California Governor Signs Controversial Charity Bill

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September 30, 2004

California Governor Signs Controversial Charity Bill

By Grant Williams

California Gov. Arnold Schwarzenegger has signed a controversial bill that would change the way many nonprofit organizations manage their finances and how they seek contributions within the state. The legislation takes effect on January 1, 2005.

The bill, which was based on recommendations by California Attorney General Bill Lockyer, was designed to tighten financial management and governance of charities and prevent fund-raising abuses by nonprofit organizations.

The California Association of Nonprofits, an umbrella group that represents more than 1,700 organizations in the state, and others had opposed the bill, saying the measure would make unnecessarily extensive and complicated changes to current law and be especially burdensome for small charities (The Chronicle, September 16).

In a letter to state lawmakers, Governor Schwarzenegger made clear that he had concerns about the bill.

"I am signing Senate Bill 1262 with the understanding that while I support transparency, accountability, and curbing unscrupulous activities, I encourage the Legislature to ensure the nonprofit community is not subjected to needless bureaucracy, thereby potentially hampering the work and contributions made by nonprofits who are serving California communities in need, " the governor wrote. "If this bill results in unnecessary expense to the nonprofit community, I encourage the Legislature to revisit this issue."

In a statement, the California Association of Nonprofits said that it was disappointed that Mr. Schwarzenegger signed the bill.

"Nevertheless, we are pleased that the governor in his signing message encouraged the Legislature to take a careful look at the costs of this bill," the association said. "We hope this evaluation will be the first step toward more careful analysis of the outcomes and impact of the laws governing nonprofit behavior."

To read Mr. Schwarzenegger's complete statement, go to the governor's Web site at http://www.governor.ca.gov/govsite/pdf/press_release/SB_1262_sign.pdf.

To read the bill, and obtain more information about it, go to the Legislative Counsel of California's Web site at http://www.leginfo.ca.gov.

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