JANUARY 2018

STATE LAW

 Arizona

The United States Supreme Court turned down a Ninth Circuit decision finding that two ordained ministers in Arizona cannot use their vow of poverty as a shield against federal income tax. The two claimed the money they received were donations and, therefore, were not taxable. The courts have consistently disagreed.

Source:  Gardner v. IRS, 2018 U.S. LEXIS 531.

California

The City of San Francisco is looking at “behested” contributions made by third parties at the request of a public official to a government project or charitable organization. This is a common practice in most jurisdictions and involves indirect influence (allegedly) by political figures requiring donations to charities or government projects in exchange for access. The Ethics Commission in San Francisco seeks to address this and create the tightest regulation pertaining to same in the state.

Source:  https://sfethics.org/compliance/city-officers/behested-payments-city-officers

Connecticut

Westport-based Newman’s Own Foundation has donated more than $512 million to charities. The Daily Voice reports that a provision in an ongoing federal budget negotiation could force the Foundation to close its doors due to a disastrous tax. When the actor died in 2008, ownership of his food company was turned over to the Foundation.  The food company donates 100% of its after-tax profits to charity (through the Foundation). A punitive provision in the U.S. Tax Code stipulates that private foundations are prohibited from owning more than 20% of a for-profit company for more than five years. Until now, the IRS has issued a delay to Newman’s Own Foundation and waived payment of the tax, but the final waiver expires in November. Both Connecticut senators are working to get an extension or a change in the provision.

Comment: This is still another example of government shooting itself in the foot by crippling charities that provide social services in order to create more income for governmental operations.

Source:  http://westport.dailyvoice.com/neighbors/senators-fight-to-save-tax-break-for-newmans-own-foundation-in-westport/731411/

Missouri

Goodwill of Kansas City announced that a fiddle owned by the late country music legend, Roy Acuff, had been donated but has now been returned to the family who owned it. The fiddle was donated anonymously to Goodwill and was put up for auction on December 27th. When the bidding began, the family recognized that the heirloom had been mistakenly given to Goodwill. The fiddle has great value and Goodwill agreed to return it to the family.

Source:  http://www.kansascity.com/entertainment/ent-columns-blogs/back-to-rockville/article192755579.html

Nevada

Although the mass shooting at the music festival in Las Vegas was the largest and deadliest in modern American history, support for the victims has been slow to come. National Public Radio did a segment on All Things Considered noting that 58 people were killed and many more injured and traumatized. Compare the tragedy to the Boston Marathon in which $80 million was raised for victims and their families. To date, only $22 million has been raised for the victims of the Las Vegas tragedy.

Source:  https://www.npr.org/2018/01/17/578666029/victims-of-the-las-vegas-shooting-are-still-trying-to-get-assistance

New York

The US Securities and Exchange Commission charged New York-based investment advisor, Train Babcock Advisor, LLC, a New Jersey based attorney, and a New York based accountant in connection with a fraudulent scheme that resulted in more than $9 million being taken from a charitable foundation.

Source:  SEC v. Gaughran, et al., Retrieved from https://www.sec.gov/litigation/litreleases/2017/lr24022.htm

Washington

The Attorney General has sued a Leavenworth man and his family claiming they kept almost $1.5 million donated by state residents to help disadvantaged children. The suit was filed on December 21st in King County Superior Court and alleges that Roy Haueter, his wife, and several of his children, operated four different charities that raised money through direct mail appeals in the state. The assertions are that they operated the charities only for personal gain.

Source:  Washington v. Hauerter, et al., https://www.seattletimes.com/seattle-news/ags-office-sues-leavenworth-wash-man-behind-alleged-scam-charities/

OTHER NEWS

Industry News

A charity funded by pharmaceutical companies that helps patients pay for drugs has sued the government. Patient Services, Inc. alleged in a federal lawsuit that oversight of its charity has grown, thereby violating its free-speech rights and posing a threat to its existence. The charity alleges that the government is limiting its ability to have basic conversations or communications with donors.

Source:  https://www.washingtonpost.com/news/wonk/wp/2018/01/08/a-big-pharma-funded-charity-that-helps-patients-pay-for-drugs-just-sued-the-government/?utm_term=.71d8aa4cc576

United States Postal Service

Postal rates went up on January 21st. Nonprofit mailing with a five digit auto-entered origin went from 0.134 to 0.136 or a 1.49% increase. Flat rates decreased by almost 7%.

Source:  https://postalpro.usps.com/storages/2017-10/2018_Price_Change%20(10.11.2017).pdf