Dec 14, 2009
Call to Action—Consumer Financial Regulation
Positive news but we need your help
Background on CFPA
H.R. 4173 (passed by the U.S. House of Representatives on Dec. 22, 2009 as part of the Wall Street Reform and Consumer Protection Act) would create a new agency, the Consumer Financial Protection Agency (CFPA), with regulatory authority over “consumer protections” regarding financial services, activities, and products. Affected organizations under CFPA authority would be subject to potential certification/registration/examination processes and fees. As originally proposed, the expansive definition of “financial activity” would potentially subject nonprofits to CFPA authority because of their fundraising efforts (charitable giving advice/planning/donor instruction) or if the nonprofits include any financial education (no matter how basic), credit counseling, debt management, or tax planning (other than return prep) as part of their programming.
The Alliance for Charitable Reform (ACR) Team, along with help from a coalition of organizations from the charitable community including Independent Sector, DMA Nonprofit Federation, United Way, and others, was able to quickly engage members of the House Financial Services Committee and alert them to this troubling aspect of the CFPA legislation. We were able to work with Reps. Perlmutter and Paulsen to ensure that at least “charitable giving” advice and instruction would NOT be a trigger for CFPA coverage of nonprofits – hence the language eventually included in Chairman Frank’s Manager’s Amendment on the House floor, via a floor amendment filed by Rep. Perlmutter. As part of this process, ACR was instrumental in putting together a letter (please see attached) to Chairman Frank advocating for our charitable giving language to be included in the Manager’s Amendment. We were able to work closely with the CFPA coalition to gather multiple signatures for the letter from the nonprofit community including Independent Sector, Council on Foundations, the Philanthropy Roundtable, United Way, Association for Gospel Rescue Missions, DMA Nonprofit Federation, and six other organizations. Our champions were pleased with the letter and felt it helped our efforts.
This win in the House is a very important step to help mitigate the impact of this legislation on nonprofits; however, we are not finished. It was very important to get language into the broader legislation at this point in the process to help leverage our efforts in the Senate to hopefully obtain similar language in their regulatory reform bill, which closely mirrors the original House CFPA bill. We are also working in the Senate to mitigate the impact on nonprofits with regard to the CFPA’s authority over their financial education activities. We are pleased to report that we have opened up a dialogue with Chairman Dodd’s staff on our concerns as they are somewhat open to working with us through this process to potentially mitigate some of the unintended consequences on nonprofits.
We need to continue engaging senators with clear examples of the vast number of nonprofits that will be significantly impacted by this legislation for offering any type of financial education as part of their programming – including teaching the basics of establishing financial security or holding a budget or check-balancing seminar. We would appreciate any examples that you can send as to how this legislation may affect your organization – particularly if you are using any type of financial education as part of your services - please let Amy on our ACR staff know immediately (.(JavaScript must be enabled to view this email address)). We would like to provide Members of Congress with concrete examples of how this legislation may affect the nonprofit community in our meetings and discussions.