Additional public comments on AB 1181

Capitol Building in Sacramento. Image courtesy of Adobe Stock.

There has been relatively little public discussion of California AB 1181. Here are a few articles I’ve been able to find. Previous public comments discussed here.

CharityWatch

CharityWatch publicly supported AB 1181 on 7/12/19:  CharityWatch Supports California’s Bill to Discourage Charities from Exaggerating Non-Cash Contributions. Comments in the article provide background on the issue.  CharityWatch has long opposed the valuation methodology in place for the sector, mentioning there is an overvaluation issue.

CharityWatch perceives the application of current accounting rules creates enough variability and inconsistency in reporting that they remove all GIK from their ratings calculations.

Here is a one sentence summary of the underlying issue from the article:

Overvaluation of pharmaceuticals, in particular, can occur under current, loose accounting rules since drugs in the developing world can be purchased at a fraction of the cost of their price in the United States.

One of their comments on the proposed legislation:

CharityWatch believes that a universal change in GIK valuation and reporting needs to start somewhere, and California may be an ideal place for that to happen.

InterAction, Accord Network

InterAction and Accord Network sent an opposition letter to the members of the Senate Judiciary committee on May 31, 2019.

Now I see where the bulk of the organizations listed in the Judiciary staff report as opposing the legislation came from. By my count, there are 51 entities listed in opposition. Included are CalCPA, California Board of Accountancy, InterAction, and PQMD.  Accord is not listed. There are 43 charities listed on the InterAction letter. That means there are 4 additional charities that signed on to oppose the legislation after the InterAction/Accord letter was sent. Several additional charities have supported the letter since the letter was sent and staff report were published.

The letter raises several objections to the proposed law. Most interesting is the suggestion that for smaller charities the administrative burden of accounting for GIK may be so high that they will have to close programs and cease serving some communities. In other words, this law would force some charities to stop some services.

Nonprofit Law Blog

Nonprofit Law Blog posted a good background article on 5/21/19:  California AB 1181: Gifts-in-Kind. Article gives a good summary of the bill as an opening sentence followed by key wording in the bill.

Comments from the bill’s sponsor, the AG, and CalCPA are provided.

If you need a good overview, check out their article.

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