Tuesday, March 3, 2009

Allegedly Controversial Virginia Charity Moved $1 Million to a Related Charity Before Filing for Chapter 11 Bankruptcy Protection

Forbes.com reported yesterday that the National Heritage Foundation, which filed for Chapter 11 Bankruptcy protection on January 28, is said to have moved $1 million to a related charity days before filing for bankruptcy.

In a document filed in court on Feb. 27, NHF disclosed that two days before it filed for bankruptcy protection (link removed), it wired $1 million to Congressional District Programs. This nonprofit shares officers, directors and even a Web site with NHF and is located at the same address. The move left NHF with less than $6 million in cash, against bank loans of $7.5 million, court filings show. An NHF official did not respond immediately to an e-mailed request for comment on the transfer.

NHF specializes in administering donor-advised funds, which operate like mini-family foundations--individual donors make contributions and take their income tax deductions upfront, then dole out the funds to individual operating charities over time. But for years, NHF has been criticized for skirting federal tax laws.

The bankruptcy filing gave NHF a temporary respite from its debts. The action also halted $2 million in yearly payments to holders of charitable gift annuities issued by NHF. Many of those annuitants have filed unsecured-creditor claims with the bankruptcy court (link removed).

For the full story, see click here.

For the earlier story discussing the initial filing for bankruptcy, please click here.

AMT

http://lawprofessors.typepad.com/nonprofit/2009/03/allegedly-con-1.html

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