Monday, December 1, 2008

Connecticut AG Questions Virginia Nonprofit's Spending

Connecticut Attorney General Richard Blumenthal has sent a letter of inquiry to the Virginia based Law Enforcement Legal Defense Fund, asking it to explain why it spends less than 19 cents of every dollar collected on its charitable purpose.  According to the Hartford Courant:

Attorney General Richard Blumenthal said Monday that he sees "serious red flags" in the finances of the Law Enforcement Legal Defense Fund, a Virginia nonprofit that has collected millions from donors around the country, but has paid only pennies on the dollar to police officers facing charges.

The defense fund has paid at least $45,000 on behalf of Robert Lawlor, a Hartford police officer charged with manslaughter in the May 2005 shooting death of 18-year-old Jashon Bryant. Overall, however, a story in The Courant Sunday reported that only about 8 percent of the charity's spending last year went to legal fees or living expenses for officers — an amount less than the charity's two executives paid themselves in salary and benefits.

At the same time, the charity spent 81 cents for every dollar collected last year on fundraising, and has paid hundreds of thousands of dollars to conservative organizations with which the executives have ties.

No doubt, fundraising on behalf of cops, firefighters, soldiers, sailors, marines, and airmen can be quite the lucrative career.  In a United Cancer Council-esque type mimic, the Hartford Courant reported (see prior linked article) that LELDF collected more than $13 million over the last five years with $9 million going to the private fundraiser.  And it only takes one or two bad apple cases to spoil the whole lot of charities that actually look out for defenders of freedom.  Among some of the grants made from the 8% of donated funds collected by the LELDF was $100,000 to the Federalist Society -- I guess those bunch of well-heeled lawyers need legal help just like the cop on the beat.  In their defense, though, the organization legitimately points out the following:

In a telephone interview earlier this month, Martin said the charity is at the mercy of expensive mail solicitations. "It's hard to raise money through direct mail. Why? Because postage is so expensive," he said. "It's just a killer."

This was the same issue raised [unsuccessfully by the Service, I might add] in United Cancer Council.  Anyway, this set of facts will make for a good discussion (1) of the private benefit doctrine, (2) the role and/or necessity of private fundraisers collecting money -- and getting paid -- on behalf of exempt charities, and  (3) the role of state attorneys general in the enforcement of federal and state tax exemption laws.

dkj

http://lawprofessors.typepad.com/nonprofit/2008/12/connecticut-ag.html

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