O’Malley Signs Bill to Curb Scam Charities

Gov. Martin O’Malley signed a bill last week that will help the state identify bad charities and give them enforcement power over charities that aim to scam Maryland residents.

“I became aware of it from constituents who said ‘I got burned,’” said District 11 Delegate Dan Morhaim, who sponsored House Bill 1352. “And when they get burned, they don’t want to give again.” District 10 Sen. Delores Kelley cross-filed companion Senate Bill 0964.

The bill coordinates Maryland’s attorney general and secretary of state offices to identify and regulate bad charities, and shut them down if necessary. It also raises money for an updated charity database that Morhaim and advocates hope will eventually make 990s, the IRS forms nonprofits file, searchable.

“It deals with the resource problem by raising fees on charities that collect over half a million dollars a year,” said Henry Bogdan, director of public policy at the Maryland Nonprofits Association, referring to the limited resources the Maryland Secretary of State’s Office can devote to combing through 990s. “Charities say it’s worth it to have a searchable system.”

It is estimated that Marylanders give $1.5 billion to charity each year, said Morhaim, who is a member of the boards of the Baltimore Humane Society, Unified Community Connections and Health Care for the Homeless. Computerized filing will be easier for nonprofits and will help the state identify bad nonprofits, he added.

Morhaim cited a 2013 report by the Tampa Bay Times called “America’s Worst Charities,” which listed 50 charities that spent from no money to 11.1 percent of donations on the designated cause. The nonprofits had names such as Kids Wish Network, National Veterans Service Fund and National Caregiving Foundation.

“They sound good, and their websites are good, and people are nice on the phone when they call,” Morhaim said. “It sounds very legitimate, and people give money, and maybe they know that 90 percent or 99 percent of it doesn’t go to the designated cause.”

A work group consisting of stakeholders from the IRS, the nonprofit world and the state is being formed to monitor this issue and improve the system in coming years, Bogdan said.

“It’s important for charities that the public has trust in them,” he said. “It’s a difficult environment; we have to make sure we have the capacity to deal with it.”


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