Jim Ulvog

Details on FTC enforcement action against four cancer charities – 7

This is the seventh in a series of posts diving into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities. The complaint can be found here. My posts in this series are visible using the FTC tag.

This is the first of two posts on comments in the complaint addressing valuation at an overall level. Following paragraphs in the complaint go into detail by charity.

This will be a long post. Not sure how to conveniently break it into two or three separate discussions.

Corporate Defendants Improperly Reported the Value of GIK

  1. Even assuming, arguendo, that in some instances Corporate Defendants could have properly claimed the GIK goods’ value as contributed revenue or reported it as program expense, in numerous instances, Corporate Defendants used improper valuation methods to inflate the reported values of donated goods. Corporate Defendants also failed to retain appropriate documentation of those valuations.

This is not going well. I think that paragraph asserts that none of the GIK shipments should have been included in revenue.

Furthermore, assuming shipments actually had variance authority there are two additional problems according to the complaint. First, goods were overvalued. Second, documentation is not retained to support the recorded valuation. (more…)

Jim Ulvog

Details on FTC enforcement action against four cancer charities – 6

This is the sixth in a series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.

The complaint is visible be found here. I will quote and comment upon the complaint. My posts in this series are visible using the FTC tag.

This is the second of two posts on specific comments in the complaint addressing variance authority.

Continuing with the complaint… (more…)

Jim Ulvog

Details on FTC enforcement action against four cancer charities – 5

This is the fifth in a series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.

This is the first of two posts on specific comments in the complaint addressing variance authority.

I will quote and comment upon the complaint which can be found here. My posts in this series are visible using the FTC tag.

Defendants Improperly Reported Receipt and Distribution of GIK They Did Not Own   (more…)

Jim Ulvog

The problems with celebrity activism? Let’s start with unintended consequences.

Amongst the long list of challenges getting in the way of actually helping the people you want to help, two repeatedly jump out at me.

The first challenge is to avoid unintended consequences. Because humans are so complicated and react to changes around them, you will frequently find that taking one action has some unexpected consequence that undercuts the help you’re trying to provide.

Another challenge is finding out what the people you are helping might actually know about the issue. The people living with the struggle every single day might have some insight that could have helped you while you were in your office figuring out how to fix their problem.

Check out the following article on 7/12 by Georgia Cole, Ben Radley, & Jean-Benoit Falisse writing at Quartz – What’s missing from celebrity activism in Africa? The people.

My summary:  the article explores the long list of problems with celebrities picking a cause, choosing the one single perfect solution that will fix everything, and advocating for their personal preference of policy action.
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Jim Ulvog

Details on FTC enforcement action against four cancer charities – 4

This is the fourth in a series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities.

I will quote and comment upon the complaint, which can be found here.

My posts in this series are visible using the FTC tag.

Continuing with the complaint…. As you see the references to INTERMEDIATE, remember that is a named for-profit entity that found and placed shipments of GIK. I choose not to mention their name since they have not been charged in any action. (more…)

Jim Ulvog

Tips for churches: Time to get a new credit card reader. A tool for document retention timelines.

If you are using a credit card reader in your church, time to get a new one. A tool to help with setting up timelines for document retention. Also, pastors, please guard your heart.

Guard your heart

To all the dear pastors devoting your life to leading us sheep: Guard your heart.

6/21 – Christianity Today – Tullian Tchividjian Resigns after Admitting ‘Inappropriate Relationship’

Guard your heart. Please.

Get new credit card reader before October 1

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Jim Ulvog

Another cancer charity under investigation; a summarized 2013 income statement

The Wall Street Journal reports an additional Cancer Nonprofit Investigated by Tennessee Secretary of State’s Office.

If you have been following the suit by the FTC and all 50 AGs against a group of four cancer charities, it will be worth checking out the article to learn another charity is under investigation in its home state.

The key leader of this organization has a familial link to the four in the FTC investigation. The article links this charity to those four.

Not much detail in the article about the particulars of this investigation. As to the general direction, you can get some hints from this quote in the article:

“They appear to follow a pattern similar to the groups that were part of the [FTC] claim,” said CharityWatch President Daniel Borochoff.

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Jim Ulvog

Details on FTC enforcement action against four cancer charities – 3

This is the third in a long series of posts diving deep into the detail mentioned in the complaint by FTC and all Attorneys General against four named cancer charities. My posts are visible using the FTC tag.

My goal is to highlight some of the information that I think is of particular interest to the wider nonprofit community. This complaint is the most detailed information available in the public realm about the range of issues that have been visible in the charity world over the last few years. Keep in mind that unlike the long series of news coverage on the issue this information is from regulators who have subpoena authority.

The complaint is visible here. I will quote it and add my comments.

Continuing with the complaint:

Misrepresentations about Charitable Efficiency: Improperly Reported GIK Used to Disguise Low Charitable Program Expenditures and Minimize High Administrative and Fundraising Costs

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Jim Ulvog

What it costs to deal with a major IRS audit. Case study from Food for the Hungry.

The IRS took serious exception to the methodology used by Food for the Hungry in preparing its tax return for the fiscal year ending September 30, 2008. The IRS audit of that 990 ran for years.

On March 24, 2014, the ministry announced the IRS closed their audit. The ministry says it did not have to file an amended return but did agree to change the way that it was accounting for gifts in kind.

A summary of the issues as I described them on 6/3/14:

  • In one sentence (as I understand the picture), the primary issue under audit was whether it was appropriate to value 500 mg mebendazole (which cannot legally be sold in the U.S.) at over $10 per pill when it can be purchased on the international market for one or two cents per pill. Two related issues were variance power and whether amounts paid in relation to a shipment of meds were a handling fee or a purchase price.

Now that tax returns are available through the 2014 fiscal year, we can see enough 990s to develop a case study about how much it costs to respond to a major challenge from the IRS.

Why the big deal?

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Jim Ulvog

Disclosure of years open to tax audit is now only required for nonpublic entity that has material unrecognized tax benefits

I have a long post at my other blog, Attestation Update, talking about the previous requirement for financial statements to disclose the years that are open to audit by tax authorities.

This disclosure applies to charities as well as private businesses.

That disclosure is no longer required unless certain conditions exist. For practically all charities, the requirement has gone away.

If you are involved in financial statement preparation, feel free to check out the discussion.

Jim Ulvog

Thoughts on jumping into cloud computing

Bruce Schneier has a series of articles that ponder the risks and rewards of jumping into cloud computing. That is the concept of storing your data and computing power with an on-line service provider.

Some things to consider:

6/10 – Schneier on Security – Should Companies Do Most of Their Computing in the Cloud? (Part 1) – The answer is complicated. The efficiencies and cost savings are real and a major advantage.

On the other hand, there may be legal issues, such as your government creates far higher privacy standards than the country where your data will be stored or another country places severe restrictions on data you store there. (more…)

Jim Ulvog

Reminder – two weeks left before deadline to file paperwork for overseas cash accounts

The June 30 deadline is rapidly approaching to file the FBAR reports for overseas bank accounts on which you have signature authority when the account holds $10,000 or more at any time during the year.

For mission organizations, think about those checking accounts you have in the field used to fund your local activities. If those accounts have more than $10,000 in them at any point during the year your organization has a filing requirement.

If you are in the finance area and have signature authority on one of those accounts, you personally have a filing requirement.

There’s no extension for the deadline. The penalties could get nasty.

Kelly Phillips Erb provides a great summary: IRS Issues Reminder As Taxpayers Near Deadline To Report Foreign Accounts, Assets.

Here is her technical summary:

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Jim Ulvog

Details on FTC enforcement action against four cancer charities – 2

This is the second in a series of posts diving deep into the detail mentioned in the complaint by the Federal Trade Commission and all Attorneys General against four named cancer charities.

My goal is to highlight some of the information that I think is of particular interest to the wider nonprofit community.

I perceive the attention paid to the complaint is drying up. Before discussing the FTC complaint, want to mention one interesting article of late:

6/1 – Suzanne Perry at Chronicle of Philanthropy – $187-Million Fraud Case Puts Charities on the Defensive – Article has reactions to the FTC and 50+ AGs going after the cancer charities that were so far over the line.

My description of the comments are they range from wondering what took the regulators so long to whether this is just a start.  Article points out there has been regulatory action against some members of this group for a long time (over 20 years with CFOA) but that doesn’t seem to have deterred additional problematic efforts.

One focus on the article is the limited staffing at the AG offices which limits how much they can focus on the charity sector. Various industry sources comment on the limits of self-regulation.

Back to the FTC complaint, which can be found here.  It is a public document. I assert journalist status, so will quote the document at length.

Here is the summary of the organizations’ activities, as interpreted by the FTC: (more…)

Jim Ulvog

Report says overall charitable giving in the US grew 5.4% in 2014

Indiana University’s report estimates overall charitable giving was up 5.4% in 2014. Total giving has recovered since the recession and has now has surpassed the previous high points in 2007 and 2005.

Chronicle of Philanthropy has more: Philanthropy Surges 5.4% to Record $358 Billion, Says “Giving USA”.

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Jim Ulvog