In an effort to gain understanding of the regulatory burden placed on charities across the United States, the Philanthropy Roundtable has released an index ranking the best and worst states for charity regulation, which found that states with heavier regulations have fewer charities.

Written by Pacific Research Institute economist Wayne Winegarden for the Philanthropy Roundtable, the 50-State Index of Charity Regulations (44 pages, PDF) compared states along five categories of charitable regulations: start-up regulations, annual reporting requirements, rules for paid solicitors, audit mandates, and oversight regulations. According to the report, the five states with the friendliest regulatory environment toward charitable organizations are Montana, Wyoming, Nebraska, Delaware, and Idaho, while the five states with the most burdensome regulatory environment toward charitable organizations are Connecticut, Mississippi, New Jersey, Florida, and Pennsylvania.

“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 Philanthropy Roundtable senior director of policy and government affairs 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.” 

(Photo credit: Getty Images/SDI Productions)