Jedynak: New Jersey’s regulatory happy environment strangles civil society

OPINION

The power of private, voluntary action, known as civil society, is the bedrock upon which our nation was built. 

But here in New Jersey, onerous government regulations and a policy environment that is hostile to economic freedom and wealth creation leave the state stuck behind when it comes to empowering citizens to organize and solve problems in their community.

How far behind? In new research by Philanthropy Roundtable, the Free to Give Index, New Jersey ranked 49th – making it the second least friendly state to charitable giving and philanthropy in the country.

The index, which ranked states based on 33 measures across 3 categories assessing their economic and tax policies, nonprofit freedom, and donor protections, highlights another casualty of New Jersey’s regulatory-heavy, big government environment: civil society.

New Jersey has just 68 charities per billion dollars of our state GDP, compared to states that made the top 5 of this index, which average 122 charities per billion dollars of GDP.

In many ways, this shouldn’t come as a surprise. We’ve long known that so many of the precursors to charitable giving and the wealth creation that enables them are under fire in the Garden State.

For more than 15 years, New Jersey has been in the top 10 states with the highest outbound migration, with an exodus of retirees in particular. With household giving levels highest among those aged 60 and above, and research showing that personal connection to community is a key driver of charitable giving, this undoubtedly hurts the organizations that serve people in need across our state.

It’s bad enough that organizations find themselves competing with the currents of New Jersey’s tax and spend policies to support their work. To add insult to injury, high fees and a maze of registration and filing requirements disincentivize the little guys from coming together to solve problems they see in their neighborhoods.

In New Jersey, if an organization wants to hire a fundraiser to help support their work – because their neighbors with the means to give continue to flee in droves – the state still has to get its hands in the process. On top of having to pay the piper by way of fees other states don’t have, they have to file their contracts with the state. Meanwhile, the top-ranked state for Montana has very few fees or registration requirements. Unlike New Jersey, they trust adults to be adults and do business with each other honorably.

On top of the hostile economic environment and barriers to starting organizations to solve local problems, the state also does nothing to make donors feel protected in their giving. We saw this most recently in the conflict between First Choice Women’s Resource Centers v. Davenport. The state was so convinced it had the right to expose private charitable donors, with no compelling reason whatsoever, that they fought the case all the way to the Supreme Court. In an unusual unanimous ruling, the Court told the state that forced disclosure of private donor information violates the First Amendment right to association.

What message does that send to New Jerseyans? The state knows best. It’s the same mindset that’s driven the tax and fee regime that has made New Jersey’s business climate the worst in the region. It’s no surprise that civil society finds itself on the ropes.

The economic woes of our state and the high tax regime will take years, if not decades, to fully disentangle. But there are a few simple things policymakers can do to empower people to step up and make our state stronger:

First, take a lesson from the Supreme Court’s ruling in First Choice Women’s Resource Centers v. Davenport and treat donor privacy as the foundational right it is. People shouldn’t have to fear backlash or retaliation for supporting causes they care about.

Second, reconsider onerous nonprofit registration requirements and high fees that keep organizations from investing in their missions. We don’t need government siphoning resources from on-the-ground work in our communities.

Third, understand that New Jerseyans do great things when we come together to help each other. The people and the spirit of this state are exceptional and innovative when given the freedom to think big.

We know that economic freedom, regulatory environments that incentivize private solutions to local problems, and a respect for the constitutional right of association allow charitable giving to thrive. And there is no shortage of improvements New Jersey can make to be a place where the freedom to give is supported and protected. What better time to start than America’s 250^th birthday?

Erica Jedynak is a board member of the New Jersey Policy Institute and a non-profit leader, and resides in Morris County with her family.