CalNonprofits has alerted us that AB 2855 is a bad bill with no silver lining.
Introduced by Assemblymember Jim Frazier, AB 2855 would require disclosure of administrative and overhead expenses and a copy of the most recent Internal Revenue Service Form 990 filing on a nonprofit’s webpage.
What?! That’s bad enough, but it gets worse. The bill goes on to propose that violating any of these requirements would be a crime subject to suspension or revocation of the nonprofit’s tax-exempt status. It would authorize the Attorney General to take any other enforcement action within its existing powers and duties.
No wonder CalNonprofits is opposing this bill: it places duplicative and unnecessary requirements on nonprofits, and then imposes penalties that are far out of proportion. You can read CalNonprofits’ letter to Assemblymember Frazier here.
This bill plays on many of the same old tired misconceptions about nonprofits and overhead. CalNonprofits and other nonprofit advocacy groups have been campaigning to get the public and government officials to understand what overhead expenses really are, like our utilities, insurance, legal compliance and accounting costs. And while a high overhead percentage could theoretically be cause for concern, it is also the case that organizations like PTAs and food pantries often have high overhead percentages merely by virtue of their high contributions of work by volunteers.
And information about nonprofits is not exactly a secret. The IRS Form 990 is already available to the public, the California Attorney General’s office maintains a public Registry of Charities that provides information about whether a nonprofit is complying with state rules, and many nonprofits do post financial information on their websites now.
Sadly, this bill plays on public fears about the shady deals of a few high-profile scam charities. But we know that the overwhelming majority of nonprofits are conscientious, and get by on lean budgets and armies of volunteers to provide critical services for our communities.
1. Please call Assemblymember Frazier’s office now with this simple message: Withdraw this bill. Call 916-319-2011 today.
2. Pass this information on to your nonprofit colleagues and ask them to oppose AB 2855.
Thanks for joining us in this fight to protect nonprofits!
For questions or more information, contact CalNonprofits Policy Director Nancy Berlin firstname.lastname@example.org. Let us know you’ve called Assemblymember Frazier by replying to this email or emailing Nancy directly.