Monday, October 10, 2016

Holy Toledo! You'll never believe what this City makes fundraising nonprofits do...

As noted last week, charities that solicit a significant amount of funds from residents of a state are required to register with the state’s attorney general, and provide some financial information.  Complying with all of the nuances of the varied state requirements is burdensome, and many organizations fail to follow all of the rules.  City of toledo seal

Deciphering all of the state laws is hard enough; now add to this complexity the reality that the tens of thousands of cities, counties, and other local governments often can impose their own requirements in addition to those imposed by their states. For example,  the City AND County of Los Angeles, for example, have a lengthy set of regulations for charitable solicitors that differ from those of the State of California. 

Compliance with all of these city laws is expensive and enforcement spotty, but there are many dutiful organizations that spend tremendous energy on trying to comply, lest they be the next target of a suddenly-energetic Attorney General or City Solicitor.

Below the jump, I’ll profile the uniquely burdensome—and doubtlessly unconstitutional—set of charitable registration requirements that the City of Toledo, Ohio continues to implement.

The City of Toledo has an ordinance that requires any charity that solicits donations—at any amount—by phone or in any public place in the City, to get a permit before soliciting. Toledo Ord. § 757.03.  Failure to do so is a crime.  757.99. Among the features of this permitting regime:

  • A permit is only good for 30 days at a time, § 757.12
  • Application must contain details about the method of soliciting, § 757.04
  • The application requires 3 letters of recommendation from City residents, § 757.04,
  • Charity must identify a treasurer who is a City resident, § 757.05
  • Charity must post a $1,000 bond, § 757.08
  • And, most shocking of all, the Director of Public Safety has the discretion whether to approve the permit based on his/her view of whether:
    • The field is already covered by another charity
    • The solicitation “will be beneficial to the people of the City, either collectively or individually”
    • The solicitation “will not be an undue or unwarranted burden upon the class of persons who will be solicited to contribute,” and
    • The solicitation “will not interfere with or hinder or prevent the activity of any person, persons or organization to whom permit hereunder has already been granted.” § 757.06

Now, you might say: “That’s absurd! Surely the City doesn’t enforce such an antiquated ordinance?!”  Well, yes and no:  It is true that not every soliciting charity has been admonished by a city official to follow these rules (much like state-level registration laws), and it’s also true that this ordinance is comically outdated (passed in the 1950s).  However, it remains on the books—even as Toledo repealed adjacent laws due to constitutional concerns, it left these rules for charities in place.  And many prudent charities have dutifully complied with their legal obligations and applied for a permit every 30 days. Indeed, in recent years, dozens of charities have jumped through the Toledo’s permitting hoops, including The Salvation Army, the Juvenile Diabetes Research Foundation, and several local charitable, church, and student groups.  At least one group cancelled a fundraiser in the city because it couldn’t get a permit issued in time.

I think it is uncontroversial to say that this regime is an unconstitutional burden on charities’ right to free speech.  First, the law vests discretion in a city official to weigh the worthiness of a charitable cause, which is foreclosed by generations of First Amendment precedent.  See, e.g., Cox v. State of La., 379 U.S. 536, 557 (1965).  Second, the particular burdens imposed on charitable speech (e.g., letters of recommendation, treasurer must be city resident, $1000 bond) are unlikely to survive exacting scrutiny.  See, e.g., Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S. 781, 798, 802 (1988). Uneven enforcement of the law doesn’t make the problems with the law disappear; indeed, arbitrary enforcement makes it worse, as the burdens of compliance fall unequally and unpredictably on some organizations but not others.

Toledo needs to repeal this law immediately, to stop charitable resources being wasted on compliance with an unconstitutional set of rules.  But the continued existence of laws like Toledo’s highlight the potential administrative nightmare of complying with the hundreds (thousands?) of local registration laws. 

@JosephWMead

https://lawprofessors.typepad.com/nonprofit/2016/10/holy-toledo-youll-never-believe-what-this-city-makes-fundraising-nonprofits-do-.html

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Comments

The link embedded in "tens of thousands" contains an extra ) at the very end so it won't open. I'd suggest deleting that ).

Posted by: Anne Freiermuth | Oct 11, 2016 9:32:46 AM

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