State authorities are asking residents to research charities in greater depth before deciding to give. The state cites a report entitled “Listen with Your Heart, Give with Your Head” which details the findings of an AARP Foundation ElderWatch survey of over 1000 adults about their giving behavior and knowledge about legitimate charities.
A federal lawsuit has been filed to enforce the pledge of a major donor. The donor was given naming rights for a dormitory and paid a little less than half the promised contribution before passing away. The attempts by Stetson University to collect the money through the probate proceeding (opposed by family) were rebuffed and, as a result, the school has gone to federal court seeking to enforce the agreement.
The state has increased the disclosure requirements for operators of unattended clothing bins if they are a “professional solicitor” as that term is defined under applicable state law.
The city of Lowell is considering the taxation of real estate owned by charitable organizations. As more commercial buildings are converted to nonprofit use, the City is facing a budget strain that is causing it to consider taking this step. Local nonprofit leaders have expressed concern and opposition.
With a verdict returned in less than an hour, a six-member federal jury decided in favor of Bank of America which was sued by an Arab-American charity that accused the bank of discrimination when the charity’s account was closed. The charity at issue had previously been raided by federal authorities but subsequently found not to have engaged in any improper conduct.
Although a charitable registration law has been passed, forms to implement the law have not yet been officially issued. There has been input from the private sector to the state but so far no result has been achieved.
A major pharmaceutical company that has donated hundreds of millions of dollars to charities that help patients afford high priced drugs for multiple myeloma and other cancers is being accused by federal authorities of engaging in a scheme to “gain billions from U.S. tax payers.” Celgene is a $9.3 billion company and the latest pharmaceutical company to come under fire in connection with patient-assistance charities which set up dozens of funds to help pay for the costs of cancer medicines.
The requirement that charities file a Schedule B as part of the registration process in New York was challenged in court unsuccessfully. On August 29th, the judge dismissed the challenge so charities will still need to include the Schedule B as part of their 990 in future filings. That does not mean, however, that the Schedule B will be open to public inspection. By New York law, the schedule is excluded from public records.
Commentary: Concerns in the industry include the fact that even though the law provides exclusion, people make mistakes and highly proprietary information could easily seep into the public domain.
The New York Attorney General recently announced that it had begun an inquiry into Donald Trump’s charity (see “Presidential Candidates and Their Charities” below). The New York Times reports that the investigation may be a result of the disclosure that the Trump Foundation paid a penalty for making an improper political contribution.
Animal rights groups are joining together to oppose State Question 777 which would change the Constitution to preclude lawmakers from passing new laws to protect farm animals and improve environmental practices.
Brent Culberson, Director of the Division of Charitable Solicitation and Gaming, is leaving his position on September 30, 2016 and taking a position at Lipscomb University. Keith Boring has been named as interim director.
Our firm is involved in a lawsuit brought by the state, in part, for failure to give the multi-part point of solicitation oral disclosure required for professional fundraisers. The Vermont point of solicitation disclosure goes beyond simply identifying the professional status of the caller by requiring additional information on how the consumer may obtain information from the office of the Attorney General. In response to the claim by the state, a counterclaim has been made by the defendant that the compelled speech goes too far and violates the First Amendment.
BBB Calls Out Charities for Failure to Respond
In order to promote transparency, this independent watchdog agency will issue up to 250 questions to charitable organizations. Most recently, the BBB named 10 charities (who are among the largest in the United States, ranked by total contributions) that failed or refused to disclose the information the agency said was needed to verify the trustworthiness of the organization.
Commentary: There are a number of good reasons, as well as poor reasons, why a charity may be reluctant to start providing information to these types of organizations. There are many private individual watch groups, all of which have standards and the ability to make demands and publicize charities that don’t respond favorably to their requests. The reality is that private watchdog agencies are, themselves, nonprofit organizations that create their own standards and express their own independent opinions regarding the worthiness of other nonprofit organizations.
The Financial Accounting Standards Board has issued a new accounting standard to encourage charitable organizations to more fully tell their own story in their financial statements. The requirements for presentation and disclosure should lead to more relevant information being presented to the reader.
Presidential Candidates and Their Charities
Under New York law, a charity is required to disclose contributions from foreign entities. A Scripps Washington Bureau review of the Clinton charities’ tax returns and regulatory filings found that year after year, the filings ignored New York law and related instructions. The New York Attorney General’s office did not respond to questions regarding the Clinton Health Access Initiative, but in an article written by Mark Greenblatt, Schneiderman’s office was quoted saying it considers the Clinton Foundation, a separate entity, “in step” with state rules. However, David Nelson, an attorney and former partner at Ernst & Young Accounting Firm, who served on the Regulation and Legislation Committee of the Counsel of Foundations was quoted saying the Attorney General’s office was not doing their job. The Scripps’ Washington Bureau review went on to report inconsistent compliance with the disclosure requirements.
On the other hand, the Washington Post took Donald Trump and his Foundation to task. The article detailed how Trump found a way to give away other people’s money and claim credit for himself. Specifically, it referred to an incident in Florida where he was honored by the Palm Beach Police Foundation. In that case, according to the published article, he secured a donation for the Palm Beach Police Foundation from another Foundation which he deposited into his Foundation and presented to the Palm Beach Police Foundation taking credit for the donation. The event to honor him apparently took place at one of his hotels where the Police Foundation paid to rent the room.
Managing Partner Greg Lam will be presenting a live teleconference on political activities and tax exempt organizations on October 27, 2016. The teleconference is being sponsored by the National Business Institute and there is a fee to participate.
The Urban Institute has just published the “State Regulation and Enforcement in the Charity Sector” research report. This 68 page report covers a wide range of issues involving the industry and regulatory accountability.