Grand Jury Urges Tighter Fund-Raising Regulations

The Orange County Grand Jury, in a report released Friday, recommends that the Board of Supervisors tighten regulation of charities that solicit donations and require, for the first time in the county, licensing and bonding of professional fund-raisers.

The report also recommends that the county government and Orange County’s 28 cities work more closely to collect and investigate reports of solicitation fraud and to make public the proportion of donations an organization keeps for its own costs. That information should be obtained through regular audits, it said.

“There is not much you can do when they keep most of the money themselves,” said Carolyn Post, a grand jury member who helped prepare the report. “But you can tell people what the percentages are.”

Board of Supervisors Chairman Thomas F. Riley said he had not seen the grand jury’s report, but he indicated he would not support any action, such as the audits, that would cost the county money.

“I’m hesitant to suggest that we take on that responsibility,” Riley said. “I would rather use the money for battered and abused children.”

Riley said that past discussions of how to better regulate solicitations have led him to conclude that what is needed is a tough ordinance that somehow covers cities as well as the unincorporated areas under the county’s jurisdiction. The county’s 28-year-old charitable-solicitation ordinance covers only the unincorporated areas.

The grand jury issues periodic reports to the supervisors on the operation of county government. The supervisors can approve, modify or ignore the recommendations.

In addition to recommending the licensing and bonding of professional fund-raisers and making public financial breakdowns, the report released Friday specifically recommends that the county:

Revise and update the county’s charity solicitation ordinance.

Determine if the county public information office, which now administers the ordinance, is the appropriate agency to do so.

Direct county workers to evaluate applications for solicitation rather than simply file them, and hire other agencies to help audit organizations and investigate complaints of fraud.

Discuss with members of a city-county coordinating committee the possibility of setting up a central computer file and a single, countywide hot line for reports of fraud.

The grand jury looked into the matter of charity solicitations at the suggestion of Riley and then-Board of Supervisors Chairman Harriett M. Wieder, Post said. Updating of the county’s ordinance was needed anyway, she said, because of a U.S. Supreme Court ruling that made unconstitutional a portion of the county’s ordinance.

The ordinance requires solicitors to tell potential donors at the time of the solicitation how much of their donations will go to administrative costs. But the court struck down such a requirement.

With that section excised, all the ordinance requires is that charities file a notice of intent to solicit, a financial statement and report on the campaign once it is over.

The ordinance gives the county the authority to audit firms, but that does not occur on a regular basis, Post said. Professional fund-raising firms are not covered by the measure.

“There is no data-sharing between any of the cities and the county; they operate under different ordinances and have different requirements and enforcements,” the grand jury report said.

In other areas of the state, the report said, fund-raising firms are licensed and required to post as much as a $5,000 bond for each principal in the company and $1,000 for employees.