APRIL 2018

STATE LAW

Alabama

In the category of “not understanding First Amendment freedoms and prior court decisions,” a bill has been introduced in the Alabama House (HB 488) that would require those soliciting on behalf of charitable organizations to disclose the percentage of the income at the point of solicitation that will be devoted to the charitable purpose.

Source: http://www.bels.alabama.gov/pdf/laws/2017%20HB%20488%20Law%20Change%20Bill.pdf

California

The former director of a Sonoma Valley organization that provides housing assistance for the needy has been sentenced to two years of incarceration after being convicted of embezzling more than $139,000 from the agency.

Source: http://www.sonomanews.com/news/8163414-181/sonoma-valley-felon-gets-two

Illinois

Here is another classic example of the necessity of having a well-written donation agreement when a major donor is making a significant pledge to an organization. In this case, private individuals in a family foundation agreed to make a $100 million pledge to the University of Chicago to establish a global studies institute in the family’s name. The family filed a lawsuit against the university claiming it is improperly managing the gift. The university filed a lawsuit against the family and the Foundation seeking balance of the pledged donation.

Source: http://www.chicagotribune.com/news/local/breaking/ct-met-university-of-chicago-donation-lawsuit-20180408-story.html

Louisiana

House Bill 594 is one of the most unique ever offered. If passed, the bill would make it a crime to engage in telephonic solicitation of a person who is 65 years or older. The definition of a telephonic solicitation would include appeals made on behalf of charitable organizations. The proposed law makes the violation of same a criminal offense.

Commentary: There are many Constitutional problems with this legislative proposal. Hopefully it never gets past its introduction.

Source: https://legis.la.gov/legis/ViewDocument.aspx?d=1072989

Massachusetts

A state judge ruled that the Berkshire Museum can proceed despite opposition to the sale of dozens of pieces of art, most notably a painting by Norman Rockwell. The Office of the Attorney General agreed to the plan in February after conducting its own investigation. In making its ruling, the court acknowledged the serious concerns that arise when a public art museum sells part of its collection, but noted that the sale was vital to the museum’s survival. 

Source: https://www.nytimes.com/2018/04/05/arts/berkshire-museum-norman-rockwell.html

Missouri

Governor Eric Greitens has been charged with a second felony charge of tampering with a computer. This all goes back to his alleged illegal use of the donor file of a charitable organization that he started seven years ago. This is the second felony case filed against the sitting governor.

Source: http://www.kansascity.com/news/politics-government/article209422724.html

North Dakota

The Attorney General has alleged consumer fraud in violation of the state’s laws pertaining to charitable solicitation against an event organizer. The defendant, who is also a candidate for mayor of the city of Minot, was supposedly organizing an event called “A Magic City Christmas Show” last year. The organizer has resisted every attempt by the Attorney General and claims this is a politically motivated charade.

Commentary: Based on the statements made by both sides, this is a case that may actually go to trial. The defendant asserts abuse and the Attorney General asserts simple law enforcement.

Source: http://www.minotdailynews.com/news/local-news/2018/04/attorney-general-outlines-fraud-investigation/

Ohio

Just prior to opening day, Cleveland Indian Pitcher Trevor Bauer announced he would be donating $420.69 per day for 68 days to assist The United Charities. He is asking the public to submit charity ideas on his website. On the 69th day, he will donate $69,420.69 to a charity of his choosing.

Source: https://www.baueroutage.com/69-days-of-giving

Oregon

An order has been entered by the Department of Justice to a former Portland marathon director who must now pay $865,000 as part of a settlement following an investigation into his dealings at the nonprofit race company. The director is also barred from working at any charitable organization, from working for other foot races, or as an attorney in Oregon, and must dissolve his for-profit company, Next Events. The settlement indicates that the director was charged with illegally loaning himself and his company money from the marathon coffers that his company produced.

Source: http://www.oregonlive.com/portland/index.ssf/2018/04/longtime_portland_marathon_rac.html

Tennessee

A lawsuit has been filed in Nashville accusing the former leader of a Nashville nonprofit of sexually harassing a female employee. The suit is against the former Executive Director as an individual, and the organization. One of the most concerning allegations in the suit is that the female employee notified a board member who took no action to stop what was going on.

Source: https://www.tennessean.com/story/news/local/davidson/2018/03/22/woman-says-nashville-nonprofit-leader-masturbated-front-her-federal-lawsuit/445756002/

Texas

A Federal jury in Houston convicted Former U.S. Congressman Steve Stockman of being the mastermind behind a wide-ranging fraud scheme using significant charitable donations from top level conservative donors to cover his personal expenses and campaign debts. Stockman was found guilty on 23 counts of mail and wire fraud, conspiracy, making false statements to the Federal Election Commission, as well as money laundering and filing a false tax return.

Source: https://www.houstonchronicle.com/news/houston-texas/houston/article/Jury-deliberating-in-ex-Congressman-Steve-12830632.php

OTHER MATTERS

Congressional Action

A proposal authorized by Representative Mike Kelly (R-Penn.), and Representative Stephanie Murphy (D-Fla.), would require tax exempt organizations to file electronically with the federal government and have the IRS make those records public. The sponsors of the bill, which was backed by the National Association of State Charity Officials, believe that the changes would lead to less fraud and more transparency and give federal and state authorities more ability to target fraudulent charities.

Source: https://www.congress.gov/bill/115th-congress/house-bill/5443

Postal News

The Alliance of Nonprofit Mailers issued a press release on April 24th announcing their support of the April 12, 2018 Executive Order of President Trump establishing the taskforce on the United States Postal System. In the press release, this important trade organization noted that nonprofits generate 10% of the USPS mail volume and many nonprofits receive the majority of their donations through the use of the mail.

Source: https://www.nonprofitmailers.org/task-force-on-usps/