Posts tagged ‘Doug White’

August 14, 2020

Will Move to Dissolve the NRA Hurt Your Nonprofit?

This post is about the attempt of New York’s Attorney General to dissolve the National Rifle Association. However, this is NOT a political post. Whether or not you support the NRA, the legal fight over its future has potential implications for your nonprofit organization. Let’s take a closer look.

Doug White, a philanthropy advisor, author, and teacher, writes:

In a 169-page document made public earlier today (you can read the entire lawsuit here), [New York Attorney General] Letitia James alleges that NRA insiders have violated New York’s nonprofit laws by illegally diverting tens of millions of dollars from the group through excessive expenses and contracts that benefited relatives or close associates. The suit alleges that longtime CEO Wayne LaPierre and three other top officials ‘instituted a culture of self-dealing, mismanagement, and negligent oversight at the NRA,’ failed to properly manage the organization’s money and violated numerous state and federal laws.

The lawsuit asks for a dozen measures to be taken. The first one: ‘Dissolving the NRA and directing that its remaining assets and any future assets be applied to charitable uses consistent with the mission set forth in the NRA’s certificate of incorporation.’”

White further notes that the legal action has been filed against the 501 (c)(4) organization, and not against any 501 (c)(3) organizations related to the NRA.

So, how could the case of the NRA affect your nonprofit organization?

Erosion of Public Trust: The mere accusations against the NRA, whether or not they are ultimately proven in court, have the power to not only erode confidence in the NRA, they have the potential to erode trust in all nonprofit organizations. If that happens, it could make fundraising more difficult. A special report in 2018 from the Better Business Bureau’s Give.org found:

While the majority of respondents (73 percent) say it is very important to trust a charity before giving, only a small portion of respondents (19 percent) say they highly trust charities and an even smaller portion (10 percent) are optimistic about the sector becoming more trustworthy over time.”

Enhancement of the Public Trust: On the other hand, New York’s action could enhance the level of trust people have in the nonprofit sector. If the Attorney General can prove her case, it would show the public that government officials are exercising appropriate oversight of the nonprofit sector which could elevate the public’s confidence that their donations to any nonprofit will be used appropriately. We know there is a correlation between the level of trust people have and the likelihood they will give as well as the amount of their giving.

Impact on Support to Controversial Organizations: If New York succeeds in liquidating the NRA, it will have the power to disburse the organization’s assets as it sees fit. How will this affect support to other controversial nonprofits if donors know that their donations could be redistributed by the state? It’s possible that this could result in more cautious behavior by donors.

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September 1, 2015

A Charity Scandal with a Surprising Twist

Yet another charity scandal has made headlines. What makes this ongoing situation startling is that the charities involved are the victims while government is the offender.

“Nearly $10 million in charitable donations by California taxpayers sat unspent in government accounts at the end of last year, The Associated Press has found, and the Senate Governance and Finance Committee chairman said Thursday that he wants a review of state accounts and will hold a hearing to find out why the money hasn’t been spent.”

Since 2005, California has collected $35 million for 29 funds. The state’s taxpayers donated the money when filing their tax returns. The money was supposed to go to a variety of charitable organizations ranging from cancer research to wildlife protection.

“’This is just embarrassing. It’s unacceptable. People expect their money to be spent for these important purposes and these delays, you know, they’re not explainable to me,’ said Sen. Bob Hertzberg, D-Van Nuys. ‘So I just learned about it, but I’m going to jump on it,’” according to the AP report.

Sadly, California is not alone in mishandling taxpayer donations to charity. For example, “New York’s top financial officer found donations languishing in its tax checkoff funds,” according to the AP.

While well intentioned, the government’s efforts to help charities have not always been efficiently or properly managed. I’m reminded of a famous quote from a former California Governor, President Ronald Reagan:

In 1986, Reagan famously said, “The nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’”

While Democratic administrations in both California and New York have mishandled money meant for charities, Democrats do not have a monopoly on making life difficult for nonprofit organizations.

While it initially looked like the Republican controlled US Congress might quickly enact certain charitable giving incentives including the IRA Charitable Rollover, the body failed to act before the summer recess. With a full legislative calendar awaiting the return of lawmakers, it’s unclear if or when the matter of charitable giving incentives will be addressed. This means that even if Congress passes measures that would benefit charities, nonprofit organizations will once again have very little time to promote those opportunities to donors prior to the end of the year.

While government can and should take steps to help the nonprofit sector, charities should not wait expectantly for assistance. Furthermore, even when assistance is promised, charities should not expect such assistance to be delivered in a timely or efficient manner.

As Doug White, Director for the Master of Science in Fundraising Management program at Columbia University, told the AP, “They are not in the business of charity. The government has its own issues.”

Another way in which government hurts the nonprofit sector is through burdensome, costly regulation that does little or nothing to protect the public interest. Such regulations divert donor funds away from the fulfillment of charitable missions.

While government action and in-action has a direct cost for nonprofits, the problem could be much greater. For example, in California, donors may now distrust the government to such a degree that they will no longer bother to designate funds for charities. Time will tell.

So, what can you do?:

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