In this issue:
Federal
GAO.
A new report has been issued by the Government Accounting Office. This time the subject is the misreporting of cash contributions by taxpayers. Historically, the misreporting has been substantial, costing the government revenue. One suggestion is the increased use of third parties (e.g., banks and employers) for filings.
INTERNAL REVENUE SERVICE (IRS).
How to answer some of the questions in the new Form 990 is challenging. In the case of Part VI on information from board members and employees (on independence of action), the IRS says a “reasonable effort” is required to get the answers. The agency’s website makes several suggestions.
LOBBYING.
According to the USA Today, lobbyists and groups attempting to curry favors from congressional law makers are now making contributions to nonprofit organizations associated with the targeted official.
State
CALIFORNIA.
The state did not join in the recent multi-state regulatory action originally, but instead filed a series of actions against charities and telefunders focusing on veteran and public safety groups.
CONNECTICUT.
The state filed a lawsuit involving a telemarketing campaign alleging that disclosures printed on the reverse side of the letter were too light in type as to not be discernable.
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The state has amended its charitable solicitation act with new provisions to go into effect on July 1, 2009. One of the positive changes is to raise the audit threshold from $200,000 to $500,000 and to put more emphasis on obtaining e-mail addresses. The Public Charities Unit will now communicate through e-mail with charitable organizations, paid solicitors and fundraising consultants. In addition, forms will no longer be mailed, but in lieu thereof, organizations will be directed to the Unit’s website to download copies. Authority is also given to the Commissioner to waive or reduce fees for late filings by charitable organizations. A written request is required.
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The state filed a lawsuit against a telemarketer alleging misrepresentations and not making the requisite point-of-solicitation disclosures of professional status.
FLORIDA.
The state has revised its policy on filing financial reports for contracts lasting more than one year. Previously, the due date was ninety days after the anniversary date. The new policy makes the deadline on the anniversary date. Delinquent filings are subject to a $1,000 fine!
ILLINOIS.
Questions have been raised regarding the sale of stock by two nonprofit foundations with close ties to the Tribune Foundation. The Wall Street Journal reported that creditors were investigating the sale, which took place in close proximity of the Tribune Corporation filing for bankruptcy.
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The state sued an individual for not being registered as a professional fundraiser. The claim under the statute is that anyone who for compensation receives funds that have been solicited for a charitable purpose must register as a fundraiser. In this case, a CPA was hired to receive and disburse the funds as an independent party. (Our firm is involved in the case).
IOWA.
The state has filed a lawsuit against a telefunding agency for alleged misrepresentations.
KENTUCKY.
Senator Jim Bunning (former baseball player) has his own foundation. However, the biggest beneficiary, according to the publication The Hill, may be him. His salary, for at least one year, was more than the grants made by his foundation. Bunning raises money for the foundation by signing autographs.
LOUISIANA.
The reclusive Fats Domino appeared and performed with Little Richard and BB King at his “Domino Effect” concert. This annual event is held in New Orleans to help raise funds to rebuild schools and playgrounds.
MASSACHUSETTS.
A study by the Boston Globe reported that breaks received by tax-exempt hospitals are outpacing the charity care that is provided. The State Inspector is now calling for a review. The state is focusing on at what point the cost in lost revenue outweighs the benefit being provided.
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The Boston Foundation has released a report indicating that the nonprofit sector (a vital part of the state’s economic community) is beginning a trend toward strategic alliance and mergers. A consolidation of resources has become more critical in the current recession.
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The state has filed a lawsuit against a telefunder and a public safety-related organization.
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The descendent of a donor to Brandeis University has sued the school to block the demolition of an academic building that was named after his great uncle. The claim is that the demolition of the building violates the condition of the bequest that was made in his great uncle’s Will.
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An individual pled guilty to misusing money he raised for veterans and retired police officers. The price of larceny in the state: thirty months incarceration.
MICHIGAN.
Two Detroit metro cities are looking for ways to reduce the number of clothing bins because of their unsightly appearance. The cities of Dearborn and Farmington Hills claim that the bins violate zoning ordinances.
MINNESOTA.
A new bill has been signed into law that will help clarify when charitable organizations can be granted property tax exemption. The bill comes after a troubling decision from the Minnesota Supreme Court on this issue. The new law contains six criteria to qualify.
NEVADA.
The northern part of the state has been particularly hard hit by the recession. The area United Way reported that giving was down 15.6%.
NEW HAMPSHIRE.
The Attorney General has filed suit against a Milford individual who operates a car towing and car donation service, which he claims benefits local charitable organizations. The state is alleging that he is acting as a professional fundraiser and, on occasions, has not distributed the proceeds from donated vehicles to charities.
NEW YORK.
The New York Post reported that, insurance giant AIG is trying to get back more than $27million it transferred to various charities, including its own foundation. Why? According to the paper the recovery effort is being made to pay executives’ bonuses! Most of the charitable money went to New York City organizations.
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The Ford Foundation office in New York City is offering to buy out as many as one-third of its 550 employees worldwide to reduce expenses and avoid cutting its grant making. Recently the Foundation also cut jobs in its offices in Hanoi and Moscow.
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In a study conducted in three counties, The Times Herald - Record reported that the number of nonprofit executives with annual salaries of $100,000 or more doubled between 2003 and 2007.
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Mayor Bloomberg named Diahann Billings-Buford as the city’s first chief services officer. Her job will be to promote volunteerism in various social welfare programs.
PENNSYLVANIA.
A nonprofit research institute with ties to Congressman John Murtha is, according to CBS News, under investigation by the FBI. The institute has received nearly $45 million in Pentagon contracts.
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The University of Pennsylvania raised $30,000 for local charities by selling off abandoned furniture and appliances left behind by students.
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According to a report published by the Philadelphia Enquirer, the Pennsylvania Supreme Court has heard a case which could determine whether nonprofit entities are subject to the conflicts of interest provisions in the state’s ethics laws.
TEXAS.
The Office of the Attorney General has created a web site where members of the general public can go to determine the economic relationship between telefunders and public safety organizations. The website also encourages people to make donations directly to those organizations and not through telefunders.
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Former governor, Bill Clements, has pledged $100 million to the University of Texas Southwestern Medical Center. Most importantly, the gift is unrestricted, according to the Dallas Morning News.
VIRGINIA.
The National D-Day Memorial in Bedford, Virginia continues to face an uncertain future. Efforts are now being made to transfer the memorial to the National Parks Service.
Other
CANADA.
Reviews of charitable giving in Canada are conducted periodically - not annually. The last report was for 2007, which showed that giving had passed the $10 billion mark, which was only a $1.1 billion increase over 2004. Figures for 2008 or 2009 may reflect a different result.
UNITED KINGDOM.
Reports from E-Bay UK seem to be going against the tide. Giving by online auction sellers has gone up 300% in the twelve month period ending April 1, 2009.
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On another positive note, in spite of the recession, payroll giving is only down 1% according to the Association of Payroll Giving organization.
DAN PALLOTTA’S BLOG.
In his mid June blog, Dan Pallotta calls the question, “What percentage of my donation went to the cause?” the worst question to ask about charity. He notes that all of the “private watch dogs” and state regulators, ” ... prioritize the measure in their charity profiles.” His blog can be found at: http://blogs.harvardbusiness.org/pallotta/.
GIVING IS DOWN!
The annual report of Giving USA affirmed what everyone knows - giving is down. According to the publication, giving declined 5.7% in 2008. Experts predict it will be even worse in 2009.
INDUSTRY OPPOSITION.
Our thanks to the following industry associations, to-wit: American Society of Association Executives, DMA Nonprofit Federation, National Catholic Development Conference, Association of Fundraising Professionals, and the Alliance of Nonprofit Mailers, which joined together to write the Senate Finance Committee to oppose the President’s proposal to limit charitable deductions for the wealthy.
FIRM NEWS.
Errol Copilevitz, senior partner of the firm, is again listed in “Best Lawyers in Kansas City.”