A bill that would have given the D.C. government broader authority to investigate and sanction the business practices of nonprofits has been pulled from the City Council’s 2006 agenda amid complaints from charitable organizations and associations.
The legislation — revising a more than 40-year-old law setting out the city’s oversight powers regarding nonprofits — made several key changes that triggered objections from associations and charitable organizations. The bill would have given the city’s attorney general authority to subpoena witnesses, require nonprofits to turn over records during an investigation and expand the range of judicial remedies against nonprofits. Currently, oversight falls under the mayor’s office and the only judicial remedy is dissolution of the organization.
The legislation would also have narrowed the definition of a nonprofit to an organization working for “a purpose other than to generate income, profit or an increase in monetary value.” Some organizations said this would limit them from raising revenue to support their operations.
Introduced by Councilmember Phil Mendelson in May, the bill was scheduled for mark-up during a Friday session of the Committee on the Judiciary. It was tabled until next year after Mendelson’s office received nearly two dozen complaints.
“If you’ve got 20 nonprofits screaming, that’s a lot,” said Janene Jackson, a clerk for the committee. “[Mendelson] sensed that there was growing uneasiness and anxiety and the best approach was to reintroduce it in January and give everyone a chance to comment on it.”
The American Society of Association Executives was vocal in opposing the bill, saying it could have “unnecessary consequences” for associations, including blocking them from generating income.
“Given the large presence of associations and other nonprofit organizations that have chosen to headquarter in our nation’s capital, it is alarming that the D.C. City Council is moving forward with this legislation without inviting the perspectives of the community that will be affected,” said ASAE President and CEO John Graham in a statement.
Charitable organizations are not necessarily opposed to the changes but were concerned about the language, said Lee Mason, director of public policy and community relations for the Center for Nonprofit Advancement.
“The problem with this bill was it tried to revise certain parts and give the attorney general oversight, when it really needs to be rewritten,” said Mason, whose organization represents the interests of 1,000 nonprofits in the Washington region.
Members of the organization testified in favor of the bill at an Oct. 19 hearing because they wanted to give investigative powers to the attorney general as soon as possible, Mason said. They had hoped to revisit some of the language issues next year after the bill passed.
“We agree that there are circumstances where the attorney general needs more tools in order to police nonprofit abuses that are harming the public interest,” Mason said. “I don’t think anyone would disagree with that. What we need to work out is how broad the authority should be. The idea — that it’s worth taking more time to do that — is fine.”
