APRIL 2017



Goodwill Industries announced the merger of its northern and southern corporations to form a single entity in the state.


A Castle Rock resident has pled guilty in U.S. District Court to organizing a bogus charity and pocketing over $1 million. He was convicted of tax evasion which followed his previous conviction for charitable fraud. His fictitious organization received a great deal of publicity for its promotional campaign “Boobies Rock Awareness for Breast Cancer” in February 2011.


The state has elected not to retry the lawyer who was previously convicted of running a $300 million gambling ring out of internet cafes operated by a veterans’ nonprofit organization. The appeals court ordered a new trial and the state has declined to prosecute.


According to published reports, a for-profit Texas clothing recycling company collected $835,000 from 251 collection bins placed around the state to raise money for the Michigan Humane Society. The Attorney General alleges that only $49,000 was given to the organization in spite of the fact that the label says 100% of the market value of the donated items will be given. The state has issued a Cease and Desist Order to the company.

According to a recent report from the Michigan Attorney General’s office, the average percentage of the money kept by a professional fundraiser declined from 67% in 2015 to 61% in 2016. Even so, the Attorney General points out that the average percentage still it does not meet the standards of the Better Business Bureau.


A former Columbia-based agency once designated by the U.S. Government as a global terrorist organization faced a judgment in federal court. The Islamic American Relief Agency was ordered to transfer more than $800,000 in assets to a charity that assists farmers and drought victims in Africa. The organization was prosecuted for transferring nearly $1.4 million to Iraq in violation of U.S. Government sanctions.

New York

A cerebral palsy facility on Long Island is suing the widow of a Florida man who reneged on her $1 billion dollar pledge to the group. In this case, the facility named a wing after her family. The defendant claims they revoked their pledge in 2013 but the facility says they were never notified and relied upon the pledge to build the wing.

Commentary: In this case, there is no indication in the published report whether the pledge was made in the form of a written agreement. The legal quandary here is whether it is enforceable because the facility relied upon the pledge and the donor received the benefit of having the wing named after her. All such major pledges should be made via an enforceable written form.

North Dakota

The President of the Board of Directors for the Charitable Gaming Association of North Dakota is criticizing a legislative proposal that will pave the way for six state-owned casinos. The fear is that state-run casinos would take a large portion of the gaming profits from many of the state-based charities that rely on gaming activities to support their programs.


The city of Cincinnati is setting up under a contract a recycling program whereby residents can recycle used clothing. The city has entered into a contract with a for-profit service that will pay the city one cent for every pound of materials collected. The rub is that this program may destroy the programs of many charitable organizations that solicit the donation of used clothing and other household items.


There is another chapter in the Feed the Children saga. The organization previously hired J.C. Watts (former Oklahoma University quarterback and congressman) as president and CEO. Subsequently, he was fired and brought a lawsuit alleging that the firing was retaliation for reported problems and irregularities at the charity that were reported to the state Attorney General’s office. Mr. Watts left the charity in November, less than 10 months into his three year contract.


The Department of State has issued a press release announcing the filing of disciplinary actions against eight charitable organizations, professional solicitors, and professional fundraising counsel during the month of February. The press release notes that these organizations may not fundraise until they come into compliance with the state charitable solicitation act.


Effective July 1st, fundraising consultants will not have to register with the Division of Charitable Solicitations in the Office of the Tennessee Secretary of State. In addition, there is also a provision in the new law that deletes the requirement of disclosing the bank account information on a solicitor’s campaign notice.


A former Texas congressman has been charged with diverting $350,000 that he himself solicited for a nonprofit. The charge alleges that he used the money for personal and political purposes.

West Virginia

A bill that has passed the Senate may not survive because of its unintended consequences. Legislation was passed by the Senate that would prohibit the taking of an authorized deduction from a person’s paycheck without that person’s express written consent. Once the bill reached the house, nonprofit leaders pointed out that the language intended to limit deductions for political purposes could also be interpreted to prohibit deductions for charitable purposes. As a result, the House is now looking at the bill and will perhaps restructure it.


PayPal Lawsuit

A lawsuit was filed in Federal Court for the Northern District of Illinois earlier this month by a nonprofit and an individual against PayPal, Inc., a Delaware Corporation, and PayPal Charitable Giving Fund, a Delaware nonprofit corporation. The lawsuit alleges that PayPal established a new platform in 2013 for customers of the site to donate to their favorite tax exempt organizations. At the same time, PayPal created its own nonprofit organization to process and distribute the donations. The lawsuit alleges that not all of the nonprofit charities on the site received their donations. If you are a charitable organization, you may hear about this case because it has been filed as a class action.

New Zealand

A recent report entitled “the shape of the charity sector” indicates that there are 114,000 active charities in New Zealand. However, only 27,380 are registered with the country. The report estimates that the charities represent approximately $40 billion in assets.