Daniel Popeo makes sense about free enterprise, philanthropy and government regulation

“Laws and regulations which shackle free enterprise, attack philanthropic freedom, and chill corporations’ charitable activities will do nothing but deepen the non-profit recession.”

Read his full piece at The Washington Examiner.

Where Is New York Charity Regulator’s Budget?

I requested a copy of the New York charity regulator office’s operating budget.

The response I received is shocking.

First of all, the request for a simple budget was treated as a Freedom of Information Law (FOIL) request. FOIL’s are used for documents held by public officials that aren’t otherwise made public. Why would a charity regulator office’s budget not be made available generally to the public?

Secondly, the FOIL officer, who’s an assistant attorney general, responded that no operating budget exists. Here’s what he wrote:

“Please be advised that the Office of the Attorney General has concluded a diligent search and has located no records that respond to your request. Please be further advised that an ‘[o]perating budget for the Charities Bureau’ does not exist.

“Thus, your FOIL is closed.”

This is quite a story. Charity regulators require that nonprofits make their information available to the public, but refuse to disclose information about their own operating budgets.

Charities are private entities. Charity regulators are public officials who work (theoretically) for the citizens.

What are they hiding? Are they breaking laws? Should there be a formal investigation and audit?

The FOIL response says the matter is closed. To the contrary, this story is just beginning.

The letter signed by Joshua Pepper, Assistant Attorney General (Records Access Officer) is available here.

Responding to Rick Cohen about the Richmond Tea Party Audit

Rick Cohen of The Nonprofit Quarterly commented on a recent post, “Permits, Audits and Comeuppance.” He is the source of my use of the word “comeuppance” in my post, and I urge you to read Mr. Cohen’s entire comment here.

In 2010 I wrote about the first installment of Mr. Cohen’s three-part story that year about the Tea Party (my piece: “The Tea Party and the Spider’s Web”).

I acknowledged that, “[a] very astute observer and an occasional critic of the mostly liberal nonprofit world, Mr. Cohen does a commendable job addressing the fact that the Tea Party movement is not organized structurally like the vast network of liberal nonprofit organizations.”

I also wrote: “As someone who deals with nonprofit structures and political advocacy, I can tell you that any number of big-government, regulation-minded statists will smell Mr. Cohen’s journalistic efforts like chum in the water. They would like nothing more than to pull down some Tea Partiers for transgressions of tax-exempt, election, or other laws.”

I even predicted situations such as the retaliatory and possibly unlawful audit of the Richmond Tea Party: “Undoubtedly, those against whom the Tea Party has been effective would like to see the Tea Party go away — or at least become tied up and hampered by investigations, audits, and the like. That would encumber the time, money, and attention of Tea Partiers, which would reduce their effectiveness and perhaps give the news media a sense of ecstasy . . . .”

I found Mr. Cohen’s use of the term “comeuppance” to describe the audit of the Richmond Tea Party troubling, and still do. My post at CRW explained that the City of Richmond appears to be engaging in unlawful retaliation against the Richmond Tea Party, while the Tea Party appears to have followed the law.

I wish that reporters and writers about the nonprofit world such as Mr. Cohen would focus more attention on the vast lawbreaking and other abuses by charity regulators. Right now, by their silence, professional writers about nonprofits indicate to me, at least, that they are comfortable with charity regulators being the biggest breakers of laws governing charities.

Mr. Cohen and his colleagues would do well following up on the issues I present here at Charity Regulator Watch, and with stories such as the one I broke today, they’d have plenty of material.

One last point: As to the Occupy protests, Mr. Cohen writes, “So far, there hasn’t been the national technical assistance-providing infrastructure emerging to claim the mantle of friendly step-parent to the Occupiers . . .”

I have seen reports to the contrary, including possible ties to the defunct ACORN, and how the Occupiers may need all those tax-exempt filings.

Maybe the Occupiers need to buy my course on the laws of forming tax-exempt entities and fundraising.

Permits, Audits and Comeuppance

At American Thinker, I write about a First Amendment issue involving rally permits.  The piece was prompted by the City of Richmond’s issuing an audit letter to the Richmond Tea Party.  The Tea Party demanded a refund of money it paid for a daytime rally permit after the Tea Party learned that Occupy Richmond was allowed to encamp for weeks without a permit.

Over at The Nonprofit Quarterly, Rick Cohen has a different take:

“On occasion, we spot incidents where the Tea Party, typically prone to eschewing the niceties of corporate and nonprofit registrations and filings, gets its comeuppance. In Richmond, Virginia, the local Tea Party has been protesting the city’s decision to call for a tax audit on the group via tax-day rallies in Richmond’s Kanawha Plaza.”

“Although the organization has been around for a few years now, the Richmond Tea Party seems to have missed some of the basics of nonprofit organization.”

I like my First Amendment and Fourth Amendment comments over his — actually, his lack of them — and I would hope most nonprofits would agree.

While Mr. Cohen and I assuredly disagree over politics, as I am a Tea Party guy while politically Mr. Cohen might be more in the Occupy camp (I dunno, just guessing), he’s made a big deal of Tea Party groups getting tax exempt status, permits, etc.  He seems a little more tolerant of lax legal standards for the Occupy groups.

I think the same laws and constitutional rights apply equally to everyone.  In fact, the Tea Parties have unquestionably been more attentive to following the laws than the Occupiers.

Ah, but Stalin’s henchman Lavrentiy Beria was known to say, “Show me the man, and I’ll show you the crime.”

I teach a class on the legal aspects of forming nonprofits and fundraising, and spoke in Richmond to Tea Party groups.  Their number one problem is that they lacked funds.  In fact, most the Tea Party organizers I spoke to did not have funds above any reporting threshold.

Ah, but comeuppance is good, right?

Don’t let charity regulators get away with false statements in the registration process

I just completed my fundraising counsel registration for New Hampshire, which is one state that, to my knowledge, hasn’t tended to abuse its charitable solicitation law. Compared to other states, New Hampshire’s registration renewal process is less of a burden.

Each year, though, that office goes through the same Kabuki dance, and its registration renewal letter states, “If you wish to continue to do business in the State of New Hampshire . . .”

Each year I file my renewal with my traditional disclaimer, but I add a sentence stating that my agency does not do business in New Hampshire.

The charity regulator in New Hampshire is the Attorney General. As lawyers, the deputies and assistants to the Attorney General probably understand the rules about “jurisdiction” better than most nonprofit and other registrants.

“Doing business” in a state gives state courts jurisdiction over you. Government and even private government litigants should have the ability to sue those who do business in their states.

New Hampshire may continue the Kabuki dance claiming that my agency does business there, but I will continue to protect my agency by making a factually correct statement that my agency does not do business in that state.

The people in the New Hampshire Attorney General’s office over the years have been fair and good people, not sneaks like some charity regulators. However, plaintiffs’ lawyers seeking to file suit often look for any basis for courts to assert jurisdiction, and abusive government officials do the same.

Nitpicky? You bet. But unfortunately the law sometimes gives effect to the old saying, “if you repeat a lie often enough, it becomes the truth.”

That’s the long way of recommending you don’t let misstatements by charity regulators go unchecked or uncorrected. You should demand that charity regulators make legally accurate statements of fact.

Power Corrupts–Even at Charities

Paul Clolery has an excellent piece at Huffington Post about the recent death of William Aramony and the Penn State scandal.  He writes:

“Aramony was the center of the United Way sex and finance scandal during the 1990s and for a quarter-century was the punchline for charity officials going off the rails.”

“The Penn State scandal, which is all about corruption on many more levels, can be the new example that people — donors — can point to as power unchecked.”

A major theme of this blog is how power has corrupted charity regulators to the point that they are actually the biggest violators of the laws governing charitable fundraising.  Laws governing regulation of charitable fundraising include the Bill of Rights.  It may come as a surprise to many (most?) charity regulators that the Bill of Rights is law, and they are bound by it.

Nobody disputes that there are problems in the charitable sector.  If charity regulators were honest with and about themselves, they’d be better at snuffing out the bad apples in the charitable sector.

Charity Regulators and the Menace of Regulating Online Activity

Recently I took an online webinar about state regulations of online fundraising.  People could opt to listen in to the webinar via telephone.

The webinar was taught by two state charity regulators, which I found disappointing because the presentation was so one-sided and incomplete.  The regulators in the webinar are lawyers in the attorney general offices of their respective states.

The laws governing online fundraising are very unclear, and the two lawyer-regulators even admitted that there are enough circumstances where even they don’t know the answers to who is regulated, and who must register and report activity.

The lawyer-regulators referenced case law outside the area of charitable fundraising to support their presentations.  As a lawyer myself, I am aware that many, if not most, people who work for charities don’t read case law about charitable fundraising, and certainly don’t read case law that doesn’t seem to even apply to them.

Participants in the webinar could send questions electronically, so I sent in the following one:  “If the lawyers enforcing these laws cannot say with certainty what activity triggers registration, aren’t nonlawyers who want to comply with the law at a disadvantage?”

The lawyer-regulator who answered my question (and I’ll keep her anonymous so I don’t embarrass her), was supposed to repeat the question for the telephone audience.  Instead, she left out the first part – “If lawyers enforcing these laws cannot say with certainty what activity triggers registration” – and stated only the second part — “aren’t nonlawyers who want to comply with the law at a disadvantage.”

So, in essence, she censored my question.  That didn’t sit well with me.  But that’s typical of charity regulators.

Her answer was typical too, meaning rather meaningless.

She said that people who aren’t sure should contact a state charity regulator.

I can dissect that answer several ways.

First, since even the lawyer regulators can’t explain all the times a charity must register its online activities, what good is it to ask them?

Also, have you ever tried calling a government agency with a legal question?  You’ll likely get a response only that they can’t provide legal advice.

Thirdly, there are over forty states with charitable solicitation laws.  People with questions can’t be expected to contact all of them.  Laws vary from state to state, and even states with similar laws don’t enforce them the same way.

Fourthly, even charity regulators who might answer your question aren’t likely to give the right answer, and certainly won’t give an answer that protects your rights.

If you have a legal question, you’re better off asking a lawyer instead of a regulator.  That, though, is expensive.

It is lost on state charity regulators that they and their laws are dinosaurs.

There is a way to protect donors (even better than the current system) without these confusing burdens on charities, but charity regulators don’t care.

How California charity regulators abuse and violate their investigation statute

The NonProfit Times reports on a California investigation into the foundation of a deceased celebrity.

The California investigation statute, beginning at California Government Code Section 11180, requires that subpoenas be issued “in a manner consistent with the California Constitution.”

Article I, Section 13 of the California Constitution replicates the Fourth Amendment to the United States Constitution, and reads as follows:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable seizures and searches may not be violated; and a warrant may not issue except on probable cause, supported by oath or affirmation, particularly describing the place to be searched and the persons and things to be seized.

A recent California subpoena I have seen was written by one deputy attorney general, who herself signed the affidavit supporting issuance of the subpoena.  In other words, she issued the subpoena to herself.  That’s like a police officer who wants to bust down your door signing his own search warrant.

The subpoena issued by this deputy attorney general lacked any statement showing probable cause.  That is just one problem with unilaterally issued subpoenas.  There is no third party requiring compliance with the California Constitution.

The California Attorney General’s office has been placed on notice that its investigations violate the controlling statute, yet it has contemptuously disregarded that notice.  Such violations of the investigation statute should therefore be deemed knowing and willful, which may bring sanctions under a federal statute, 18 U.S.C. 242.

So, if you are a charity that receives a demand for documents from the California Attorney General, demand in response that the AG comply with the law.  The California AG seems to think it is acceptable to violate the law to determine whether others have violated the law.

Worse, the California AG may not even be investigating whether any law has been broken, but is merely engaging in a fishing expedition or is using the color of law to harass and intimidate the charity.


Is the Postal Service unlawfully denying entry of mail at nonprofit postage rates?

Nonprofits that mail using the reduced nonprofit postage rates need to be on the lookout for violations of law by the United States Postal Service.

The USPS is under financial pressure, and has a history of abusing access to the nonprofit postage rates when money is tight.

I’ll provide more details this week, but please if you are aware of instance where the USPS is abusing your ability to mail at the nonprofit rates, send me a tip or comment.


I-Regulate: Charity regulators to sink their hooks into your mobile devices

Just two days before the death of innovator and entrepreneur Steve Jobs, state charity regulators were busy at their annual meeting trying to figure out how to get their non-innovative and job-killing regulatory grappling hooks into fundraising communications through social media.

The motto for charity regulators must be:  “Build it, and they will regulate it.”

Then again, these are the backwards-thinking regulators who pushed for adoption of the Protection of Charitable Assets Act, which takes regulation of charities back to the year 1535.  Yesterday I wrote at The Washington Examiner:

This year the [Uniform Law Commission] adopted a model state law called the Protection of Charitable Assets Act. The drafting committee proclaimed proudly that the new act was based on the English Statute of Uses from the year 1535, a concoction of King Henry VIII to increase his power over the realm a full two and a half centuries before the American Bill of Rights.

The ULC was informed of various constitutional objections, including that its model act would give state regulators unbridled, unilateral power to conduct searches of charities, religious organizations and ideologically leaning nonprofits.

These new powers came without rudimentary Fourth Amendment protections against unreasonable searches and seizures. Henry VIII would have approved.

Charity regulators are stuck in a time warp.