It’s unfortunate that policing transgressions in the charity world is so rare that it makes news when it happens. But it does. And so we must thank the attorneys general in California and New York for taking recent actions that should be ordinary – and probably would be if enforcers such as the IRS and state attorneys general were given adequate resources for the job.
California AG Xavier Becerra filed for a permanent injunction in early March against the National Cancer Coalition, citing “false and misleading financial reports and … deceptive solicitations” (https://oag.ca.gov/news/press-releases/attorney-general-becerra-secures-judgment-against-national-cancer-coalition). It took just a day for the organization to cave, opting to dissolve itself.
Becerra also issued cease-and-desist orders to three charities said to be “deceptive in fundraising solicitations” (http://www.thenonprofittimes.com/news-articles/charities-get-cease-desist-california-ag/). Unlike the National Cancer Coalition, which had been listed as one of America’s Worst Charities by the Tampa Bay Times and the Center for Investigative Reporting (http://www.tampabay.com/news/business/breaking-bad-fundraiser-funnels-cash-to-one-of-americas-worst-charities/2137747), these organizations are generally well regarded. Their alleged infractions get into the weeds of accounting practices, and what they’ve done is not completely outside the mainstream (see this Twitter thread from accounting prof Brian Mittendorf). Since the organizations have the chance to appeal, the ultimate result of these orders is uncertain. Still, it’s good to see somebody minding the store.
The New York AG’s latest action, announced today, was against a telemarketing company that solicited for sham charities (http://www.nydailynews.com/new-york/telemarketing-firm-solicited-sham-charities-shutter-article-1.3895248). One of the firm's clients, National Vietnam Veterans Foundation, made the news in 2016 when it was shut down by NY AG Schneiderman. The telemarketer, Mercola Marketing Inc., has also agreed to shut down, and to pay $100,000 to legitimate charities. Schneiderman has in recent years made something of a sport of going after sham charities through an effort he calls Operation Bottomfeeder.
While we celebrate stories like these, we wish they were more common. Policing charities at the federal level is extremely rare, and only somewhat less so among states. We worry about this because there is still some value in the 501(c)(3) “brand.” Every scandal tarnishes it a bit, and much harm will be done if it loses its shine altogether.
We in the charity world must recognize this fact. Our collective brand -- “Nonprofit” – should be prized as a common asset, and we should be doing all we can to protect it. For the present, we can’t reasonably expect others to protect it for us.
Becerra also issued cease-and-desist orders to three charities said to be “deceptive in fundraising solicitations” (http://www.thenonprofittimes.com/news-articles/charities-get-cease-desist-california-ag/). Unlike the National Cancer Coalition, which had been listed as one of America’s Worst Charities by the Tampa Bay Times and the Center for Investigative Reporting (http://www.tampabay.com/news/business/breaking-bad-fundraiser-funnels-cash-to-one-of-americas-worst-charities/2137747), these organizations are generally well regarded. Their alleged infractions get into the weeds of accounting practices, and what they’ve done is not completely outside the mainstream (see this Twitter thread from accounting prof Brian Mittendorf). Since the organizations have the chance to appeal, the ultimate result of these orders is uncertain. Still, it’s good to see somebody minding the store.
The New York AG’s latest action, announced today, was against a telemarketing company that solicited for sham charities (http://www.nydailynews.com/new-york/telemarketing-firm-solicited-sham-charities-shutter-article-1.3895248). One of the firm's clients, National Vietnam Veterans Foundation, made the news in 2016 when it was shut down by NY AG Schneiderman. The telemarketer, Mercola Marketing Inc., has also agreed to shut down, and to pay $100,000 to legitimate charities. Schneiderman has in recent years made something of a sport of going after sham charities through an effort he calls Operation Bottomfeeder.
While we celebrate stories like these, we wish they were more common. Policing charities at the federal level is extremely rare, and only somewhat less so among states. We worry about this because there is still some value in the 501(c)(3) “brand.” Every scandal tarnishes it a bit, and much harm will be done if it loses its shine altogether.
We in the charity world must recognize this fact. Our collective brand -- “Nonprofit” – should be prized as a common asset, and we should be doing all we can to protect it. For the present, we can’t reasonably expect others to protect it for us.
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