Nonprofit finance, accounting, and tax news. Other tidbits of interest to the charity community.
ECFA has announced preliminary results of their 2015 State of the Giving Report. First indications are based on 600 member organizations who have renewed through January 31st.
Cash contributions grew 5.9% year over year. Total revenue grew by 4.2%.
Final results expected in October.
The news coverage has died down about enforcement action taken against four charities by the FTC and every state attorney general. I’ve not seen anything that dives a deep into the accusations. This post is the start of a series of discussions on the case.
Why go into detail?
After having read through the accusation, it is obvious this case contains most of the problematic issues we have seen over the last few years in nonprofit accounting and fundraising. Off the top of my head, I don’t recall any issues under discussion in the charity world that are not present in this case. That makes this set of allegations a good case study.
The complaint can be found here. That is a public document. I claim journalist status, so will quote the document at length.
Here is the opening of the complaint, with a few comments added: (more…)
Here’s an example of visually presenting complex data:
It is really difficult to grasp 400,000 American battle deaths in WWII, or a million deaths at Stalingrad, or many millions of Chinese slaughtered by the Japanese, or the death from the 2 nukes or daily firebombing of Japan.
The Fallen of World War II does a superb job of putting the tragic cost into visual form. The video is 15 minutes and presents a huge amount of info.
If you are interested in history, especially military history, you will get a lot out of the presentation.
If you want to see a brilliant visualization and draw some ideas on how to present complex information, you will want to check it out.
You can see it on vimeo here.
Here are a few articles on my growing backlog of ideas of interest to charities. Quick updates on a variety of topics: general reminders, maintain control over funds sent overseas, FICA taxes on 403(b) contribution, short list of regs impacting a missionary sending church, and cell phones as de minimis fringe benefit.
12/10/14 – Ministry CPA – 5 Reminders about Charitable Contributions – Check out the article for quick summary of: (more…)
Best practices of Non-profit boards is a superb summary of how charity board members can do a better job.
Key ideas from the authors: (more…)
Here are two articles for your consideration. The first illustrates the idea that if you have a recognizable brand and you want to keep it for a long time, you probably ought to defend it. The second addresses the issue of how to hold organizations accountable for the context of outcome measures, in other words whether they are actually having any impact in the world.
5/7 – Steve Nardizzi at Huffington Post – Protecting the Nonprofit Brand – The CEO of Wounded Warrior Project gives a very persuasive explanation why WWP pursued litigation against charities that got too close to their name and their logo. If you’re building for the long-term and you want to have an impact for decades into the future you need to do a some things different from if you have an extremely short-term focus.
There is a lot more to say on the FTC and all AGs going after four charities that were way out of line.
5/19 – William P. Barrett at Forbes – Cancer Charities Agree to Dissolve Amid Fraud Claims – Article summarizes the case by the FTC. Two of the four charities have agreed to close their doors. Three of the named individuals have agreed they will not have future involvement with charity management or even fundraising.
We did nothing wrong and we agree not to break the law again
Article points out the irony we seen these kinds of settlements. Even though the three individuals agreed to not be involved in the charity sector again during their lifetime and two of the charities agreed to be taken over by receivers and then liquidated, the charities and individuals involved denied doing anything wrong.
It is as if it’s a normal and everyday thing that individuals agree to be legally barred from involvement in their economic sector and charities agree to corporate suicide when they have done nothing wrong.
But that’s the legal dance that is necessary. Denying wrongdoing is necessary to prevent the consent degree from becoming proof to anyone who later tried to sue the charities or individuals. Even though I understand the reason, it seems silly to those looking in from the outside.
Contested claims
One cool thing I have learned while blogging is that lots of records for federal court proceedings are available in the federal Public Access to Court Electronic Records (PACER) system. After following the case of Scott London for a while, I’ve learned my way around PACER.
I have taken a quick look at the documents available in PACER for the enforcement action by the FTC and all state AGs against four cancer charities.
Here is a collection of the articles I found the day the FTC and all state Attorneys General took enforcement action against a group of four charities:
Update: A quote in the Chronicle of Philanthropy article provides a massive warning to the nonprofit community:
Hugh Jones, a charity regulator in Hawaii, said to his knowledge “this is the first time state charity regulators have aggressively pursued the deceptive use of gifts in kind.”
While this case looks to be extraordinarily extreme, there are a variety of issues that the FTC and every AG has now declared to be the fraud category. Anyone who has been paying attention knows the issues under discussion are not limited to these four charities.
It isn’t too late to clean up policies, valuations, and modify some past filings.
Let those with ears to hear, hear.
FTC litigation
FTC press release which lists the names of the charities and key executives: (more…)
Flash press release:
https://www.ftc.gov/news-events/press-releases/2015/05/ftc-all-50-states-dc-charge-four-cancer-charities-bilking-over
A few fast highlights :
2 of 4 charities will close
Over $100m fines
Overvalued GIK was major technique
Last evening Mr. William P. Barrett (@WilliamPBarrett) tweeted:
FTC fundraising fraud lawsuit filed in Arizona federal court against #CancerFundOfAmerica and Cancer Support Services, but no individuals
Tweet has no link to articles but does point to the discussion of Cancer Fund of America at the America’s Worst Charities website. They are #2 on the list. Cancer Support Services isn’t on that list. After a cursory search, I can’t find any other discussion of the FTC’s action.
If that is a correct description of the targets of the enforcement action, you can start your reading by following that link.
The FTC announcement of a press conference is here.
I will be in a continuing education class all day so will follow any news sporadically. Haven’t decided if I’m going to step out of the class so I can listen in to the press conference. (I claim to be part of the media for this issue!) The scheduled time is in the middle of one of the most important classes.
If you have been reading this blog, you may want to pay attention to the coverage that seems likely to develop today.
On 5/19 the FTC and State Attorneys General to Announce Action on a Major Consumer Fraud Case
I think there will be some major news tomorrow. This may be related to the work various AGs have been doing on GIKs. If my guess is correct there will be plenty of coverage tomorrow.
link: https://www.ftc.gov/news-events/press-releases/2015/05/ftc-state-attorneys-general-announce-action-major-consumer-fraud
Back in 2013, I offered An illustration why you should gain control over your name on the ‘net, both through buying domain names and reserving your name at social media sights (oops, meant to say sites!).
To illustrate the concept that you should grab control over your name on the ’net, I pointed out a pro-Second Amendment activist who bought a domain and turned it into a pro-gun website to poke fun at an anti-gun politician.
The domain?
I just checked that address and found out it is a dead link. It used to be an advocacy site. However, the joke (if you are into such things) and the point (which is the reason for this post) stand.
In recent weeks, a politician from the opposite side of the aisle got zinged. She is former head of a large technology company. Someone grabbed a domain including her name and put up a one-page site criticizing how many people were laid off during her tenure.
The domain? (more…)
A few articles on the nonprofit sector.
Why do I mention the first two articles? They show the entire nonprofit world has a long way to go on outcome measures. I’m not sure there is even a tidbit of agreement on the right questions to ask, let alone measuring answers.
5/7 – David Callahan at Inside Philanthropy – Top Philanthropoids Are Paid Over $600 Million a Year. Is That Too Much? – Mr. Callahan is continuing his discussion I’ve mentioned here and here wondering if the humongous staffing levels at the gargantuan foundations makes any difference in the impact of those foundations.
Here are two opportunities to get an introduction to the massive rewrite of financial reporting rules for NPOs. No travel. No cost beyond your time.
CliftonLarsonAllen is offering a free one-hour webinar about the exposure draft on Thursday, May 21 at 2:00 p.m. Central Time.
You can register for the CLA webinar here.
As I mentioned earlier, FASB is offering a free webinar on May 12 at 1:30 p.m. Eastern Daylight Time. Their session will run for two hours and is good for two hours of CPE.
You can register for the FASB webinar here.
Both free. FASB session offers 2 hours CPE.