Governor vetoes AB 1181. More details and background on override.

October 13, 2019, 2:58 pm

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On Saturday October 12, 2019, Governor Newsom vetoed California AB 1181. The bill would require charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the market the medicine would be distributed.

Essentially this would have required charities to use values in the international market instead of the U.S. market.

The governor announce a list of bills he signed and vetoed. You can find the list here. By my count he signed 69 and vetoed 58 on Saturday.

Veto message

The governor’s veto message can be read here. In it he said:

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Governor vetoes AB 1181

October 13, 2019, 6:19 am

Image courtesy of Adobe Stock.

On Saturday October 12, 2019, Governor Newsom vetoed California Assembly Bill 1181, which would have required charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the end recipient market. Essentially this would have required charities filing in the state to use values in the international market instead of the U.S. market.

More discussion will follow later today.

Update: more details in followup post.


More details on Food for the Poor’s settlement with Michigan Attorney General

October 11, 2019, 9:01 am

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Previous discussion on 10/4/18 provided details on a settlement between Food for the Poor and the Michigan Attorney General.

Prior post provided explanation of the FFP appeal claiming 95% efficiency, the cost of 6 cents to provide a meal, and joint cost allocation of speakers who go out to raise funds.

I have obtained and read a copy of the settlement agreement with the AG.  There are a few more details that are worth describing.

Penalties

The settlement agreement was effective 9/27/18. It was announced the next day.

FFP denies their appeals were misleading and denies any violation of state law. They also deny doing anything wrong.  The charity does recognize

“…that modifying its solicitations would better emphasize its impact, as well as achieve greater transparency. Food For The Poor worked with the Department to modify its solicitation materials and resolve the Department’s concerns.”

FFP agreed to pay $250,000 to two charities in Michigan which feed poor people. The charity also agreed to pay the AG $50,000 as reimbursement for their litigation costs.

Issues and resolutions

Efficiency claims 

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Discussion of possible ramifications and compliance issues for AB 1181.

October 8, 2019, 9:35 am

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Nicola White has an article at Bloombergtax.com discussing the ripple effects of AB 1181 along with some pondering on compliance issues for charities and auditors:  California Drug Bill Could Hike Accounting Costs for Charities.

Full disclosure:  I am quoted in the article. Scary step for me is this was my first on-the-record interview. This is only the second time I’ve been quoted in an article.

This article is not behind a paywall.

If you have been following the GIK issue, you will want to read the full article.

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Accessible copies of Final Cease and Desist Orders from California AG

October 7, 2019, 5:51 pm

The order may be final but case is not finished. Image courtesy of Adobe Stock.

If you are so interested, you can read for yourself the final cease and desist orders from the California AG against MAP International, Catholic Medical Mission Board, and Food for the Poor. They may be found at:

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Recent articles and comments on GIK valuation

October 2, 2019, 9:22 am

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There has been little discussion of the GIK valuation issue, especially regarding AB 1181, that I have noticed over recent weeks. Here are all the public comments I have seen. Let me know anything I missed.

Before getting to five articles, a quick minor comment on AB 1181.  It was officially enrolled on 9/18/19. As of this morning (10/2/19) the exact status of the bill is that on 9/25/19 it was “Enrolled and presented to the Governor at 3:30 p.m.” according to the bill’s history.

I’m still playing catch-up on understanding the legislative process here in California. I now know that a bill must go through ‘engrossing and enrolling’ before going to the Governor for his consideration. Based on looking at some other bills, the next step after presentation to Governor is for him to sign. Then the bill is ‘chaptered’, or given an official location in the state statutes.

All that detail means the bill could not have been signed by the Governor before 9/25/19.

According to the Assembly’s legislative calendar, the governor has through 10/13/19 to either sign or veto bills.

Articles

Bloomberg Tax – 8/21/19 – Crackdown May Stop Charities From Inflating Cost of Donations

Article provides good background on the medical GIK issue. Gives good, brief background on the FTC case against four charities in 2015. Also summarizes the new FASB project.

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Not-for-Profit Advisory Committee agrees with FASB there is no need to change how donated medicine is valued.

September 30, 2019, 9:32 am

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On 9/27/19 FASB sent out a FASB Action Alert. These are sent to people who sign up for various newsletters from FASB. This one is titled Not-for-Profit Advisory Committee Meeting Recap and summarizes their meeting on September 16 & 17, 2019.

This committee is referred to as NAC. They meet twice a year.

Main topic of discussion, based on the notes, was the FASB’s project on Not-for-Profit Reporting of Gifts-in-Kind.  You can keep track of the project by checking that web page.

I will quote several of the key comments in the email and summarize other comments:

NAC generally agreed that additional disclosure might be helpful to readers of financial statements.

Meaning of the following paragraph is that NAC concurs with FASB’s scope decision for this project to address presentation and disclosure and exclude any consideration of valuation:

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