Charities Regulation and Oversight Project
Investigative Reporters & Editors Conference 2016
June 18, 2016
New Orleans, LA
Senior Counsel Cindy Lott Presents Findings of Major Research Project at NAAG/NASCO Annual Conference (October 2015)
Cindy Lott, Senior Counsel to the National State Attorneys General Program (“State AG Program”) and a Senior Fellow at the Urban Institute, along with Karin Kunstler Goldman, Section Chief of the New York State Attorney General’s Charities Bureau and long-time advisor to the State AG Program, presented findings of a highly anticipated research project, detailing state regulation and enforcement of the charitable sector, at the National Association of Attorneys General (NAAG) and the National Association of State Charity Officials (NASCO) 2015 Annual Conference in Washington D.C. In conjunction with the Urban Institute’s Center on Nonprofits and Philanthropy, and through the generous of the Charles Stewart Mott Foundation, researchers from the Urban Institute and the State AG Program’s Charities Regulation and Oversight Project undertook a comprehensive state by state analysis of the regulatory landscape of the charitable sector, including jurisdiction, capacity, and regulatory/enforcement methods and outcomes. The research project consisted of three major investigative components: 1) state-specific background legal research regarding regulation and enforcement of the charitable sector within that state; 2) survey questions submitted to representatives within the respective state agencies overseeing charities enforcement; and 3) follow-up interviews with state regulators. Although states, working both independently and in conjunction with the IRS, play a large role in regulating the charitable sector, very little data exists on the actual practices of, and resources for the state regulators.
The preliminary findings show that the 53 percent of state charity offices have not increased staffing since 2008. Through attrition, another 13 percent have thinned their ranks of lawyers, paralegals, investigators, and accountants. Ms. Lott noted that flat state regulatory staffing levels makes anti-fraud efforts all the more difficult, especially as the sector sees a dramatic increase in the number of nonprofit organizations. This recent explosion is due in large part to IRS’ new streamlined application for organizations seeking tax exempt status, otherwise known as Form 1023-EZ. In 2014, many in the sector, including then NASCO President Alissa Gardenswartz, recommended against the adoption of the new application. Gardenswartz and others noted that by requiring less information at the front end of the process, critical data regarding prospective qualifying charities will be lost, which would consequently place greater burdens on state charities regulators. The convergence of less data and overburdened state regulators would likely give rise to greater abuse, inefficiency and fraud.
Other findings noted during the presentation:
- Three-quarters of states require charities and or fundraising professionals to register with the state and file annual financial reports.
- More than one-half of the jurisidictions surveyed are bifurcated, meaning that charitiable organizations are required to register with a state agency other than the attorney general’s office.
- Fewer than half (44%) of the jurisdictions surveyed require the filing of independent audited financial statements by charitable organizations
- Most common areas of enforcement of the sector by state charities regulators include: fundraising abuses (62%); enforcing charitable trusts (36%); and governance issues (36%).
Please click on the links below to view media coverage of the presentation:
In a recently published op-ed piece in the Chronicle of Philanthropy, former Tennessee Attorney General Robert E. Cooper uses the much heralded lawsuit suit brought by 50 states, the District of Columbia and the Federal Trade Commission (FTC) against four cancer charities for deceptive acts and false claims in soliciting charitable donations, as a way of addressing the difficulties regulators face when investigating charitable organizations. Although this unprecedented collaboration between all state jurisdictions and the federal government marks a high point in states’ enforcement activity against fraudulent and deceptive practices by entities claiming to be charitable, many outside observers have asked the question; why did the investigation take four years to complete?
To read Robert Cooper’s op-ed article, click HERE
The Charities Project is pleased to announce the launch of three new publicly available webinars:
- State Charities Regulators and Intellectual Property of Nonprofits: Originally streamed live to a regulator-only audience in February 2015, webinar participants discuss a wide range of topics including: Basic terms a state regulator should be familiar with when it comes to a nonprofit organization’s intellectual property; Issues that may arise regarding a nonprofit organization's intellectual property, which may implicate state attorneys general’s oversight and action; General board governance duties and considerations when managing a nonprofit’s intellectual property portfolio.
- Disaster Philanthropy: Through the generous support of the Council on Foundations, this webinar introduces viewers to the ever-evolving world of disaster philanthropy. As the unfortunate realities of climate change and man-made catastrophic events proliferate, the world’s reliance on the philanthropic community to respond has never been greater. New ways of conceptualizing and implementing disaster response have redefined the role of the philanthropic community and expanded its horizons. This changing role also requires adaptation and evolution from those that oversee this community, namely state regulators. This webinar introduces viewers to the historical and traditional forms of disaster philanthropy and the new initiatives redefining the field. It also introduces viewers to the historic and evolving role of state charities regulators in this story, from regulators with on the ground experience in disaster zones within their respective states.
- IRS and Charities Regulation: An Updated Primer: Originally filmed in 2010, Marcus Owens - a former director of the Exempt Organizations Division of the Internal Revenue Service and current partner at Loeb and Loeb - provides an updated overview of the I.R.S.'s role in regulating charitable organizations.
To access the complete collection of Charities Project webinars, click HERE
The National State Attorneys General Program is pleased to announce that Cindy Lott, the Executive Director of the Program and Lead Counsel of the Charities Regulation and Oversight Project has been named to the Internal Revenue Service’s Advisory Committee On Tax Exempt and Government Entities (ACT). Appointed by the Secretary of the Treasury, upon the recommendation of the IRS Commissioner, ACT members serve for two-year terms. This year’s group of seven new appointees will be joining 14 returning members.
Created under the Federal Advisory Committee Act, ACT provides a public forum in which IRS executives receive regular input on the development and implementation of IRS policy concerning tax exempt and government entities. Members are placed into subject specific teams and present reports and recommendations regarding their subject matter. These recommendations culminate in the submission of a final year-end report. Members participate in approximately five public meetings per year in Washington, DC.
Ms. Lott has been appointed to the Exempt Organizations project team and will be responsible for offering recommendations for improving the effectiveness of the redesigned IRS Form 990. Ms. Lott and the other members of the Advisory Committee will present their reports and recommendations to IRS executives at the next public meeting scheduled for June 17.
In an unprecedented collaboration between federal-state agencies - including assistance from the Better Business Bureau's Wise Giving Alliance - 50 states, the District of Columbia and the Federal Trade Commission (FTC) have announced the filing of a federal civil lawsuit in the U.S. District Court of Arizona against four cancer charities for deceptive acts and false claims in soliciting charitable donations. The complaint alleges that the charities raised over $180 million while donating a tiny percentage to charitable entities. This is the first time that all 50 states plus the District of Columbia have filed an action together. Charities Project Lead Counsel Cindy Lott described this action to the Chronicle of Philanthropy's Suzanne Perry as "a high-water mark in the evolution of state charities regulation."
In an interview with the Pittsburgh Tribune-Review, Lott noted that, "[a]lthough restitution provides some relief to those aggrieved by charitable fraud...money is not the only currency in the charitable sector...Trust is the currency, and these actions help restore trust.”
Several of the AGs who signed on to the complaint, first discussed doing so at a conference put on by Columbia Law School’s National State Attorneys General Program. "These in-person meetings have been invaluable to the enforcement community", according to state enforcement attorneys.
To view the FTC press release, click HERE
To view the complaint filed by the FTC, 50 states and District of Columbia, click HERE
Georgetown’s annual conference on Representing and Managing Tax-Exempt organizations draws over 600 private practitioners representing tax-exempt organizations, as well as foundations and other charitable organizations. This year, members of the National Association of State Charities Officials (NASCO) will be participating in the following session:
Anatomy of a State AG Investigation
(April 24, 2015 1:15-2:30pm)
Eric Carriker, Assistant Attorney General, Massachusetts Office of the Attorney General;
Janet M. Kleinfelter, Deputy Attorney General, Public Interest Division, Office of Tennessee Attorney General and President of NASCO
To access the resource document, please click HERE
To access the 2015 Conference Agenda, please click HERE
Charities Project Lead Counsel Cindy Lott and Tennessee Deputy Attorney General, and long-time Charities Project contributor Janet Kleinfelter, hosted a session at the Association of Corporate Contributions Professionals (ACCP) conference in Nashville, Tennessee on governance in the charitable sector. In preparation for the session, the Charities Project created a new resource page on the topic, which covers governance basics in a mission-based environment. Resources include best practices, state attorneys general resources for nonprofits and articles which highlight and analyze the differences between nonprofit and for-profit governance.
To access the webpage, please click HERE
Charities Project/Urban Institute Present Preliminary Findings of Joint Research Project (November 2014)
Through the generous support of the Charles Stewart Mott Foundation, the Charities Project, in conjunction with the Urban Institute’s Center on Nonprofits and Philanthropy, is currently conducting the first national in-depth survey of the regulatory landscape for the charitable sector at the state level, including jurisdiction, capacity, and regulatory/enforcement methods and outcomes. The research project consists of three major investigative components: 1) state-specific background legal research regarding regulation and enforcement of the charitable sector within that state; 2) survey questions submitted to representatives within the respective state agencies overseeing charities enforcement; and 3) follow-up interviews with state regulators. Although states, working both independently and in conjunction with the IRS, play a large role in regulating the charitable sector, very little data exists on the actual practices of, and resources for, the state regulators.
On November 20th, Charities Project Lead Counsel Cindy M. Lott, along with members of the research team, presented their preliminary findings to participants at the Association for Research on Nonprofit Organizations and Voluntary Action’s (“ARNOVA”) annual conference. This year’s conference, entitled, “Evolving Sectoral Relationships: Global & Local Views" took place in Denver. ARNOVA is a U.S.-based, national and international association “that connects scholars, teachers, and practice leaders interested in research on nonprofit organizations, voluntary action, philanthropy and civil society.”
Ms. Lott and her team are now in the process of fine-tuning their data analysis and drafting the final report, which they hope to complete by late spring 2015. This research project is the first of its kind and will serve as a baseline for other research questions important to the philanthropic and nonprofit sector.
Charities Project on the Fall 2014 Conference Circuit
The American Law Institute’s (ALI) annual program brought together an array of experts to discuss a broad range of topics affecting tax-exempt organizations. Senior Counsel Lott spoke to participants on state regulatory issues, addressing both current issues and emerging trends.
The Mobile Giving Forum convened on October 21, 2014 for a one-day event on the “advancement of donor engagement via mobile as well as text-to-give campaign strategies and how they fit into broader fund development and mobile marketing initiatives.” The annual forum brings together individuals from the nonprofit, corporate, regulatory and other intersecting sectors for a discussion on donor engagement and best practices within the growing mobile donation platforms. Senior Counsel Lott spoke on a panel entitled, “Updates to Best Practices & Guidelines for mobile engagement” addressing best practices, regulation and enforcement trends in mobile giving from a state regulators perspective.
On October 10, Senior Counsel Lott served as a panelist at the closing plenary session of Board Sources’ annual Leadership Forum in Washington D.C. Established in the late 1980’s, Board Source is a membership organization which focuses on issues pertaining to nonprofit board governance. This year’s theme, governance by design, explored new models and trends within the sector, which focus on effective and results oriented board governance. Senior Counsel Lott’s presentation focused on the regulatory and oversight themes that pervade in light of these new models of governance.
On October 2 Senior Counsel Lott shared a panel with Abigail Kuzma, Senior Policy Advisor and Director and Chief Counsel of the Consumer Protection Division of the Indiana Attorney General’s Office. The panel discussion, entitled “Cover Your Assets” focused on internal controls and legal obligations of nonprofit board members, particularly as it pertained to the financial health of a nonprofit corporation. As part of the presentation, the Charities Project created a resource page on internal controls on the Charities Project website. To access this resource page, please click HERE
The National Association of State Charities Officials ("NASCO"), in conjunction with the National Association of Attorneys General ("NAAG") held their annual fall conference in Washington D.C. in early October. Representatives of the nonprofit sector joined regulators in discussing this year’s theme: the evolving role of charitable regulation in the 21st Century. Washington D.C. Attorney General Irvin Nathan provided opening remarks on the public day. Panel topics included hot topics in the nonprofit sector, corporate governance developments affecting nonprofits, and disaster relief and opportunities for collaboration between regulators and members of the sector. Professor Thomas Kelly of University of North Carolina School of Law and Professor John Columbo, Interim Dean of the University Of Illinois School Of Law, presented the year’s keynote address on whether charities, generally, are still carrying out their charitable missions and thus entitled to tax-exempt status. The public day concluded with an “ask the regulator” open-mic session and an update on NASCO’s Single Portal Project.
Senior Counsel Lott, who has served as a long-time advisor to NASCO, spoke to regulators at regulators-only meetings scheduled for the second and third days of the conference.
On September 18, 2014, Charities Project Senior Counsel Cindy Lott served as the keynote speaker at the Seventeenth Annual Nonprofit Times' Power and Influence Top 50 gala held at the National Press Club in Washington D.C. The magazine honors those individuals in the sector who advance the cause of nonprofits through fresh new perspectives and innovation. Senior Counsel Lott’s speech focused on the current state of regulation of the sector. The topic of regulation, once fairly latent in the charitable sector, has become a topic of interest for various reasons, including states' burgeoning activity level, controversy at the IRS, possible federal legislation and new technologies being utilized throughout the charitable sector.
The Charities Regulation and Oversight Project is pleased to announce the production of a new webinar on the role of state attorneys general in art deaccesioning. This timely webinar introduces viewers to the practice of deaccesioning and the role of state attorneys general in this process. By using recent cases and hypotheticals, webinar participants provide a brief history of the subject matter, definitions of relevant and germane terminology and an overview of the role state regulators may or may not be required to play in the process. What remedial measures are available for state attorneys general in blocking or approving a proposed deaccession and what are the ethical considerations for museum’s and art institutions when considering a possible sale? And what do recent trends tell us about deacessioning and attorney general enforcement? Our participants address these and other pertinent questions.
To access Deaccessioning of Art and Attorneys General webinar, please click HERE
To access the complete list of Charities Project webinars, please click HERE
This edition provides an overview of recent conferences and developments in the charities/nonprofit world. Topics include:
- Conservation Easements Conference at Columbia Law School
- National Association of State Charity Officials' (NASCO) comments on IRS Form 1023-EZ
- Georgetown Law CLE's annual conference on "Representing and Managing Tax-Exempt Organizations"
- An update on NASCO's Single Portal Project
To read the latest edition of the Charities Project newsletter, please click HERE
May 8-9, 2014
Columbia Law School
New York, New York
Presentation materials and other substantive resources can be found HERE
Download a PDF version of the agenda HERE
View videos from the conference HERE
On April 24th, NASCO President Alissa Gardenswartz (Senior Assistant Attorney General, Colorado Attorney General’s office), Eric Carriker (Assistant Attorney General, Massachusetts Attorney General’s office) and Cindy M. Lott, Lead Counsel for the Charities Project, were panelists at Georgetown Law School Continuing Legal Education’s (CLE) annual conference on Representing and Managing Tax-Exempt organizations. The panel provided audience members updates regarding recent trends and current regulatory and enforcement efforts at the state level for the charitable sector in some of the following areas:
- The Role of States in Governance Issues
- Nonprofit Healthcare
- Federal/State Cooperation and Referrals
- Partnering with the Sector
- Disaster Relief
Georgetown’s annual conference on Representing and Managing Tax-Exempt organizations draws over 600 private practitioners representing tax-exempt organizations, as well as foundations and other charitable organizations.
To access the resource document provided to attendees, please click HERE
To access the 2014 conference brochure, please click HERE
The Charities Regulation and Oversight Project ("Charities Project") is pleased to announce the publication, through Columbia University’s Academic Commons, of two dozen solicited papers addressing the future of state charities regulation. This collection of state-focused articles is the first of its kind in the literature, addressing regulation and enforcement in the charitable sector. The collection features articles from nationally recognized academics, regulators and practitioners who participated in the Charities Project’s unprecedented policy conference, which took place at Columbia Law School in 2013. These twenty-five articles are openly accessible and publicly searchable through Columbia University’s Academic Commons.
To access the complete list of conference topics and links to the papers, please click HERE
2013 Charities Regulation Policy Conference: “The Future of State Charities Regulation”
February 7 and 8, 2013
Columbia Law School
New York, New York
View Video Footage from the Conference
Read the Conference Agenda
Read Press Coverage of the Conference
The 2013 Charities Regulation and Oversight Project Policy Conference (held Feb. 7-8, 2013 at Columbia Law School in New York) was developed by the Charities Regulation and Oversight Project in partnership with the National Attorneys General Training and Research Institute (NAGTRI). Featuring the participation of more than half a dozen current and former attorneys general, dozens of assistant attorneys general from around the country, federal regulators and top academics and practitioners, conference sessions addressed a wide range of topics at the intersection of state regulation and the nonprofit sector, including emerging issues regarding the interlocking jurisdictional role of the states and the federal government; the continuing evolution of state attorneys general and other state regulators vis-a-vis the sector; political activity and advocacy in and by the sector; the regulatory and enforcement responsibilities of state attorneys general over new hybrid corporate forms and "social mission" organizations; state regulators and religious organizations; the dynamic evolution of states' regulation of nonprofit healthcare; how media and technology impact transparency of the states and the sector; and the changing landscape of state-based charitable solicitation.
Please contact Program Coordinator Frances Laviscount, at email@example.com or 212-851-1061 with any questions regarding the conference.
Thursday, September 12, 2013
On Thursday, September 12, 2013, the Charities Regulation and Oversight Project of the National State Attorneys General Program at Columbia Law School in conjunction with Regional Association of Grantmakers hosted an audio conference on the topic of “Working Effectively with Grantmakers and Foundations.” David Spenard from the Kentucky Office of the Attorney General and Susan Staricka from the Texas Office of the Attorney General were among the presenters and the panel was moderated by Barbara Taylor from Grantmakers of Western Pennsylvania and Cindy M. Lott, Senior Counsel to the National State Attorneys General Program.
To listen to the podcast on “Working Effectively with RAs and Foundations for Charity Regulators” click HERE
Access Resources Here
Charities Regulation and Oversight Project
National State Attorneys General Program at Columbia Law School
605 West 113 Street, #1
New York, N.Y. 10025