The Democratic Congresswoman under indictment for running a fraudulent charity is criticizing the FBI in the state of Florida who she claims has wasted their time investigating her when they could have been taking action that might have prevented the tragedy in Orlando.
Politicians and charities are often a bad mix. The state’s 5th District Congresswoman, and her chief of staff, have been indicted for allegedly using more than $800,000 in donations to an educational charity for their own purposes.
Changes to the Hawaiian Charitable Solicitation Law have been signed into effect. In addition to adding more point of solicitation disclosures for professional fundraisers, the law also ties audited financial statement requirements to $500,000 in contributions rather than gross revenues. Other provisions deal with the waiving of certain fees and changes to the commercial co-venture law.
A raffle that was promoted by a gun shop to raise money for the victims of the Orlando shootings has been canceled. The law in the state of Illinois only allows nonprofits, under certain conditions, to conduct raffles.
Commentary: Raffles are, by definition, a form of a prohibited lottery and are only available in states that have specific provisions allowing same and which often require pre-licensing or registration.
Democratic Congressman John Yarmuth has announced that he is donating his congressional salary of $174,000 to 17 local nonprofit organizations. According to a published report, the Congressman has already donated more than $1 million to charity during his 10 years of service in Congress.
A new nonprofit organization has been created to work with Boston public schools to help disadvantaged children graduate from college. Although a noble cause, many organizations that already perform the same service are objecting and raising the issue of whether the market simply has too many nonprofit organizations trying to do the same thing. One prominent family foundation has refused to fund the new effort because of the multitude of organizations attempting to fill the need.
The former CEO of a Long Island Autism charity was indicted on July 18, 2016. She is charged with using the charity’s money for personal items such as cosmetic surgery and home improvements. Record also reflects that in addition to these improper benefits, she drew a salary of $480,000 per year.
An agreement in principle has been reached between the Office of the Attorney General and the Board of the Hershey Trust. The agreement is expected to include the resignations of some Board members and a term limitation in general for Board service. At least initially, new Board members will be subject to approval by the Office of the Attorney General. Board compensation is also expected to be addressed in the final agreement.
The Attorney General announced fines of $15,000 each to settle claims against two obituary websites alleging they misrepresented donors of charitable contributions by not disclosing a processing fee and for not being registered as fundraisers.
The Office of the Attorney General is operating mobile offices throughout the state so citizens can check on charities and others involved in state flood relief.
A Surprising Statistic
Blackbaud, Inc. reports that just 2% of all U.S. nonprofit organizations bring in 91% of all donation revenue.
If you are going to establish a new advocacy group and intend to seek tax exempt status under IRC § 501(c)(4), take note of a new rule. On July 8, 2016 the IRS issued a new requirement that you must now notify the IRS no later than 60 days after the group is formed. A user fee of $50 will also be required. New subordinates under a group exemption must also file the notice.
Congress and The Red Cross
In response to a perceived rebuff by the Red Cross, Senator Charles Grassley has introduced legislation to gain greater access to the books and records of the organization. The bill is entitled the “American Red Cross Transparency Act of 2016.” It is Senate Bill 3128 and has been referred to the Senate Judiciary Committee.
Commentary: The American Red Cross is congressionally chartered which in theory gives the GAO the right to review books and records. This legislation as noted above is apparently in reaction to what Senator Grassley might term as noncooperation by the agency.
The Times, in a June 29th article, noted that public trust in charities has fallen to its lowest level in more than 10 years as a result of fundraising and mismanagement scandals. The article went on to report that two-thirds of those polled thought charities spend too much money on salaries and administration while three-quarters felt uncomfortable about some fundraising methods. A third of the individuals polled mentioned media coverage as a factor in their falling trust of the charitable community.