Saturday, January 12, 2008

Basic Nonprofit Practice Point - Never Claim to Be a Tax Exempt Charity if You Can't Show Your Exemption Letter

Many of you who teach nonprofit or philanthropy law have no doubt also given advice on the subject.  One piece of advice that I routinely give, and am always surprised when it is not done, is that one should not give assurances that contributions to an organization are tax deductible without having a exemption letter to that effect.  Well, here is a story from the January 11, 2008, Atlanta Journal Constitution about an on-going saga at the Atlanta City Council.  A very persistent reporter for the AJC, Cameron McWhirter, alleges that a member of the Atlanta City Council, H. Lamar Willis, may have collected more than $150,000 from some big-wig corporations for a charity that no one seems to have a record of ever existing - at least not legally.  Here is an excerpt from the article, "Ethics Inquiry on Atlanta Councilman Languishes":

In August, the ethics board opened an investigation into whether Councilman Willis, a practicing attorney, operated the H. Lamar Willis Foundation from his city offices. It also is examining whether Willis used city staff to run and promote the organization, which gave away annual scholarships to Atlanta public high school students.

Willis raised money — he claimed more than $150,000 — from area businesses such as AirTran, Comcast and Coca-Cola. In July, The Atlanta Journal-Constitution reported Willis never registered the organization with the Internal Revenue Service or with the state, as required by federal and state law.

McWhirter previously reported about this situation in a front page article in the July 27, 2007, AJC entitled "Did Councilman Misrepresent Charity? Foundation Raised Money by Claiming to be Nonprofit, But There's no Record it Ever Was." In the July 27, 2007, article, McWhirter explains that after his initial interview with Willis about the charitable donations "material has been removed from the foundation's Web site, including assertions that donations to the foundation are tax deductible."  On July 30, Councilman Willis published a response to the July 27, 2007, McWhirter article stating that he did not personally profit from the donations.  Willis' response is also in the AJC and is entitled "Equal Time: Foundation Used Contributions Appropriately." (You have to obtain the two July 2007 articles from the AJC for a fee - they are not on-line for free.  Just go to and enter the phrase "did councilman misrepresent charity" in the archive search field.)


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