WASHINGTON – January 31, 2023 – Philanthropy Roundtable found that overregulation in the United States may lead to fewer charities in a state, according to The 50 State Index of Charity Regulations, released today and authored by Pacific Research Institute economist Wayne Winegarden for the Philanthropy Roundtable.
“While some regulations are needed to foster accountability, what this new research shows is that too much regulation inhibits Americans’ ability to effectively support causes they care about as donations are swallowed up by regulatory burdens,” said Senior Director of Policy and Government Affairs for Philanthropy Roundtable Elizabeth McGuigan. “This paper advances our understanding of the impact of regulations on the charitable sector and can inform states looking to improve their regulatory environment to better support people in need.”
According to Winegarden, more burdensome regulations require charities to spend more time, money and other resources complying with state mandates rather than fulfilling their charitable missions. “States with excessive regulations undermine the efficiency and effectiveness of the charitable sector,” said Winegarden. “States interested in making sure that charitable resources are available for those in need should streamline state regulations and eliminate the ones that are unnecessary or overly burdensome.”
By comparing states along five categories of charitable regulations, Winegarden determined the best and worst states for charities to operate in.
Top Five States (those with the lightest regulatory burdens):
- Montana
- Wyoming
- Nebraska
- Delaware
- Idaho
Bottom Five States (those with the heaviest regulatory burdens)
- Connecticut
- Mississippi
- New Jersey
- Florida
- Pennsylvania
Our society and those in need depend on a thriving, vibrant charitable sector but little research has been done before this paper to examine the impact of overregulation on the charitable sector. The evidence suggests excessive levels of regulation are counterproductive to fostering a positive environment for charities and those they serve.
Read The 50 State Index of Charity Regulations here for more findings and methodology.
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