September 2019

Charitable Giving Report

Independent Sector commissioned a study by the Indiana University Lilly Family School of Philanthropy on the potential impact of the 2017 federal income tax overhaul. This study predicts as much as a $19 billion decrease in giving. The report in part talks about the decline of itemizing taxpayers who no longer may take a deduction for a charitable gift and its effect over a period of time. The report is entitled “Charitable Giving and Tax Incentives,” and may be available online through the Indiana University Lilly Family School of Philanthropy.

Source: Independent Sector

Industry News

Fidelity Charitable released its annual report noting receipt of over $100 Million in cryptocurrency donations since it began accepting same in 2015.

Source: Dash News, August 26, 2019.

Industry News

The Nonprofit Times reported on August 27, 2019, that the Association of National Advertisers has launched the ANA Nonprofit Federation. This important trade association was part of the DMA when it merged into the ANA in July of last year.

Source: Nonprofit Times, August 27, 2019.

IRS

An announcement has been made that IRS web pages have been redesigned to improve organization, design, and navigation, using data analytics and user testing.

IRS

The saga of donor disclosure for advocacy organizations took another turn. On September 6, the IRS issued proposed new regulations allowing 501(c)(4) and 501(c)(6) organizations to once again stop disclosing their donors. In addition, the proposed rules would waive penalties against those who had not previously disclosed.

California

The Administrative Hearing Officer has issued a proposed decision in a case involving non-cash gifts received by three different organizations. Each of the organizations was issued a Cease and Desist Order for their method of accounting for pharmaceutical goods that were restricted for delivery to countries outside the United States. In addition, the Attorney General’s Office alleged that they engaged in misrepresentations in their fundraising. The Administrative Hearing Officer’s proposed order finds that the charities did not violate GAAP by using valuations based upon fair market value determinations in the United States as opposed to fair market valuation in the foreign jurisdiction in which the items were received. However, the Administrative Hearing Officer noted that fundraising representations made with respect to cash solicitations setting forth percentage efficiencies for program services could mislead California donors and issued penalties to the organizations. Each of the organizations now has the right to appeal the decision or to find some common ground with the Office of the Attorney General.

California

Assembly Bill 1181 has been amended, changing the effective date to January 1, 2021. The bill is now in front of the Governor to either sign or veto. This is the bill that changes how nonprofits must account for and report non-cash gifts that are destined for distribution in third-world countries.

Florida

Legislation has been introduced that would remove the cap on state income tax deductions for charitable contributions in response to the devastation caused by the recent hurricane.

Illinois

The Office of the Attorney General announced that a Cook County judge entered an order prohibiting the Lombard-based charity, Veterans Christian Network, Inc., and its founders from engaging in future charitable activities in the state. The order resolves a lawsuit brought by the Attorney General for numerous violations of the state’s charitable solicitation laws. A judgment of $28,337 remains against the individuals who allegedly collected that amount and failed to use it for charitable purposes.

Source: National Association of State Charity Officials (“NASCO), August 26, 2019

Massachusetts

Senate Bill 986 would cap the compensation for charity executives at $500,000 per year. The same limitation would be placed on board members. (Commentary: We suspect, but do not know, that this bill is primarily aimed at some of the wealthiest institutions in the Commonwealth that include both universities and nonprofit hospitals.)

Mississippi

The Secretary of State has sent an email to registered charities cautioning them not to open fraudulent emails with the subject “Mississippi Secretary of State shared Financials with You.”

Source: Mississippi Secretary of State's Office

North Carolina

Federal authorities have charged an individual with a scheme that resulted in a corporation transferring approximately $367,000 in matching funds to a dummy corporation set up by the individual.

Source: CTPost, September 19, 2019

Texas

According to a published report, Dallas area donors directed $99.9 million in grant money to charities in 2018 with almost two-thirds going to local organizations. The published report goes on to say that the amount represented a 30% increase over 2017, outpacing the nationwide average growth of 16%.

Source: Dallas Morning News, August 21, 2019.

Texas

A most unusual set of circumstances. A Navy SEAL who was acquitted of murdering a prisoner has now sued his lawyers alleging that one of his former lawyers promised that legal fees would be covered by a nonprofit that would use his name for fundraising. The Navy SEAL alleges that the lawyers engaged in delay tactics that ran up legal bills and gave the nonprofit (United American Patriots) more time to raise money while he languished in confinement. The suit, among other things, accuses the United American Patriots of targeting service members for profit. The Navy SEAL is seeking a declaratory judgment that he owes no fees to the attorneys and seeks damages for breach of fiduciary duty.

Source: ABA Journal, September 18, 2019.