In this issue:
- FCC adopts rules for implementing Truth in Caller ID Act
- Maine - HB 1145 has been signed into law.
- New York - A new task force is being formed by the Governor to investigate salaries and other compensation of nonprofit agencies that receive state funds.
- The Model Protection of Charitable Assets Act was approved by the Uniform Law Commission on July 13, 2011 at their annual meeting.
The Federal Communications Commission has adopted rules to implement the Truth in Caller ID Act of 2009. Of critical importance to telefunding agencies was the issue involving the use of projection of telephone numbers other than the principal business telephone number of the agency. In its ruling, the FCC held that the use of same was permissible so long as it was not being done with the intent to defraud, cause harm, or wrongfully obtain anything of value. The new rules became effective August 19, 2011.
THE CHARITABLE DEDUCTION.
The deal reached by Congress to cut spending and raise the debt limit did not affect the charitable deduction in any way. However, there will be those who advocate its demise as part of the long-term fix to the difficult economic situation the nation faces. Strong advocates oppose any such action. To help the industry, we urge you to contact your individual congresspersons and senators to seek the preservation of the deduction for charitable contributions.
According to a leading nonprofit expert, the state’s wealthier residents are not doing their part to support the state’s charities. Alaskans making more than $200,000 per year give thousands of dollars less than the national average to those similarly situated, and substantially less than those in other states.
In an unpublished appellate decision, a California court upheld the validity of a release signed by a participant in a nonprofit retreat and workshop. The retreat involved various activities, such as yoga, dance and hiking. A condition to participating was to sign a one-page release that, in effect, had the participant “assuming the risk.” The release, while simple, was complete and included a bar against any kind of claim. The plaintiff alleged it was invalid because the release was not conspicuous. The key being that the court concluded the release was both obvious and noticeable. (Commentary: This is an important point for charities that sponsor special events). Rothman v. Heart Consciousness Church, 3611, CA Ct. of Appeals, District 1.
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The California Attorney General’s office has entered into settlements with a number of defendants from cases filed in 2009. These cases involved a series of allegations of misrepresentation and violations of the state’s charitable solicitation law. Primarily, the defendants were public safety and veterans groups. These settlements may now resolve all the cases that were filed during that period.
Former candidate Christine O’Donnell and her political action committee has complained to the IRS about the activity of Citizens for Responsibility and Ethics in Washington, D.C. The allegation is that the organization abused its tax-exempt status as a charity by intervening in a campaign. The organization has denied the allegation.
The City Commissioners of Lawrence, in an effort to curtail downtown panhandling, are considering developing a “feed the meter if you want to feed somebody in need” program.
A federal jury convicted a former city council woman who participated in a scheme to loot more than $1 million from a string of inner-city charities controlled by a family member of former U.S. Representative William Jefferson.
HB 1145 has been signed into law. The bill authorizes the Commissioner of Professional and Financial Regulation to deny the license application of an entity that has been, or whose principals have been, convicted of a felony or a misdemeanor involving dishonesty. There is no time limitation on when the felony was committed. Provisions not limiting a felony within the last 5 to 10 years have been struck down. This provision also appears to allow for too much discretion. Additionally, the bill requires an applicant whose license previously lapsed to file an annual fundraising activity report for the previous calendar year.
A private initiative has been filed by a private citizen asking to amend the Commonwealth’s “do-not-call” law. The change would make calls made on behalf of nonprofits by professional agencies subject to the do-not-call restriction. The Massachusetts Attorney General is asking for comments and our firm has filed comments in opposition.
The Attorney General announced the state is seeking to stop an online site based in Puerto Rico and an internet operator in Georgia from fraudulently soliciting donations to help victims of the Joplin tornado.
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A number of veteran organizations are classified under the Internal Revenue Code as Section 501(c)(19) organizations. This is a special charitable classification for veteran groups that have members. A Missouri law discriminates against them by giving exemptions for a Section 501(c)(3) organizations that operate resale stores. The provision exempts the 501(c)(3) organizations from zoning restrictions. An effort is being made by our office to get the law amended to include 501(c)(19) organizations in the same category as 501(c)(3) organizations.
Warren Buffett’s original family home sold by auction to a buyer who intends to use it to benefit his favorite charity, Girls, Inc.
Thomas R. Calcagni, who was serving as Acting Director of the Division of Consumer Affairs, has now been appointed Director of the Division of Consumer Affairs. In conjunction with his previous request for public comments to a proposed new rule, our law firm prepared a multi-page letter that was co-signed by more than sixty organizations opposing the rule, which would require additional disclosures when multiple components of a fundraising campaign are expressed at the point of solicitation.
A copy of the letter can be obtained from our website, [Download the letter now.] or by e-mailing Errol Copilevitz at: firstname.lastname@example.org. However, we have now been advised that the proposed rule was overwhelming opposed and has been withdrawn. The new director has indicated a continuing interest in protecting donors in the state.
A new task force is being formed by the Governor to investigate salaries and other compensation of nonprofit agencies that receive state funds. According to a press release, there were 2,000 workers paid more than $100,000 a year. This investigation is separate from a task force created by the New York Attorney General seeking to improve the efficiency and accountability of hundreds of nonprofit agencies. Most interestingly, the Attorney General said that nonprofit agencies now employ more than 17% of the state’s work force, including approximately 500,000 people in the city of New York.
The new, tighter registration requirements have gone into effect in the state. According to a published report, state officials have spoken to more than 350 nonprofit leaders at workshops throughout the state, explaining the necessity of registration and complying with other requirements, including record retention for 5 years.
A former attorney general for the state is intricately involved in the affairs of the Hershey companies and the Hershey Foundation. During the last several years, he has drawn more than $500,000 per year. In addition, the Foundation itself has come under investigation by the current attorney general as a result of the purchase of a golf course for more than the appraised price (by a substantial amount). Inquiries into the workings of the Hershey charities have gone on for more than a decade.
The Office of the Secretary of State has changed its address. In the future all correspondence should be directed to: Office of the Secretary of State, Public Charities Section, 1205 Pendleton Street, Suite 525, Columbia, SC 29201.
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Parties on both sides of the aisle came together to reject the request of the governor to eliminate money for the arts in the state budget. The budget had previously been the subject of a veto. The veto was overridden by near unanimous votes in both chambers.
The Fifth Circuit Court of Appeals has affirmed, in large part, the challenge that was brought by this law firm pertaining to a Texas statute that would have required certain point-of-solicitation disclosures on unattended clothing bins. The court rejected the state’s argument that an unattended clothing bin seeking donations of used clothing, which contained only the name of a charitable organization, was a form of commercial speech. The court clearly held that is was a form of fully protected speech. (For more information, please feel free to contact: email@example.com.
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As we all know, running for public office places politicians under unusual scrutiny. In the case of Texas Governor Rick Perry, a published report indicates he is not quite so charitable as we would like. Most gifts were in the form of used clothing. In some years only nominal financial gifts were made.
Because of the growing interest in measuring the effectiveness of a charity, the BBB Wise Giving Alliance, GuideStar USA, and Independent Sector have offered a document called “Charting Impact” with input from 200 nonprofit leaders. The concept revolves around five questions that are believed to be helpful in understanding how and what a charity is and has done. For more information visit www.chartingimpact.org.
CONCERT TICKET CHALLENGE.
The New York Times reported the establishment of a new nonprofit group, The Fans’ First Coalition, which announced a mission of protecting ordinary consumers from predatory ticket scalpers. Several major artists have endorsed the organization, but the Times now reports that it is actually financed by Live Nation Entertainment in competition with Stub Hub. It turns out that Stub Hub also has such an organization. The newspaper article goes on to detail the questionable use of grass roots organizations by vested interests.
The Model Protection of Charitable Assets Act was approved by the Uniform Law Commission on July 13, 2011 at their annual meeting in Vale, Colorado. The Act has many critics and has some in the industry concerned because of its vagueness. Approval of the Act only means that it is now available to be considered by the various states. So far no state has yet to enact it.
According to a report by the Associated Press, Americans gave over $1.5 billion to hundreds of charities established after September 11, 2001. The report goes on to detail a number of instances where the charities spent huge sums raising money and/or paying salaries. The report notes that many of these organizations failed to achieve their mission - while some did. The report was based on a study of 325 charities.
According to a published report, in a move that will advance China’s social development, the government will be making it easier for civil societies involved in charitable works to register. Currently, many of these civil societies operate unregistered and outside the law. (Commentary: This is one of the most populace countries in the world, with an emerging economy. There is vast potential for the charitable movement which has yet to be developed).