DECEMBER 2015

STATES

CALIFORNIA

At the same time the Office of the Attorney General issued its annual report on fundraising in the state, the office announced the filing of two lawsuits against car donation charities. The cases were filed in southern California and accuse the organizations of misappropriating millions of dollars from donated vehicles.

COLORADO

A complaint was filed with the Office of the Secretary of State by a nonprofit organization run by a powerful lobbyist with ties to the agricultural industry, accusing the Humane Society of the United States of engaging in misleading representations concerning the use of donated funds. The assertion was that the public was misled to believe that more than the amount actually spent was going to local animal shelters. The investigation was closed with a letter from the Office of the Secretary of State finding the organization had not engaged in misleading conduct. (Comment: This is a case of one biased group trying to get another biased group into trouble. In this instance it is the Humane Society versus cattle ranchers and agriculture. This is not the first state in which the two entities have butted heads).

FLORIDA

According to a report published in a Tallahassee newspaper, privatization may not be the best answer when it comes to nonprofit giving.  Previously, the United Way ran the state employee charitable campaign, but was heavily criticized for its administrative costs.  One estimate the cost at 22% and another put it at 29%.  Seeking a more efficient administration, the state contracted with a New Jersey for-profit entity (Solix) to manage the campaign.  Instead of bringing more efficiency, the costs of administration increased to 47% of the employees’ donations in 2013, and 51% in 2014.  (Comment: The Miami Herald was particularly intrigued by this development, noting how the state had taken such action to enforce more efficiency in charitable fundraising in the state).

GEORGIA

An organization which formerly operated a group home and shared facilities with another nonprofit that acted as an animal sanctuary has come under criticism from a local Atlanta television station. The Channel 2 report claimed the station had found evidence the group home closed in 2010, but continued to solicit donations from the public, accepting at least $658,000 in contributions from donors in the years that followed. A former employee of the group home confirmed to the television station that there are no foster children being cared for currently. State charity regulators are now conducting their own investigation.

MICHIGAN

Apparently changes are coming on the regulation of charity poker in the state. The first change is to codify the rules and transfer oversight from the Michigan Gaming Control Board, who many thought were overly restrictive in its administration of the rules.

MONTANA

The Department of Revenue has notified tax-exempt organizations that they must reapply for state property tax exemption no later than March 1, 2016.

OREGON

The Department of Justice has issued a notice of rulemaking hearing to increase fees associated with registered charitable organizations.

NEBRASKA

The Property Assessment Division of the Department of Revenue is once again reminding tax-exempt organizations in the state that they must file property tax exemption applications by December 31, 2015. 

NEW MEXICO

The City of Albuquerque is in the midst of a campaign titled “Make’Em Boom” to generate awareness and support around local charities and artists.  The creator of the campaign stated, “For Albuquerque to be what it deserves to be, it needs a very strong base of businesses and it needs significant support for local charities.”

NEW YORK 

In a New York Times report, the newspaper pointed out that a number of social service agencies in and around the City of New York have begun to “re-brand.” Long, cumbersome old names are now being changed to promote better branding and marketing opportunities.

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A Brooklyn-based charity has settled a lawsuit brought by the Office of the Attorney General. The settlement acknowledges that research claims made by the organization were false. Executives of the organization must pay $380,000 and never work for another charity. The charity is being dissolved. A claim against the organization’s auditor has also been settled.

NORTH CAROLINA

The Office of the Secretary of State has issued its annual report on giving.  For the first time in three years, the report indicates that giving across the state of North Carolina has gone up.

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After receiving a letter from the American Humanist Association Legal Center, the Florence School District announced it would no longer endorse religiously-based organizations, but instead will support secular charities. The letter the Legal Center sent noted the school was in violation of the Establishment Clause of the First Amendment.

OKLAHOMA

A Tulsa federal jury found an individual guilty of fraud and money laundering in connection with the printing of Alzheimer’s caregiver booklets, produced by a charity founded by former University of Arkansas football coach Frank Boyles and his wife. The defendant was accused of bilking the charity out of $267,000.  Instead of using the funds to produce the product, the government alleged he used the funds for personal gain.

PENNSYLVANIA

The law license of the Pennsylvania Attorney General was suspended by the State Supreme Court in October, pending a resolution of criminal charges against her alleging she leaked grand jury information and engaged in perjury. Her top deputy told the state legislature that the Pennsylvania Attorney General is “legally disabled.” The legislature is deciding whether to take action to force her removal.

SOUTH CAROLINA

The Secretary of State has issued his annual “scrooge list” based upon the percentages of organizations’ expenditure spent on their charitable programs.

TEXAS

At the behest of the governor, the Health & Human Services Executive Commissioner sent a strongly worded letter to nineteen refugee resettlement agencies in Texas, including charities asking that they scrap any plans to resettle Syrian refugees in the state.  The Austin Statesman suggested to its readers that the confrontation will lead to a legal showdown.

WASHINGTON

The state’s Nonprofit Association has announced its 2016 conference will be held on May 16th and 17th.

CONGRESS

H.R. Bill 4016 has been introduced in the House by House, Ways & Means Committee member, Erik Paulsen (R-MN), that would extend the limitation on the carry-over of excess corporate charitable contributions from five years to twenty years. The Bill has been referred to the House, Ways & Means Committee.

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Senate Finance Committee Chair, Orrin Hatch (R-UT), has asked eleven private foundations that operate museums to provide evidence that they are meeting the standards required of them as § 501(c)(3) organizations, to-wit: “Demonstrably serving and being in harmony with the public interest.”  Senator Hatch has asked the foundations to provide to the Finance Committee documents such as the original application for tax-exempt status, as well as information regarding museum operations and how the museums obtained their artwork.  (Comment: The crux of the issue is whether taxpayers are supporting private collections held in entities that should not be taking advantage of tax-exempt status).

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H.R. Bill 4064 would allow the Treasury Secretary to prevent the public disclosure of social security numbers on the IRS Form 990, which are required to be filed by charitable organizations.

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The Protecting Americans From Tax Hikes (PATH) would extend charitable giving incentives permanently.

 OTHER COUNTRIES

AUSTRALIA

In the category, it is the same everywhere, a Brisbane-based foundation which spent more than $1 million on luxury cars, overseas jaunts, and gambling in the name of research has lost its appeal to retain its tax-free charitable status.  The federal court struck down an appeal by the foundation, which was fighting the Australian Tax Office over the loss of its charity tax concessions and deductible gift-recipient status for its work.

UNITED KINGDOM

The Telegraph cited a report from the True and Fair Foundation, which found that one in five of the country’s largest charities spent less than fifty percent of the cash raised on charitable activities.  Some of those that fell below the line are some of the country’s biggest volunteer organizations.

 OTHER MATTERS

CHARITABLE GIVING SURVEY

The Guardian reported that the United States ranks second in its “World Giving Index,” and that 95% of American households make contributions.

NEW SERVICES AVAILABLE

Through years of work with the boards of nonprofit organizations on various issues, our two senior partners, Errol Copilevitz and Greg Lam, have developed an expertise in board training and basic strategic planning. Both lawyers have performed this service for several different organizations. If your organization has a need, please feel free to contact either Errol or Greg.

SMITHSONIAN

The Associated Press reported that the Smithsonian Museum has announced a new initiative. The Museum is going to explore ways in which giving is woven into the fabric of America. The plan is to collect, research, and exhibit artifacts documenting our country’s history of generosity.

FIRM NEWS

We are pleased to announce that Karen Donnelly has been made a partner of our firm.

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FROM ALL THE ATTORNEYS AND STAFF, WE WISH YOU A JOYFUL HOLIDAY SEASON.

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