New York plans charity law reform

Publié le par madonnafansworld

New York projette une réforme de la loi sur les charités.


New York plans charity law reform to cut red tape
By Michelle Nichols – Tue Apr 26, 3:50 pm ET
Editing by Mark Egan and Eric Walsh.

NEW YORK (Reuters) – New York Attorney General Eric Schneiderman announced plans on Tuesday to reform cumbersome laws and regulations burdening the state's charities in a bid to ease what he called a looming funding crisis.
Schneiderman said he would form a working group of nonprofit, government and labor representatives to develop proposals and recommend reforms. He also appealed to New York City's corporate leaders to take a role.
New York's nonprofits employ 500,000 people -- up to 18 percent of the state's workforce -- while finance and insurance companies in New York City employ about 341,000 people.
"New York's statutory requirements governing charities are so burdensome that one leading not-for-profit lawyer has stated that it is essentially malpractice to advise a not-for-profit client to incorporate in New York," Schneiderman told the nonprofit Association for a Better New York.
There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said, while many smaller charities rely on city or state funding.
"The economy may have bottomed out in many areas, but for New York's not-for-profits, the effects of cuts at every level of government have yet to be felt," Schneiderman said.
Schneiderman told members of ABNY that tight federal and state budgets could mean "a looming crisis in this incredibly important sector."
Many U.S. states are facing financial hardships stemming from the U.S. recession of 2007-2009, which has limited their budgets for law enforcement and other services.
U.S. tax authorities grant groups charitable status, exempting them from taxes, but most laws governing nonprofits are at state level from the attorney-general.
Schneiderman said that if a charity received funding from six city or state agencies it could be subject to six separate audits. Nonprofits in New York with revenues of more than $250,000 also have to conduct annual audits, while in other states such as California the threshold is $2 million.
"We can be as tough or tougher on policing fraud without imposing unnecessary burdens," Schneiderman said. "But in hard economic times, we can't afford to force (charities) to spend 15 or 20 percent of their resources on compliance costs."
Experts said last week that U.S. authorities, particularly in cash-strapped states, have not devoted enough resources to policing nonprofit groups. High-profile charities run by U.S. singer Madonna and best-selling author Greg Mortenson have this year been involved in controversies.
The Human Services Council, which represents human service nonprofit groups in New York, said it was pleased that Schneiderman had recognized the economic contribution of the state's nonprofit sector.
"We are looking forward to partnering with him on efforts to strengthen these critical organizations," the council said.
Doug White, of New York University's Heyman Center for Philanthropy and Fundraising, said the proposals by Schneiderman were "a start" as "the reporting requirements are far too onerous and we should have a higher ceiling."

Source: Reuters.


Weak enforcement of rules on U.S. charities: experts
By Michelle Nichols
NEW YORK | Wed Apr 20, 2011 6:07pm EDT
Editing by Mark Egan and Cynthia Osterman.

NEW YORK (Reuters) - Authorities in the United States, particularly in cash-strapped states, have not devoted enough resources to policing nonprofit groups like those involved in recent philanthropy controversies, experts say.
U.S. tax authorities grant groups charitable status, which exempts them from taxes, and require most to file annual informational tax returns, but experts say the main source of regulation faced by nonprofit groups is at state level from the attorney-general.
"The problem is that very few states have put the resources they should into this part of the attorney general's activities and the quality of regulation ... varies," said Leslie Lenkowsky, a professor of public affairs and philanthropic studies at Indiana University.
Best-selling author Greg Mortenson was accused by television program "60 Minutes" this week of misusing money given by donors, who include President Barack Obama, to his charitable organization Central Asia Institute. The New York Times reported last month that singer Madonna had ousted the board of her Raising Malawi charity due to mismanagement.
Many U.S. states are facing financial hardships stemming from the U.S. recession of 2007-2009, which has limited their budgets for law enforcement and other services.
There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said.
Mortenson, whose charity received $100,000 of Obama's $1.4 million Nobel Peace Prize award, has denied any wrongdoing and Madonna has said that her group was not under investigation.
Montana Attorney General Steve Bullock, who is responsible for overseeing the Central Asia Institute, said he will investigate concerns raised that the charity spends more promoting the importance of constructing schools in Afghanistan and Pakistan that is spends to build them.
"We've kept our rules relatively loose for charities in the United States," Lenkowsky said. "The reason being that our philosophy is that we would like to see lots of private initiatives that aim to serve a public interest."
HIGHER FRAUD RATE
Tax authorities reject very few applications by groups wanting to become charities, but making it more difficult would raise concerns about what criteria would be used to determine a nonprofit and could hinder efforts by groups to do good.
There are several independent charity watchdogs such as Charity Navigator and the American Institute for Philanthropy, where donors can get advice about larger nonprofit groups.
But their views can differ. The institute wrote a critical report about Mortenson's Central Asia Institute, while the Navigator gave it a top four star rating and then added a donor advisory warning when concerns about the group were raised.
"The vast majority of donors are looking for information that is readily available; they don't have a lot of time to do research for their charitable giving," said Ken Berger, chief executive of Charity Navigator.
"We're trying to oversee what is basically a $2 trillion part of the American economy -- one out of every 10 jobs -- 10 percent of GDP, and we are a very small operation," he said. "Creating further regulation would not be viable unless we get serious about enforcing existing law more rigorously."
Research shows that theft in the nonprofit sector accounts for 13 percent of annual donations, or about twice the rate of fraud in the for-profit sector, said Mark Kramer, co-founder of nonprofit consulting firm FSG and author of "Do More Than Give: The 6 Practices of Donors Who Change the World."
"In the for-profit sector, the line between what is illegal and what is merely bad judgment is clearly defined: Madoff committed fraud and is in jail," Kramer said.
"When one takes on the moral weight of running a charity, however, the rules are less clear," he said. "Unlike the for-profit sector, the scandal doesn't depend on whether something is illegal -- merely whether it sounds bad."
Kramer said donors tend to focus on funding good causes rather than judging charities by their results -- an approach which creates greater opportunities for mismanagement.

Source: Reuters.

Publié dans Charity

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