Nonprofit Law Prof Blog

Government $ + Nonprofit Lax Internal Controls = Theft Waiting to Happen

This hypothesis is based only on anecdotes, but it appears that there are an increasing number of reported high-dollar thefts from charities that involve a mix of government funding - and so potentially lots of money - and lax internal controls that unfortunately are all too common at nonprofits. In this space we have reported on perhaps the largest such instance, which is the Feeding Our Future scandal in Minnesota that allegedly added up to at least $250 million. But there have been a number of other, alleged multi-million dollar scandals that involve similar fact patterns, including:

• The FBI is investigating an Orange County, California nonprofit that the County is suing based on claims that it misused more than $13 million in COVID-19 relief funds. The daughter of a County Supervisor works for the nonprofit, Viet America Society, and has also been named in the lawsuit. Additional coverage: L.A. Times (subscription required); N.Y. Times (subscription required); Orange County Register.

• The U.S. Attorney's Office in the Eastern District of Missouri announced late last month the indictment of a St. Louis nonprofit executive who allegedly fraudulently obtained "more than $2 million in funds intended to feed low-income Missouri children, both before and during the coronavirus pandemic." Coverage: St. Louis Post-Dispatch (subscription required).

• The CFO of the Detroit Riverfront Conservancy pled guilty late last month to stealing nearly $15 million from the nonprofit. As an earlier Detroit Free Press article detailed, the theft raised serious questions about the nonprofit's internal controls, including not only with respect to its privately provided funds but also the at least $15 million in direct government grants received over the past decade and the $3 million per year provided by the city of Detroit for operating costs.

• In August the U.S. Attorney for the Southern District of New York announced the conviction of the "shadow executive director" of a nonprofit for stealing millions of dollars from the federal Head Start Program. Apparently the defendant lied to the U.S. Department of Health and Human Services when forms he submitted claimed the nonprofit had an independent board of directors and controls in place to guard against fraud, waste, and abuse.

And I could keep going, especially if I included smaller dollar amount cases that state and local authorities are investigating or prosecuting. As Professor Nicolas Duquette (USC) commented for the Detroit Free Press article about the Detroit Riverfront Conservancy, reliance on nonprofits to handle public business can present a “fundamental problem” for accountability. These examples raise the concern that a perhaps not sufficiently appreciated downside of governments farming out the provision of public services to nonprofit organizations is that this farming out often comes with substantial funds but not sufficient internal control requirements.

Lloyd Mayer

NAAG/NASCO Charities Conference Public Day Agenda

The National Association of Attorneys General (NAAG) and the National Association of State Charity Officials (NASCO) will hold their annual conference in Baltimore and online next week. Here are the highlights from the draft agenda for the public day (Tuesday, October 8th):

9:00 am – 9:30 am Welcome & Introductory Remarks

9:35 am – 10:35 am Partnering for Public Good: This panel will examine graduated approaches to enforcement to help charitable organizations and their advisors understand the challenges faced by regulators and to help regulators understand the impact enforcement efforts have on charitable organizations. Two regulators will engage in a moderated conversation with a nonprofit practitioner and in-house counsel.

10:50 am – 11:50 am AI’S Role in Charities: This program will be a fireside chat between a state regulator and Heather Iliff, President and CEO of Maryland Nonprofits, discussing the role of artificial intelligence in the nonprofit sector.

12:20 pm – 1:35 pm Lunch/State Update: State regulators share brief updates on recent enforcement actions, outreach activities, and regulatory and legislative changes based on information in NASCO’s Annual Report. 

1:50 pm – 2:50 pm Fraud Resiliency In The Charitable Sector: Charitable fiduciaries are responsible for protecting their organizations from fraud. This session will focus on the research of the National Association of Certified Fraud Examiners, highlighting trends and issues relevant to regulators and charitable fiduciaries.

2:55 pm – 3:50 pm Boards Facing Crisis: This panel will include regulators, former regulators, and practitioners who will discuss how boards facing an organizational crisis can help shepherd their organization through the crisis, including governance and communications strategies to weather the storm.

4:05 pm – 5:00 pm Fiscal Sponsorship Roundtable: Fiscal sponsorship relationships have propagated throughout the country. This panel, which includes a lawyer who advises fiscal sponsors, a leader in a large fiscal sponsoring organization, and a regulator, will discuss what a fiscal sponsorship relationship is, how they interact with existing legal frameworks, and some of the benefits and pitfalls associated with them.

5:05 pm – 5:55 pm Government Oversight of Charities And Fundraising In 2024 And Beyond: A group of ten state and federal government regulators with more than 250 years of collective experience in charities oversight recently co-authored a paper, “Charitable Oversight: Insight from Regulators and Enforcers” that was presented at an April 2024 Symposium on the Future of Nonprofit Regulation. The Symposium was a collaboration of the Center on Nonprofits and Philanthropy at the Urban Institute and the Lilly Family School of Philanthropy at Indiana University. Three authors of that paper join one of the academic architects of the Symposium to discuss some of the insights on nonprofit regulation, including future challenges, identified by the paper and some of the other perspectives shared at the symposium. We will also share the results of a survey of conference participants about past changes and challenges in nonprofit regulation as well as prognostications about future such changes and challenges.

6:00 pm - 6:05 pm Closing Remarks

Lloyd Mayer

 

NASCO Issues Guidance Regarding Scam PACs

We have previously discussed in this space the emergence of "Scam PACs" that fraudsters use to avoid charitable solicitation rules and often to take advantage of the current sharp political divisions, including as recently as this past June and as long ago as at least 2019. Despite federal indictments and convictions, it appears that they still remain a common vehicle for fraud. 

Now the National Association of State Charity Officials (NASCO) has issued guidance specifically relating to this development. The guidance states "While many PACs serve an important role in political discourse, scam PACs are out to exploit legal loopholes and deceive donors by fundraising under the pretext that they are supporting an issue-based cause. Instead, a scam PAC diverts almost all of its donor’s money back into fundraising and the PAC organizer’s pockets. Scam PACs often target elderly constituents through telemarketing." The guidance then recommends taking specific steps to research a PAC before donating and how to be cautious when receiving telephone or text donation requests.

Lloyd Mayer

New York AG Negotiates Agreement with Health Care System to Increase Financial Assistance for Patients

New York Attorney General Letitia James announced earlier this month that her office had entered into a "historic agreement" with Northwell Health to provide greater financial assistance to that nonprofit health system's patients. According to the press release:

[U]ninsured and under-insured New Yorkers receiving necessary medical care and earning under five times the federal poverty level, $75,300 for an individual or $156,000 for a family of four, will be eligible for free or discounted care. Northwell has also committed to dedicating more staff to help patients apply for financial assistance and significantly reducing medical debt collection

According to the AG's press release, the agreement grew out of an investigation sparked by complaints from patients who had gone to Northwell emergency rooms for COVID-19 tests only to receive bills with standard emergency room charges. As part of the agreement, Northwell also agreed to refund over $400,000 in charges to over 2,000 patients and to pay $650,000 in penalties to the state. 

Northwell's take on the settlement can be found here. Coverage: HealthcareDive.

Lloyd Mayer

 

Ohio AG Seeks to Block Sale of Rare Books by Seminary

The AP reports that Ohio Attorney General Dave Yost has gone to state court to seek a temporary restraining order against Hebrew Union College to prevent it from selling its rare book collection. The move appears to be prophylactic, in that while the financially struggling school recently had the collection valued, it also stated it had no current plans to sell any part of the collection. The attorney general is apparently arguing that any such sale would both violate donor restrictions on gifts used to fund the collection and violate the College's fiduciary duties to the library's public beneficiaries. The former claim would of course depend on the source of the funds used to create the collection, while the latter appears to be a broader interpretation of fiduciary duties than is typical (but I have not researched Ohio law on this point). A hearing on the AG's request is scheduled for July 12th. Other Coverage: DescretNews; The American Israelite.

Lloyd Mayer 

Does Running a Charity Require Too Much "Red Tape"? A St. Paul Restaurant Owner Thinks So

The Star Tribune reports that a St, Paul restaurant owner who had founded the section 501(c)(3) nonprofit Give Hope will give up its nonprofit status to avoid having to deal with state "red tape." More specifically, he chose this path after the Minnesota Attorney General's office informed the organization that it was required to register as a Minnesota charity as well as satisfying its federal obligations.  But Give Hope apparently was not doing very well on the latter front either, as according to the IRS Tax Exempt Organization Search tool (listed under EIN 85-0666744) it had its tax-exempt status automatically revoked in 2023 for failing to file three annual returns in a row. It is unclear whether the organization still had any assets before it chose to dissolve, which of course would have to be disposed of in a manner that furthered its charitable purposes. An interesting illustration that not everyone who founds a new charity, even with only the best of intentions, recognizes or accepts the legal responsibilities that come with it.

Lloyd Mayer

State AG News: DC AG Resolves Arabella Advisors & NRA Foundation Cases, TX AG Draws Criticism from Pope Francis

State authorities and particularly Attorneys General offices continue to be at the forefront of nonprofit oversight. Several recent items of note:

• Politico reports that District of Columbia Attorney General Brian Schwalb has ended his investigation of Arabella Advisors, according to an attorney for nonprofits that are overseen by the for-profit consulting firm. As previously reported in this space, the complaint against Arabella Advisors that led to the investigation was apparently in response to a complaint against several Leonard Leo-affiliated nonprofits that led to an DC AG investigation into those groups. It appears that investigation is still ongoing.

• The DC Attorney General also announced a settlement of a lawsuit against the NRA Foundation that will "require thorough oversight and extensive operational changes to ensure that the Foundation operates independently from the NRA and fully complies with District nonprofit laws." The NRA also issued a press release about the settlement. The lawsuit related to allegations that the NRA had improperly controlled the Foundation, including using Foundation funds inappropriately. Coverage: N.Y. Times; Washington Post.

• The San Antonio Current reports that Pope Francis has criticized Texas Attorney General Ken Paxton for attempting to shut down a Catholic charity that assists immigrants, as previously reported in this space. According to the report, in response to question about the lawsuit brought by the Texas AG Pope Francis said: "That is madness. Sheer madness. To close the border and leave them there, that is madness. The migrant has to be received. Thereafter you see how you are going to deal with him. Maybe you have to send him back, I don't know, but each case ought to be considered humanely, right?" Other coverage: San Antonio Express-News.

Lloyd Mayer

NRA update by the New York Times

A few weeks ago, I wrote a post entitled "The NRA Saga Continues... wayne LaPierre Takes the Stand,"  in which I discussed the continuing downfall of the organization that once embodied nonprofit political power.    I just wanted to flag that the today's New York Times email news letter, The Morning, (Sub required) has a write up of the current status of the NRA.  Here's a quote and a link:

Today, the N.R.A. has shed hundreds of thousands of members and large sums of money. It is standing trial for fraud and self-dealing in New York. “The N.R.A. is little more than a shell of itself after hemorrhaging hundreds of millions in legal fees,” Joshua Powell, a former top N.R.A. official who settled with the state before the trial, told The Times. The organization’s fall is not a death knell for Second Amendment advocates, but it is a blow.

Today’s newsletter will explain what went wrong with the group.

 

With the updates! eww

NASCO Reiterates Criticism of IRS Form 1023-EZ

In response to a general request from the Internal Revenue Service for comments on its forms for tax-exempt organizations, the National Association of State Charity Officials (NASCO) sent a letter repeating its longstanding concerns regarding Form 1023-EZ.  Here is NASCO's summary of that letter:

In the letter, we underscore NASCO’s longstanding position that the 1023-EZ should be revisited and reiterate the need for timely availability of Forms 990. We highlight how the use of the Form 1023-EZ combined with the IRS’s retroactive reinstatement procedures under section 4 of Rev. Proc. 2014-11 can harm the public interest and enable scam charities to fly under the radar with serious consequences for donors, public funds, and confidence in the charitable sector.

Lloyd Mayer

New York AG Issues New & Updated Guidance for Religious Corporations & Their Members

From a recent email sent by the Office of the New York State Attorney General:

The Attorney General’s Charities Bureaus is pleased to announce the publication of new and up-dated guidance for Religious Corporations and their members.

* * *

Religious Corporations: Sales and Other Disposition of Assets – Up-dated guidance for religious corporations, including a check list of requirements for petitions to the Attorney General or the Court for approval of sales, clarification of which denominations must seek approval of the Attorney General and/or the Court, detailed guidance on preparation for a sale, explanation of statutory requirements and the role of the Attorney General, sample forms for documents required by the Attorney General and/or the Court.

Guidance for Congregants Whose Houses of Worship are or May be Offered for Sale or Lease – NEW guidance for members of religious congregations, many of whom have the right to vote on whether property of their congregations should be sold, including questions to ask to have an understanding of the procedures and time required to sell the property and the financial and other impact of the sale on the congregation.

Lloyd Mayer

California AG Proposes Charitable Crowdfunding Regulations

The California Department of Justice just issued a Notice of Amendments to Regulations implementing Assembly Bill No. 488, which relates to charitable crowdfunding. Fellow blogger Darryll Jones summarized an earlier set of proposed regulations on this topic, which it appears that the new set of proposed regulations is superseding. 

I have not had time to parse through them to see what has changed from the initial proposed regulations - nor does it appear anyone else has, which is understandable given the upcoming Thanksgiving holiday - but in the interests of getting the news about them out as quickly as possible I am doing this initial post. Comments are due in 45 days, so early January 2024.

Lloyd Mayer

House Republicans Chairmen Question DC AG Investigation of Leonard Leo Affiliated Nonprofits

The EO Tax Journal reported that two Republican Chairmen in the House of Representatives have launched an inquiry into the District of Columbia Attorney General's investigation focused on Leonard Leo and several nonprofits with which he is affiliated. Lest there be any doubt about the reasons for their inquiry, here are the opening paragraphs of their press release:

Today, House Judiciary Committee Chairman Jim Jordan (R-OH) and House Oversight Committee Chairman James Comer (R-KY) sent a letter to Washington, D.C. Attorney General Brian Schwalb demanding information on his politically motivated investigation of Leonard Leo and certain nonprofit groups he is affiliated with.

Leonard Leo was baselessly accused of receiving "excessive payments for consulting and other services from the several conservative nonprofit groups" by the Campaign for Accountability with no evidence to substantiate the complaint. Now, he is being investigated by Attorney General Brian Schwalb even though he and the organizations with which he is affiliated are based outside of Washington, D.C.

Their full letter to the DC AG is available here.

Setting aside the partisan issues their inquiry raises, the question of whether the DC AG's investigation is appropriate given where the nonprofits are based does raise an interesting internal affairs doctrine issue, as Ben Leff previously discussed in this space.  

Lloyd Mayer

NASCO's Latest Report on State Enforcement & Regulation

The National Association of State Charity Officials (NASCO) has issued its latest Annual Report on State Enforcement and Regulation covering September 2022 thru September 2023. The report does not attempt to provide comprehensive coverage of state activity with respect to charities during this period. Instead, it "is designed to provide and highlight a sample of activities for the covered period, not to encompass all matters addressed by state charity regulators." Here is the Table of Contents:

Introduction

1. Enforcement cases in key areas:

a. Deceptive Solicitations

b. Governance

c. Trusts and Estates

d. Other

2. Outreach efforts and published guidance

3. Transaction reviews

4. Regulations and legislation

The report provides numerous scenarios of alleged and proven wrongdoing relating to charities, some of which will be familiar to readers as they have been mentioned in this space. It also provides a useful, albeit anecdotal, snapshot of the many tasks of state charity officials. Those roles include pursuing misappropriation of charitable assets, enforcing registration and reporting requirements, helping parties resolve contentious governance disputes, and educating both the public and charity leaders about relevant laws and legal responsibilities.

Lloyd Mayer

Venable: Highlights of the 2023 NAAG/NASCO Annual Conference

The Venable law firm has posted Highlights of the 2023 NAAG/NASCO Annual Conference held earlier this week. Here is the introduction:

The National Association of Attorneys General (NAAG), in conjunction with the National Association of State Charity Officials (NASCO), hosted its annual conference to discuss the state of charities and a variety of issues affecting this segment of the nonprofit sector. Although the second day of the two-day conference is open only to attorneys general and government staff, the first day was open to the public. In this first session, topics included governance issues, state regulatory updates, ethical challenges, and other operational and programmatic considerations. The following is a summary of some of the main lessons learned from various panels on the public day.

Lloyd Mayer

AGs in Action: Recent Cases Involving Involving Allegations of Millions Stolen

There is unfortunately but not surprisingly a steady litany of stories involving charity insiders allegedly stealing significant funds from the charities they operate. Of course some malfeasance among the approximately one and a-half million charities (based on IRS data and so not counting all charities and particularly all churches) is unavoidable. And often the amounts are small, reflecting both the small financial size of many charities and likely their related lack of strong internal controls to prevent such theft. That said, it is worth noting when the amounts at issue cross into seven-figure territory. There are at least two such stories last month, one from Florida and the other from Ohio.

The Florida case involves the former CEO of the Florida Coalition Against Domestic Violence (FCADV) being "charged with one count each of organized scheme to defraud, grand theft and official misconduct, all felonies." Readers of this blog may remember that this has been a long-simmering situation, which began with a state audit triggered by public reports that the CEO had been paid $761,000 in the fiscal year that ended on June 30, 2017. That audit led in 2021 to the former CEO repaying to FCADV $2.1 million in alleged excess compensation, as well as payments from FCADV's insurer and other former officials, and FCADV's dissolution. But those payments were apparently not enough to protect the former CEO from criminal charges. Coverage: Florida Politics; Miami Herald.

The Ohio case involves former executives of the Columbus Zoo and Aquarium being charged with alleging diverting over $2 million for their own benefit. The Attorney General's press release alleges that "the former executives manipulated credit-card and check authorization forms for more than a decade" and that the "stolen money was spent on lavish non-zoo related items, including suites and tickets to concerts and sporting events; golf memberships; trips to multiple states and foreign countries; meals, beverages and alcohol; and motor vehicles." Coverage: Columbus Dispatch;  N.Y. Times.

Lloyd Mayer

DC AG’s Investigation of Nonprofits Incorporated in “Foreign” Jurisdictions: Is it a Violation of the “Internal Affairs Doctrine”?

Last week, the Wall Street Journal published an opinion piece about a letter that 12 Republican state AGs sent to DC AG Brian Schwalb. In it, they complained about the DC AG’s investigation into several nonprofits associated with conservative activist (and Federalist Society founder) Leonard Leo. (There is no link to the letter because none is published online and I have been unable to get a copy, perhaps because of my truly pathetic journalistic skills). According to the WSJ,

“Mr. Schwalb [issued] subpoenas. This is remarkable because the D.C. AG lacks jurisdiction. All of Mr. Leo’s affiliated businesses and nonprofits mentioned in the complaint are based outside of D.C., including in Virginia or Texas. Under a longstanding legal principle known as the internal affairs doctrine, matters relating to an entity’s internal workings are governed by the laws of the state of its incorporation and enforced solely by that state’s officials.”

(Politico also has an article about the DC AG’s investigation, which, unsurprisingly has a different take on it).  (UPDATE: Politico posted another article today that reports that the Leo-affiliated entities are not cooperating with the DC AG and that the DC AG is also investigating Arabella Advisors, a "liberal 'dark money' group" that was the subject of a complaint from a conservative watchdog group.)

But, of course, the internal affairs doctrine applies to – you guessed it – internal affairs, and so the claim that DC does not have jurisdiction over the Leo-affiliated entities raises the question of the claim at the heart of DC’s investigation. Is it an investigation into the internal affairs of the Leo-affiliated entities, or something else? Unfortunately, I don’t have access to the DC AG’s subpoenas or any other source for its legal reasoning establishing jurisdiction. The WSJ piece claims that the investigation was initiated because of a letter sent by the Campaign for Accountability to the DC AG in April, but unfortunately CfA only posted its companion letter to the IRS (which obviously has jurisdiction).  That letter identifies the alleged misconduct, saying,

“There are questions as to whether the Leo-Affiliated Nonprofits have diverted substantial portions of their income and assets, directly or indirectly, to the personal benefit of Leonard Leo. Most of these entities have either made substantial independent contractor payments one or more of his for-profit business entities or made major contributions to other Leo-Affiliated Nonprofits that made such payments. Such payments were generally listed as made in exchange alleged consulting, research, public relations, or similar services, however, CfA has reasonable questions about whether those alleged services were actually rendered at all or, if services were rendered, whether the payments made were substantially in excess of the fair market value of those services.”

So, the question is, under DC state law are diversions of nonprofit assets to the personal benefit of someone who directly or indirectly controls that nonprofit an “internal affair” or not? Not to get too confusing on matters of jurisdiction, but it seems clear that DC has personal jurisdiction over at least some of the entities (all of the ones I checked) because they maintained their principal office in DC and they may well have conducted fundraising operations in the District. So, the question is just about the scope of the internal affairs doctrine, not about the “reach” of state authorities over foreign entities.

Anyway, if anyone from the DC AG’s office, or the Republican AGs who wrote the letter, would like to provide their analysis of the question, I and my students would love to see it!

Benjamin Leff

Conservation Easements Are a State Tax Issue Too

The California Franchise Tax Board has issued a notice that provides taxpayers with the opportunity to resolve potentially problematic syndicated conservation easement tax issues with reduced penalties. FTB Notice 2023-2 provides a closing agreement such taxpayers can use to take advantage of this opportunity, but they must do so by November 17, 2023. It is a helpful reminder that conservation easements may be a state tax issue for many taxpayers as well as a federal tax issue.

Hat tip: EO Tax Journal; Tax Notes.

Lloyd Mayer

Nonprofit Health Care Update: Bankruptcies, a Failed Merger, and Continuing Consolidation

It is difficult to keep up with the constant flow of news relating to nonprofit health care providers. The past two weeks alone saw these stories:

• The Wall Steet Journal reported (subscription required) that "California Nonprofit Hospitals Turn to Bankruptcy for Leverage Against State." According to the article, nonprofit hospitals in California are using bankruptcy filings to push the state's Attorney General's Office to consider permitting sales or mergers that otherwise might not make it through the state's review system for such transactions.

• In South Dakota, a second attempt to merge nonprofit rural health system Sanford Health with the Minnesota-based M Health Fairview (associated with the University of Minnesota) failed according to a report by Dakota News Now titled "What’s next for Sanford, Fairview after merger falls apart?" According to the story, at least one of the obstacles was Minnesota legislation requiring additional due diligence by state officials before any merger. Additional coverage: Fierce Healthcare; MPR News.

• A N.Y. Times opinion piece by a former physician who now works for KFF Health News titled "Your Exorbitant Medical Bill, Brought to You by the Latest Hospital Merger" (subscription required) details both the extent and perhaps the inevitability of health care consolidation. It notes that 75 percent of health care markets are now considered highly consolidated. The FTC has recently become more active in blocking mergers, stopping seven in the past two years, but this has occurred while 53 mergers and acquisitions went forward in 2022. And state legislatures can help protect healthcare systems from antitrust scrutiny by passing so-called Certificate of Public Advantage laws.

Lloyd Mayer

Politics & Nonprofits: Déjà Vu All Over Again

Anyone who tracks legal developments relating to the involvement of nonprofits in politics would be forgiven if they felt they were in a particularly drawn out version of the movie Groundhog Day. That is because it appears everything that is new is something we have seen before. Here are some recent examples:

• DISCLOSE Act Introduced (again): U.S. Senator Sheldon Whitehouse (D-RI) and Representative David Cicilline (D-RI), along with 162 colleagues, reintroduced the Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act in the new Congress. As noted in the press release, "Senate Majority Leader Chuck Schumer first introduced the DISCLOSE Act in the wake of the disastrous Citizens United decision in 2010, and Whitehouse has led the introduction of the legislation in every subsequent Congress."

• Treasury/IRS Barred From Issuing 501(c)(4) Guidance (again): The Consolidated Appropriations Act, 2023 (Pub. L. No. 117-328) continues the now longstanding prohibition on the Treasury Department, including the Internal Revenue Service, using any funds to develop guidance "relating to the standard which is used to determine whether an organization is operated exclusively for the promotion of social welfare for purposes of section 501(c)(4)" (Division E, Title I, Section 123, under Administrative Provisions - Department of the Treasury). The Act also continues now longstanding prohibitions on the IRS using any funds "to target citizens of the United States for exercising any right guaranteed under the First Amendment" or "to target groups for regulatory scrutiny based on their ideological beliefs." (Division E, Title I, Sections 106 & 107, under Administrative Provisions - Internal Revenue Service).

• A Politician Benefitting from a Friendly 501(c)(4) (again): Politico reports that "A new nonprofit group is helping DeSantis go national." The new nonprofit, named And to the Republic, is reportedly a section 501(c)(4) organization that "is supporting Ron DeSantis’ national political activity."

• A Politician Accused of Misusing a Nonprofit (again): The Arizona Republic reports that a former Democratic primary candidate for Secretary of State Reginald Bolding is facing allegations of wrongdoing relating to a nonprofit he founded and helped lead ("Bolding, his nonprofit, referred to AG for investigation of connections, donations"). The referral from Arizona Secretary of State Katie Hobbs states there "is reasonable cause to believe [Bolding]  violated campaign finance law" based on a complaint filed by a Phoenix resident. The nonprofit is named Our Voice Our Vote, and according to IRS records it is a section 501(c)(4) organization.

Lloyd Mayer

AGs in Action: NASCO Report, Ohio "Charitable University", and Massachusetts Revised Guide for Board Members

With the well-known limits on IRS oversight of tax-exempt nonprofits, the burden of regulating charities has increasingly fallen to state attorneys general and other state officials. And the these officials have been active, both with respect to enforcement and education. This activity is demonstrated by several recent developments:

• The National Association of State Charity Officials issued last fall a Report on State Enforcement and Regulation. Covering the period from January 2021 to September 2022, it provides "[a] sample of cases in which NASCO members were involved in 2021 in these key areas: a. Deceptive Solicitation b. Nonprofit Governance c. Trust and Estates" and a summary of "[o]utreach efforts and published guidance issued in 2021 and 2022."

• As reported by WDTN, the launch by Ohio Attorney General Dave Yost earlier this year of "an effort to educate members of Ohio charity boards" under the heading Charitable University.

• The publication late last year by Massachusetts Attorney General Maura Healey of a revised Guide for Board Members of Charitable Organizations that "is provided by the Attorney General’s Office to help board members of charitable nonprofit organizations carry out their important responsibilities."

Lloyd Mayer