The National Catholic Development Conference is closing its office after more than fifty years of operation. According to a published report in The Nonprofit Times, it will “. . . fold into The Nonprofit Alliance . . .” which was formed last year.
Source: The Nonprofit Times, May 10, 2019
The Alliance of Nonprofit Mailers reported on May 22 that some nonprofits are now incurring sales tax charges on direct mail entered into certain states by their service providers. The ability to assess some of these sales taxes is a result of the Wayfair case which reversed the requirement of physical presence from the long precedent in the Quill case.
Despite opposition from both the nonprofit and the accounting industries, Assembly Bill 1181 has been passed. Its future in the Senate remains uncertain. The primary focus of this legislation is to make changes in how “gifts in kind” are valued by charitable organizations who file in the State of California. The law would require a variance from GAAP on how to value donated goods for the purpose of recording income as well as program service. On those items restricted for distribution into the international community, the law would require the use of the value at the point of distribution (i.e., the country of distribution) rather than the United States value. (Commentary: Not only is this contrary to GAAP and opposed by everyone in the industry other than the California Attorney General, it also creates an impossibility. Charities involved in gifts-in-kind file in each of the states. In addition, in some cases, the product would not otherwise be available in third-world countries. This is particularly true with pharmaceuticals and medical supplies. Readers of this report are urged to contact representatives of California to express their opposition to this bill going forward.)
An executive with the United Way of Santa Rosa County will be sentenced on July 29, 2019, as a result of a theft of over $650,000 during a seven-year period. The prosecutors report recovering $211,000 from the defendant’s bank account.
Source: The Nonprofit Times, May 14, 2019
District of Columbia
Cooler heads have prevailed. Previously, the District of Columbia Office of Tax and Revenue would have required nonprofits with operations in the District to get an annual updated confirmation of the federal tax exempt status from the IRS. This was intended as a condition to continue to be exempt in the District. The requirement is no longer in place.
A settlement has been reached in the State’s case against CopStress, Inc., a charitable organization run by a retired Baltimore City Police Officer. Under the terms of the settlement, the organization will cease all charitable soliciting and turn over its remaining assets to an organization whose mission matches charitable solicitations at issue in the case. The original complaint alleged that the solicitations mislead the public about affiliation or sponsorship of the organization by the Baltimore City Police Department.
Source: Press Release, May 3, 2019, Maryland Attorney General
A nonprofit tied to the book scandal that led to the resignation of the Mayor of Baltimore was just voted a $14.2 million HIV program contract by the former Mayor’s successor. The group itself was under investigation for facilitating the purchase of $78,000 worth of books from the former Mayor.
Source: Baltimore Brew, May 9, 2019
A number of charities rely heavily on gambling revenue from the state. New legislation, Senate Bill 41, would allow historical racing machines, electric gambling kiosks that enable players to bet on horse races that have already been run. The bill would authorize installation of these machines in 14 charitable gambling locations throughout the state, which are required under state law to give 35% of their gross profits to registered charities.
Source: The New Hampshire Union Leader, May 25, 2019.
State law requires gaming rooms to give 35% of their gross revenues after prizes to local charities that must be registered with the Secretary of State for at least two years. The State itself receives 10% in games where tokens have a monetary value and 3% in games where tokens have no value. The Seabrook Park and Racebook Casino recently was purchased and refurbished and is drawing positive reviews from Customers and the State.
Source: New Hampshire Union Leader, May 12, 2019
A new rule has been adopted requiring charitable organizations to file Schedule B to their 990 which identifies major contributors when making their annual report to the Division’s Charities Registration Section. (Commentary: New Jersey joins California and New York requiring the disclosure of donor information in charitable registrations.) (Additional Commentary: Charitable speech is a form of free speech, and the requirement by a state to disclose the name of supporters as a condition to engaging in constitutionally protected activity seems suspect.)
Northjersey.com published a report on May 17, 2019, stating that American charities steered $125 million to groups that spread anti-Muslim hate and propaganda during a three-year period ending in 2016. The story is based upon a report by a Muslim advocacy group.
The United States Attorney for the Middle District of Pennsylvania announced an indictment against an individual for embezzlement of funds involving federal programs. According to the United States Attorney, the indictment alleges that, between 2010 and 2017, the defendant knowingly embezzled and converted to her own personal use more than $220,000.
Source: Harrisburg Newspaper, May 3, 2019.
On May 19, 2019, Pittsburgh’s Channel 4 ran a story featuring State Representative Tony DeLuca, Democrat, Penn Hills, expressing concern that charities were soliciting in the Commonwealth who are spending less than 60% on their program service. In response, Representative DeLuca is proposing legislation that would require a minimum of 60% of charities’ expenses go to their programs. He is quoted in the piece as saying, if they don’t meet the minimum standard, then they will be prohibited from soliciting in the Commonwealth. (Commentary: Such legislation, as proposed, if passed in the Commonwealth of Pennsylvania, would violate the United States Supreme Court holdings in a series of 4 different cases that held that a solicitation for public support was a form of fully protected speech. As a form of fully protected speech, it cannot be limited or disqualified based upon dollar efficiency.)
House Bill 4345 has been approved and is now going to the Senate. The bill, if passed by the Senate, would make churches, charities, and their employees and volunteers exempt from civil lawsuit liability if they disclose in good faith to an individual’s current or prospective employer their belief that the individual engaged in some form of sexual harassment, abuse, or impropriety while previously employed. In addition, independent contractors who do business with nonprofits would be given civil immunity.
Source: Dallas Morning News, May 9, 2019.
The Attorney General has announced a settlement with the family that operated a series of charities but misused the funds received from Washington donors for personal enrichment. The initial lawsuit was filed in December, 2017, and was recently settled. The family is being required to pay $300,000, which represents most of the assets the family owns as well as entering into an agreement not to engage in charitable or fundraising activities in the future.
Source: Office of the Attorney General Press Release, May 29, 2019.
The charitable sector in the United Kingdom has been rocked by a series of scandals, principally those of a sexual nature. Britain’s new International Aid Minister pledged to root out sexual abuse in the sector after reports showed charitable giving has dropped for the third consecutive year among deepening mistrust of the charitable sector in the United Kingdom.
Source: Reuters, May 7, 2019.