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HomeMy WebLinkAboutIR 6969 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6969 M,R T E R,0 �05 f0J? To the Mayor and Members of the City Council September 25, 1984 �-' �TexAys Subject: CONSTITUTIONALITY OF CHARITABLE SOLICITATIONS ORDINANCE X073 On June 26, 1984, the United States Supreme Court rendered a decision in the case of Secretary of State of Maryland v. Joseph H. Munson Co., Inc. In this case, the Supreme Court held unconstitutional, a Maryland statute which made it unlawful to solicit for charitable contributions when a charity's fund-raising expenses exceeded 25 percent of the gross amount collected, despite the statute's provision for an administrative waiver of the percentage limitation where a charity could show that such limitation would effectively prevent it from raising funds. The statute was determined to be violative of the right of free speech guaranteed by the first and fourteenth amendments to the United States Constitution. The Munson decision represents a significant expansion of the Supreme Court's prior holdings in the area of charitable solicitation regulation and effectively overrules prior lower court decisions, including National Foundation v. City of Fort Worth, 415 F.2d 41 (CA5-1969), in which the predecessor to Fort Worths current ordinance was upheld against constitutional attack. Because of the substantive similarity between the Maryland statute and certain provisions of Fbrt Worth's current ordinance, the City Attor- ney's office was asked to review the City's ordinance in light of Munson. The City Attorney's office concluded that those portions of the present ordinance which allow the denial of a permit to solicit for charitable contributions based upon the percentage of fund-raising ex- penses in relation to the gross amount collected crust now be deemed un- constitutional. (See Section 32-6(d), Code of the City of Fort Worth) . Further, it was the opinion of the City Attorney's office that the Munson decision brought into question the validity of the ordinance as a whole. It was concluded that the Court in Munson was sending a clear signal that the only constitutionally valid approaches to regulation of charitable solicitations would be the passage and enforcement of ordi- nances which would (1) punish fraudulent solicitations and/or (2) re- quire financial disclosure by charities. It would appear that the City's present system or regulation, which makes it unlawful to solicit for charitable contributions with the City without a permit to solicit issued by the Charitable Solicitations Commission under the standards enunciated in the ordinance, is unconstitutional. As a result of the Munson decision, it is apparent that there is a need to reassess the City's activities in the field of charitable regulation. It is recommended that the necessary steps be taken to repeal the present ordinance and that the following policy option be explored: 1. Deregulation at the Municipal Level. This option would entail the discontinuation of regulation of charitable solicitations by the City. In conjunction with ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS —�— INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6969 - n.2 10,ATE 4, 02'ex�,�. To the Mayor and Members of the City Council September 25, 1984 --, Subject: CONSTITUTIONALITY OF CHARITABLE SOLICITATIONS ORDINANCE X073 this, the City might also consider one or a combination of the following: (a) Press for state legislation regulating charitable solici- tations. Since many charities now operate on a statewide (and also nationwide) basis, it could be argued that the state, with its superior resources and jurisdiction, would be in a more effective position to regulate such activities; (b) Rely on the private sector to police charities. Non- governmental organizations (such as the Better Business Bureau) might perform functions such as examination of chari- ties' financial position, etc., and informing the public re- garding charities which make efficient use of contributions and those which do not; (c) Have the City staff develop educational programs designed to better inform citizens on how to evaluate charities and make their contributions wisely. 2. Continued Regulation by the City. If it is determined that the City should continue to actively regulate charitable solicitations, it would appear that the following approaches would be viable from a constitutional standpoint: (a) Passage of ordinances which would define and outlaw fraudulent solicitation practices; and/or (b) Passage of ordinances which would require financial dis- closure by charities to either (1) potential contributors directly or (2) to the City, which would keep such financial records on file for inspection by the public. Of course, in determining whether or not to continue regulation of cha- ritable solicitations, an important factor to be considered is the costs of such regulation versus the benefits to be derived from such continued regulation. The City staff requests guidance from the City Council on this matter. Once a basic course of action is established, the staff will be in a position to develop more specific proposals for the Council's conside- ration. ISSUED BY THE CITY MANAGER — FORT WORTH, TEXAS --- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6969 - p. 3 A,PTIRFO ��EVORP To the Mayor and Members of the City Council September 25, 1984 ~�N xpy Subject: CONSTITUTIONALITY OF CHARITABLE SOLICITATIONS ORDINANCE eT� If the Council desires additional information, it will be provided upon request. Robert L. Herchert City Manager RLH:kcnn ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS --