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PC 604

Para enmendar el Artículo 23.02 del Capítulo XXIII de la Ley 164-2009, según enmendada, conocida como la “Ley General de Corporaciones” a los fines de establecer una presunción sobre toda organización sin fines de lucro que utilice más del cuarenta (40) porciento de sus ingresos en asuntos no relacionados para el fin social que se creó.

2025-2028 Session

Withdrawn bill would presume Puerto Rico nonprofits misusing funds if spending exceeds 40% on activities unrelated to their stated social mission.

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Bill Summary · PC 604

Legislative bill overview

Bill PC 604 proposes amending the General Corporations Law of Puerto Rico to establish a legal presumption that nonprofit organizations spending more than 40% of their income on activities unrelated to their stated social mission are operating improperly. The bill was introduced in May 2025 but was withdrawn by its author in September 2025 before advancing beyond first reading.

Why is this important

Nonprofit accountability is a legitimate public concern, as donor funds and tax benefits are predicated on organizations serving their declared missions. However, this bill would create significant operational and legal consequences for organizations, affecting how they can allocate resources for administration, fundraising, and ancillary activities—all necessary for nonprofit function.

Potential points of contention

  • Definition ambiguity: "Unrelated to the social purpose" is subjective and could be interpreted broadly to penalize legitimate operational expenses like administrative salaries, facility maintenance, and professional services
  • Arbitrary threshold: A blanket 40% threshold doesn't account for different nonprofit types (educational, medical, social services) which naturally require different expense ratios
  • Legal burden: Establishing a "presumption" shifts proof requirements, potentially making nonprofits guilty until proven innocent rather than subject to standard regulatory review
  • Operational impact: Many well-functioning nonprofits spend 30-50% on overhead and administration—standard best practices suggest 25-35% is sustainable, making this threshold punitive

Compiled from official sources — confirm details with the bill’s official record.

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