JANUARY 2016

STATES.

COLORADO.

A new rule has been implemented by the Colorado Secretary of State. Solicitation notices that are filed late will be subject to fines. If a notice is not filed at least 15 days before the beginning of a solicitation campaign, a $200 fine will be added to the normal filing fee of $75. 

DISTRICT OF COLUMBIA.

To try to encourage a better ratio of compliance, the District of Columbia’s Division of Consumer and Regulatory Affairs is granting amnesty for businesses and nonprofits which have not remained current with their licensing and filing. The amnesty period will run through February 29, 2016.

ILLINOIS.

Disgruntled fans of the St. Louis Rams now have a place to donate their clothing. A bar in Belleville, IL (a suburb of St. Louis) has announced that it will be collecting Rams clothing and donating it to local shelters.

LOUISIANA.

A challenge has been filed in the United States District Court for the Eastern District of Louisiana by three nonprofit organizations seeking a temporary and permanent restraining order to prevent the removal of the confederate monuments in the state. The suit alleges that the removal of the monuments violates the free speech rights to preserve history.

MAINE.

The Wallstreet Journal, in its December 22nd issue, discussed the work of Wreaths Across America, a charity that places millions of dollars in decorations on military graves. The report goes on to say that the filings by the organization and interviews reveal a “distinctly commercial aspect to the charity’s operations.” The charity buys its wreaths from a company owned by the same family that started the nonprofit. It is the exclusive service/purchase relationship between the charity and the company, wherein both are controlled by the same family, that is at issue. The organization defends the arrangement by saying that the independent board of directors agreed to the exclusive relationship until such time that it might be determined that the arrangement with the company owned by the family did not represent fair and reasonable pricing. In response to the inquiry, the current president of the nonprofit organization has said that the board will consider seeking bids from other suppliers for the 2017 season. Potential alternate suppliers in the state maintain that they can sell the wreaths to the charity at a cheaper price. (Commentary: This situation is a complete view of the issues and difficulties that sometimes arise when for-profit ventures are tied to charitable organizations that utilize the services or goods of the for-profit entity. Needless to say, such relationships can be problematic if not handled correctly).

NEW YORK.

Add this state to the number of states that have recently passed legislation regulating unattended clothing bins. The law prohibits placement of collection bins on public property and imposes maintenance requirements as well as disclosure provisions.

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The appellate division of the New York Supreme Court issued an Order on December 30, 2015 upholding the summary judgment granted by the trial court against a Breast Cancer charity and its professional fundraiser. In doing so, the Court affirmed a judgment of over $3,000,000 and found the principal of the fundraising company personally responsible. The issue was, in part, whether the State could pierce the corporate veil in the case and the Court found, based upon prior court decisions, that piercing the corporate veil was appropriate if the individual participated in the misrepresentations or had knowledge or should have had knowledge that the representations being made were false. In this case, millions of dollars were raised and most of it went to pay salaries at the charity, cover the fundraising costs, and to compensate the fundraiser.

PENNSYLVANIA.

The owner of the Philadelphia Inquirer, the Philadelphia Daily News, and Philly.com has gifted the media company to a nonprofit institute. The expressed hope is that this new business model will help the print media survive the digital age and stop years of layoffs and losses. The recipient is the Institute for Journalism and New Media which was recently formed and endowed with $20 million. 

SOUTH CAROLINA.

The new law passed by the state went into effect on January 1, 2016 and removes sales tax on construction materials bought by charities that build and renovate homes for low income families. This is a new law we hope other states will quickly adopt.

UTAH.

According to a published report, donations to charities is one of the top 10 consumer complaint categories for 2015, notes Utah Division of Consumer Protection Director Daniel O’Bannon. The report goes on to note that there are 10,339 charities registered to solicit in the state.

OTHER MATTERS.

IRS.

The Internal Revenue Service (IRS) is backing down from a controversial rule that would have pressured nonprofits to collect the Social Security numbers of their donors. Nonprofits warned the rule would have a “chilling effect” on donations and make charitable organizations a target for hackers, discouraging people from giving. The backlash persuaded the IRS to withdraw the proposed rule after it received nearly 38,000 comments, including a letter signed by 215 charitable organizations that warns they cannot possibly safeguard the Social Security numbers of their donors.

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An organization that operated a food bank has had its tax exempt status revoked because it failed to demonstrate that it had properly distributed food to the needy and that its funds were used to further exempt purposes and not for the benefit of organizational insiders. A second organization, whose purpose was to provide shelter to recovering addicts, had its exempt status revoked because the organization had been inactive and failed to show that it was not established simply to serve the private interest of its president who lived with his son on the premises.

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The agency has revised publication 526, Charitable Contributions, for use in preparing 2015 returns. The publication explains how to claim the deduction for charitable contributions and the types of organizations that are eligible to receive charitable contributions.

USPS.

The alliance of nonprofit mailers reports that a deduction in postage rates, of all things, is expected in April. The United States Postal Service reports that not since July 1, 1919, when the service removed the World War I one-cent “exigent” surcharge, have we seen a general reduction in postage rates.

CONGRESS.

A bill has been introduced in the House (H.R. 4281) by representative Keith J. Rothfus (R-PA), which would bar the inclusion of nonprofit donor social security numbers and contribution substantiation acknowledgements.