AUGUSTA — A bill proposed after the a state official ordered the Red Barn restaurant to stop holding its community fundraisers won the unanimous approval of a legislative committee Tuesday.
The proposed law change would allow businesses to raise funds for nonprofit organizations and people in need without registering as nonprofits themselves. Over the last five years, Red Barn in Augusta has raised $635,000 for various charities.
But in November, a letter from an assistant attorney general directed the restaurant to “cease engaging in solicitation as a charitable organization until you become licensed as a charitable organization or show why you do not need to be licensed as such.”
The bill, sponsored by Rep. Lori Fowle, D-Vassalboro, received a unanimous “ought to pass” endorsement from the Legislature’s Labor, Commerce, Research and Economic Development Committee after a work session Tuesday.
Alicia Barnes, business manager of the Red Barn and volunteer executive director of the Red Barn Cares Foundation, which is being established as a nonprofit organization to further the Red Barn’s charitable activities, said she and owner Laura Benedict hope the law change will encourage more businesses to hold fundraising events for people and organizations in need in their communities.
Benedict has credited the Red Barn’s regular fundraisers with saving the business by bringing in new customers and fostering loyalty. The restaurant hosts the events at no charge and provides free food to the charities.
“Laura is ecstatic. She couldn’t be more thankful for how this went down,” Barnes said. “We’re hoping some other businesses in town, which are already supporting the community, will do the same thing.”
Fowle, whose district includes a small part of Augusta where the Red Barn is, said she submitted the bill so other small, local businesses wouldn’t have to worry about getting into legal trouble while raising money for a worthy cause.
“Maine’s small businesses should be allowed to raise money for a good cause without having to deal with red tape,” Fowle said in a statement. “We should make it easier for more employers to be good citizens of the communities they serve. This is something that everyone wants.”
The first version of the measure would have eliminated state regulation and licensing requirements for nonprofit fundraisers, unless the person raising the money is being paid.
However, after committee co-chairman Sen. John Patrick, D-Rumford, and others raised concerns that the change could have the unintended consequence of removing all oversight of fundraisers, an amendment was added to maintain the requirement that nonprofit organizations raising funds for themselves register and be regulated by the state under the Charitable Solicitations Act.
People who are paid to raise money also still will have to register, and be regulated, by the state.
Fowle said the Charitable Solicitations Act was intended to ensure that telephone fundraisers, which she said are conducted primarily by out-of-state companies, actually are giving the money they raise to charity.
Attorney General Janet Mills said, in a prior public hearing on the bill, she was “vigorously in support of this bill.”
The Red Barn’s fundraisers resumed late last year after the restaurant was granted a waiver of the licensing requirement for December of last year, and there have been some fundraisers there this year, too. Barnes said the state licensing requirement applies to fundraising of more than $35,000, so they could continue their fundraisers this year because they haven’t hit the $35,000 limit yet.
The next fundraiser at the Red Barn is a March 17 event for Hall-Dale’s Project Graduation.
In response to the letter from the attorney general’s office, Red Barn created the Red Barn Cares Foundation, a fundraising arm of the restaurant. Barnes said work to establish the foundation, and attain federal nonprofit status, is ongoing. The foundation’s board meets later this month to plan future fundraising activities.
Barnes said the outpouring of support in the community for the Red Barn’s fundraisers has been overwhelming.
Keith Edwards — 621-5647 firstname.lastname@example.org