Consumer Finance Protection

In response to the financial meltdown in 2008, the White House and Congress have sought to reform regulation of the financial industry, and in particular, to protect consumers. Bills introduced in the House and Senate would apply recordkeeping, regulatory oversight and enforcement provisions to nonprofits offering advice on charitable donations and to those providing financial literacy training. The National Council recognizes the need for financial reform to protect consumers from fraud and abuse. But an earlier version of the House legislation would have covered food banks, homeless shelters, and other poverty-assistance nonprofits simply by teaching individuals how to balance their checkbooks. Therefore, charitable giving advice, education programs, and similar services offered by nonprofits should be specifically exempted from the new regulatory regime.    

Why It Matters to Nonprofits

Nonprofits could face new regulations and oversight as financial service providers. This could create additional administrative costs and burdens on small community nonprofits. 

Status

The House passed a version of this legislation (HR 4173) that included the creation of a stand-alone Consumer Financial Protection Agency. The House amended this bill to exempt financial advice relating to charitable donations. The Senate Banking Committee passed the Restoring American Financial Stability Act of 2010 (S.3217) sponsored by Senator Dodd (D-CT) on March 22. The new Senate bill only regulates financial institutions with more than $10 billion in assets. The Senate voted (60-40) to end debate and pass their verion of financial reform on May 20. The House and Senate must now reconcile the differences between their respective bills.

What Nonprofits Can Do

Contact your Representatives and Senators and let them know how the regulation of charitable giving advice or financial literacy programs would impact your organization. 

Additional Resources

A coalition of nonprofit organizations has sent a letter to Senate Banking Committee Chairman Dodd raising concerns about the impact of legislation on charitable giving advice and financial literacy programs offered by nonprofits.

The National Council of La Raza has sent this letter to Congress in support of a new Consumer Protection Agency.