JUNE 2015


Earlier this month, the IRS gave a reminder that donations on personal fundraising websites are not deductible if earmarked for particular individuals.  Conversely, donations made to charitable organizations without the limitation are deductible.

A notice has been issued that new draft rules on electioneering by nonprofits will be released sometime, hopefully, this month.  This is in response to numerous complaints about the last election’s regulatory efforts.
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The Advisory Panel to the IRS issued several suggestions in its mid month report.  Primarily the Panel supports a congressional mandate to require electronic filing of IRS Form 990.  The report also suggest an extended deadline to facilitate the process.  The Advisory Panel also suggested that a committee be convened to study potential changes to the IRS Form 990.  It has been the subject of some criticism that it has become far too complex.

The Alliance of Nonprofit Mailers received a decision from the court on the 4.3% exigent surcharge.  The ruling was favorable.  The surcharge will not be permanent.  



Veteran groups in the state are allowed to conduct raffles.  However, state officials are claiming video terminals (look like slot machines) being used to sell raffle tickets constitute illegal gambling.  The groups are taking the state to court.  Veteran groups, like the local VFW and American Legion, have grown dependent on the income generated by raffles.

A well known environmental attorney has come under fire in an article published on the news site of Inew Source.  The essence of the article is that the attorney, along with family and friends, created more than 19 nonprofits with a focus on public education about the environment.  On numerous occasions, the entities have been used as plaintiffs in lawsuits challenging developments in the San Diego area.  State officials and outside experts have been critical of the establishment of these numerous nonprofits and the failure to operate them in a proper manner.  Few are properly registered according to published reports, and few have proper board members and ongoing activities, other than supposedly acting as vehicles for environmental challenges.
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Legislation, supported by the Attorney General to strengthen the state’s charitable solicitation laws, continues to progress.  A number of amendments were accepted by the sponsors, and as a result there appears to be little opposition to its passage.

The Boston Business Journal reported that the researchers hired by the Boston Foundation to prepare what was expected to be a widely touted and most positive economic analysis of Boston’s Olympic application refused a proposal to consider the likely effects on local charities.  The Journal went on to say that the omission of consideration of the impact on local charities is significant because of existing evidence that prior Olympics hurt local charities in other host cities.  What is peculiar is the fact that the Boston Foundation is one of the largest in the region.  
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In perhaps one of the first backlashes to the multi-state/FTC action, Bill 271 has been introduced which would require any person who solicits charitable donations for profit to comply with certain guidelines that require additional point-of-solicitation disclosures.  (Comment: Hopefully well-seasoned calmer heads will prevail and this legislation will not pass.  It clearly is a form of compelled speech).  
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A trial court in the state dismissed a lawsuit brought by students at Harvard University against the university, joining the Office of the Attorney General and demanding that the university divest its investments in what the plaintiffs call “dangerous fossil fuels.”  The joinder of the Attorney General was necessary because the issue involved investment of charitable assets.  The court did not find the students had standing to bring the claim.  

After suing Savers, which operates thrift stores, the state has widened the lawsuit by suing one of Saver’s charitable clients.  The Attorney General announced that the case was filed against the charity because the organization had not signed a proposed consent agreement.
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Congressman Richard Noland (D-M) announced he had written a letter to the House Oversight and Government Reform Committee, citing alleged waste of $500 million by the American Red Cross in its efforts to help victims of the 2010 earthquake in Haiti.  The letter calls for a congressional inquiry of the American Red Cross.  The American Red Cross has responded by expressing concern over the lack of accuracy of the claim.
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The Minneapolis Foundation (one of the very first community foundations in the world) was started 100 years ago this month by Twin Cities business people.  (Comment: According to most reports, the Minneapolis Foundation was second only to the Cleveland Foundation, introducing a concept that has been adopted across the country).
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The Department of Revenue has released a new sales tax fact sheet, announcing that the annual fundraising exemption for youth and senior citizen nonprofit organizations has been increased from $10,000 to $20,000, effective January 1, 2015.  The fact sheet also provides a new clarification of the term “fundraising event.”

A St. Louis area-based charity unsuccessfully sued the local Better Business Bureau, which issued a warning to consumers urging them to be cautious when dealing with the organization’s car donation program.  The essence of the claim was tortuous interference with business expectancy, but the court said there was nothing in the release by the local Better Business Bureau that was actionable.

In early June, Governor Brian Sandoval signed Assembly Bill 50 into law.  The legislation, in large part, corrected the errors in a previous attempt to require charities to register with the state.  The new law goes into effect on October 1, 2015, and includes a comprehensive registration requirement.  (Comment: A number of trade organizations and individuals in the nonprofit community worked on making the legislation better than as originally proposed).

A local accounting firm joined with Terry Knowles, Assistant Director of Charitable Trusts, Office of the Attorney General, and the New Hampshire Center for Nonprofits to provide a workshop on “Guarding Against Fraud and Embezzlement,” which took place on June 18, 2015.  

Senate Bill 5893 would prohibit publicly accessible receptacle bins being placed on public property, and would require unattended clothing receptacle bins to contain a number of disclosures.  The law, if passed, would also give the landowner or leaseholder rights to terminate any agreement with an organization maintaining an unattended clothing receptacle bin on his/her property.  The law would also heighten the requirements on the bin owner with regard to its maintenance and appearance.

The Nonprofit Quarterly recently published an article of interest.  The article reported that since 2003, the Houston branch of the Better Business Bureau has been auditing charities and nonprofits in south Texas.  These audits are voluntary.  Some hospitals have refused, while others have agreed.  The article raises the question:  should a nonprofit have to agree to be audited by the local Better Business Bureau?
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A recent survey by Charity Navigator rated the Houston philanthropic community as the healthiest in the nation, followed by San Diego, Boston, Los Angeles, Miami, and Philadelphia).

Senate Bill 1017, pertaining to unattended clothing bin receptacles, will go into effect on July 1, 2015.  The Bill requires conspicuous notices, depending upon who owns or operates the clothing bin receptacles.  The new requirements also include obtaining a notarized consent from the landowner or leaseholder.  The receptacles must be emptied every 2 weeks, and have detailed disclosures on signs that must appear on the front and at least one other side of the receptacles.

The Office of the Attorney General has announced a mediation resolution over a dispute involving Sweet Briar College.  Lawsuits were filed over the future of the college.  One faction wanted the college closed, while another faction was fighting to keep it operating.  As a result of a settlement, the Office of the Attorney General has agreed to the release of $12 million from the college’s endowment.  In addition, the current trustees and president of the college have all agreed to step down and be replaced.  The college has committed to continue operating, at least for the next academic year if not longer.

There has been a positive change to the charitable solicitation law in the state.  The threshold for charitable organizations required to have a full audit has been raised from $200,000 to $500,000 per year in revenue..  Secretary of State Natalie Tennant praised the change in the law, which brings the state into accord with most other states, allowing smaller charities to avoid the expense of an audit and thereby freeing up more money for program services and mission.



According to an article in The Wall Street Journal, charitable giving by Americans rose to a record $358.38 billion in 2014, which surpassed the previous high set in 2007.  The year 2014 was the fifth straight year of growth in charitable giving since the onset of the recession.

The Hudson Institute conducted a study that evaluated countries’ philanthropic-related barriers, as well as their incentives.  The study reported that the Netherlands ranked number one with the United States, Germany, Canada and France following it.  Of the 64 countries covered in the survey, Saudi Arabia was found to be the worst for individual giving.

The Associated Press reported that the country’s parliament has given preliminary approval to legislation that would allow prosecutors to declare foreign international nonprofit organizations “undesirable,” and take away their ability to exist in the country.  (Comment: Obviously most of the organizations affected are “western,” and the action is a further indication of the chilling relationship between Russia and the west).

The Fund Raising Standards Board reported it has received almost 400 complaints about the frequency of requests for money following the death of a 92 year old woman, who committed suicide as result of allegedly being overwhelmed by fundraising letters.  The Chief Executive Officer of the FRSB said that individuals should be able to “opt-out” of receiving charity requests, and charities should have to seek permission before passing contact details to third parties.