fraudulent solicitations, as is the ostensible purpose of the county’s ordinance, the brief says. Further, the county receives virtually no complaints about fraudulent solicitations, county workers admitted in depositions. The county does not verify information on the forms charities submit. Nor does it review materials for potential fraud —unless there is a complaint. Workers just file the forms away.

In fact, the county admits that it has received no complaints that a charity has committed solicitation fraud in Pinellas County, and it knows of no instances in which a charity has provided false information in its registration materials. This is important because case law says that a government regulating speech to redress past harms or anticipate future harms—such as fraud—must demonstrate that the harms are real, not merely conjectural, and that the regulation will alleviate the harms. For the ordinance to withstand a legal challenge, then, the county must show that solicitations by charitable groups are causing real harm in Pinellas County—which they aren’t, according to the county—and that workers use the ordinance to prevent the harm, which they clearly are not, since they don’t verify information on forms or conduct investigations.

Further compounding these problems, the plaintiffs argue, the ordinance also violates the First Amendment because it requires that a charity obtain the county’s permission before it sends a single piece of solicitation mail into the county. The issuance and revocation of permits in the county is a highly subjective affair dependent on differing interpretations of the county’s complicated ordinance and forms, and on the exercise of considerable discretion by county officials. There are inadequate procedural safeguards to alleviate the risk of censorship and to ensure that charities promptly receive their permits, the plaintiffs say.

“From top to bottom, this ordinance is unconstitutional. There are so many legal problems with it that it is difficult to know where to start,” said Bonnie Robin-Vergeer, the Public Citizen attorney handling the case. “This legal challenge is of critical importance. Nonprofit groups already are struggling under the weight of the requirements imposed by 40 states. If only a tiny fraction of local governments across the country enacted ordinances half as burdensome as Pinellas County’s, then the largest of national charities could be forced to close up shop.”

Click here to view a copy of the brief on the Web.