October 2012

In this issue:

  • It is with a great deal of pride that the law firm of Copilevitz & Canter, LLC has received a Tier #1 ranking in the 2013 edition of U.S. News - Best Lawyers, Best Law Firms.
  • It is quite likely that the cost of mailing at the nonprofit rate is going up. If approved, nonprofit mailing would increase by 2.5%, effective January 27, 2013.
  • A Texas federal appeals court has ruled that charities in the state cannot use proceeds from bingo on certain types of political advocacy.


In what may be an unprecedented move, the FTC has offered $50,000 to anyone who can solve the illegal pre-recorded telemarketing calls which so many people have complained about.  This new program is called, “FTC Robocall Challenge.”  The prize will go to whoever creates the best technical solution that blocks commercial robocalls on land lines and mobile phones. 

As part of its paperwork reduction effort, the IRS is asking for comments on various forms which it utilizes.  The comments are due no later than December 10, 2012.


Legislation that would have prohibited nonprofits from placing collection bins on private property was vetoed by the governor.  In doing so, the governor called the bill “anti-competitive.”  The bill had been primarily sponsored by a local Goodwill because of the amount of unregulated donation boxes being placed around the state.

Comment: The use of unattended clothing collection bins is becoming an increasingly popular fundraising strategy.  As a result, you can expect to see more legislative attempts to regulate the activity.

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Assembly Bill 2327 has been signed into law.  The legislation expands the authority of the Office of the Attorney General to take action where it is perceived there are misrepresentations taking place, or failure to comply with other aspects of the state’s charitable solicitation law.  The Attorney General’s Office is also given the authority to impose penalties in certain circumstances.  Most notable is a new requirement that was added to the legislation, which requires a charitable organization, in any year that the balance sheet of that charitable organization shows that it holds restricted net assets, while reporting negative unrestricted net assets, to provide an explanation of its compliance with its charitable trust responsibilities, and proof of directors’ and officers’ liability insurance to the Attorney General.
[See Government Code Section 12599.8]
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The state continues to request Schedule B of the IRS Form 990 to be included in the registration filings.  This important Schedule, which is not a matter of public record, contains the names of major donors.

The mayor of Bristol has voiced strong objections to local firefighters wearing pink T-shirts on the job as part of a fundraiser to promote breast cancer awareness.  The mayor has declined to give them permission, citing his contractual authority to do so. 
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On a heavier note, the former CFO of a disability charity in Plainfield was sentenced to thirty-three months incarceration for stealing $348,000 from the charity.

A move is afoot in Palm Beach County to ban unattended donation clothing bins in unincorporated areas.  The legislation was promoted by Goodwill Industries.  Hearings will be held in December on this issue.

The State Department of Revenue issued a statement that the gross receipts of charitable organizations from fundraising sales are not subject to state sales tax if the transactions qualify as not being competitive to businesses, as that term is defined under the state statute, and if the motive of the payment or purchase is to make a donation to a charitable organization.

Comment: This certainly leaves a lot of room for interpretation.  It would seem that any purchase could be defined to be competitive.

The operators of an orphanage mission located in Haiti has sued journalist and author, Mitch Albom, and one of his charities claiming they broke an agreement they entered into with the mission after the earthquake.  The lawsuit seeks $2.5 million in damages.  The attorney for Albom and his charity described the lawsuit as “frivolous.” 

It seems obvious that the Minnesota Council of Nonprofits is a leader in the industry.  Most recently, this organization sought the creation of a sales tax exemption review board, as well as advocating for a state prohibition against local fees being imposed on properties that are owned by tax-exempt organizations.

Bob Tigner of the Association of Direct Response Fundraising Counsel (ADRFCO) continues his dialogue with the state regarding Form SR-2 that is now required of fundraising consultants.  There remains confusion about the practical applicability of the form to fundraising consultants.

The Attorney General of New York has responded to the congressional committee that chastised him for seeking donor information from taxpayers, rather than going directly to the IRS.  In his letter, he challenged the committee, noting he was not confined to the IRS to seek such information.
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As a result of a settlement with the New York Attorney General’s Office, the contents of two homes owned by Brooke Astor were auctioned in late September.  The contents brought the surprising amount of $18.8 million that will be distributed to institutions and charities, including the New York Public Library and the Metropolitan Museum of Art.

Once again, Bob Tigner of ADRFCO is leading the discussions with the state over a new proposed requirement of having to show proof of corporate good standing as a condition to registration.  Stay tuned!

A major hospital chain in the Commonwealth has agreed to remit payments to two cities in lieu of taxes based on a formula of fifty percent of the assessed value of the properties. 
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A major foundation in Pittsburgh has sued its investment management company.  The lawsuit accuses the investment manager of misusing the foundation’s $2 million in holdings.

A federal appeals court has ruled that charities in the state cannot use proceeds from bingo on certain types of political advocacy.

Comment: This case is important and/or interesting because it distinguishes the restriction from the ruling of the U.S. Supreme Court in the Citizens United case.  In part, the decision hinges on the fact that this is a state-created subsidy.

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Fall-out continues for Lance Armstrong’s charity. According to the Los Angeles Times, after the rulings and revelations, major donors are seeking the return of money.  One major donor, according to the report, made significant contributions after reading Armstrong’s book, and now says, “They were fooled.”

The Wisconsin Department of Revenue has issued a publication reflecting the laws that were passed by the state legislature on October 1, 2012.  The publication details sales tax exemptions available to nonprofit organizations, as well as guidance with reference to occasional sales exemptions, seller’s permits, and fundraisers.


Art Taylor, the director of this important agency, recently made a presentation to the annual conference of state regulators in its public session.  He told the group that his agency is going to become more active in protecting prospective donors from fundraising appeals that include misleading or false statements.

As a result of an agreement with the state of New York Attorney General’s Office, two of the largest breast cancer charities, Susan G. Komen for the Cure, and the Breast Cancer Research Foundation, have adopted guidelines for fuller disclosure when engaged in activities involving the sale of “pink products and services” in their names.  According to the New York Attorney General, “These best practices, agreed to by the nation’s largest breast cancer charities, will ensure that cause marketing campaigns provide the benefit that’s expected, and that we protect consumers, charities and above all, the women and families affected by this devastating disease.”

The new leader of the Council on Foundations has e-mailed her members, announcing that the Foundation will become more active in conveying the value of philanthropy to legislatures and lawmakers.  The campaign will focus on educating lawmakers at all levels to help them understand how philanthropy changes lives, creates jobs, and builds communities.

Credit, Suisse & Forbes surveyed 264 wealthy Americans in September to determine where they make their donations, to-wit: religious institutions receive 41%; medical research 37%; children’s health 30%; and charities dealing with contemporary social issues involving religion, politics, etc., 25%.

The story of “Bobby Thompson” and the Navy Veterans Assistance Fund continues to be of great interest and amusement.  According to the most recent published reports, the mysterious person known as “Bobby Thompson” has tentatively been identified as a former military intelligence officer named John Donald Cody.  According to the ABC news, Cody has been on the FBI watch list for 25 years or more, and has been accused of various frauds, including taking more than $100 million under the name of the Navy Veterans Assistance Fund.

It is quite likely that the cost of mailing at the nonprofit rate is going up.  If approved, nonprofit mailing would increase by 2.5%, effective January 27, 2013.  The increase is now pending approval by the Postal Regulatory Commission. The rate-proving body has forty-five days to respond the USPS’ request for the new rate.

As a result of a filibuster by lawmakers, the legislation to establish the Australian Charities and Not-For-Profits Commission will not take place now until well after the projected date of October 1, 2012.

New regulations are being proposed under the title of “Small Charitable Donation Regulations 2013.”  The new regulations are designed to establish an administrative framework for gift-aid small donations, and will be formally introduced in April 2013.  The agency is now asking for comments.

It is with a great deal of pride that the law firm of Copilevitz & Canter, LLC has received a Tier #1 ranking in the 2013 edition of U.S. News - Best Lawyers, Best Law Firms.  This is the initial ranking of the top law firms in the country.  This means our firm was ranked at the very highest of all law firm rankings in the United States.

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Our firm is preparing and filing an amicus brief in a federal court action, where the Federal Trade Commission continues to make the argument that a high cost of fundraising in and of itself is a form of misrepresentation.  The case is pending at the district court level, and copies of the amicus brief, once filed, can be available upon request.