Get documents about "The Nonprofit
Document Sample
The Nonprofit Integrity Act Sponsored by Association of Fundraising Professionals San Diego Presented by Lynda S. Moerschbaecher Attorney Carlsbad CA 760-804-8058 Feb. 4, 2005 1 Background of Act Sarbanes-Oxley 2002 New York Attorney General 2003 California Attorney General 2004 California Law as of 2005 2 Context of Act Federal Legislation Proposed States and Agencies setting own rules Nonprofit opposition to detail Unresolved issues in law 3 Layout of Act Financial accountability and governance Fundraising rules Commercial fundraisers--Solicit and handle funds Fundraising Counsel—Advise, plan, prepare for funds 4 Financial Accountability Statutory Scheme—7 parts Filings with AG Contents of filings Time and manner of filings Court accountings/other exemptions Audited statements available to public CEO/CFO compensation review Gross revenues over $2 million 5 Covered Entities Charitable corporations Unincorporated associations Trustees* Legal entities holding property for charitable purposes 6 Trustees--Definition Individuals, corporations, unincorporateds as trustee Corporations, unincorporateds accepting property for charitable use Corporations, unincorporateds administering charitable trusts 7 Exempted Persons U.S., States, Territories, Possessions, D.C., Puerto Rico and subdivisions Religious Corporations Educational Institutions Hospitals Cemetery Corporations Certain Licensed Health Care Plans 8 New Registration with AG AG to maintain a new Registry Describes trust or relationship under which property is held AG can conduct “whatever investigation is necessary” to accomplish 9 What to File Articles of Incorporation or governing document Within 30 days of receipt of property Future interests in trusts-no need to file 10 What Else to File Periodic Written Reports Under oath Nature of assets held and their administration 11 Contents of Reports—AG Rules Time, content, manner, filings set by AG Classifications and differing rules No unreasonable expense to charity Exemption for certain trustee accountings 4 months + 15 days after year-end 12 Organizations with Gross Revenue of Over $2 Million Amount excludes government contracts and grants with Yellow Book accountings Must have audited annual statements Must have Audit Committee if a Corporation 13 Audited Financials Independent CPA and GAAP Rules Auditor independence per Yellow Book Non audit services and independence Consolidated statements OK Available to AG and public w/in 9 mos. Available as for IRS Form 990 14 Audit Committee 13 Requirements Very specific Must be followed if covered entity is Corporation With over $2 mil gross revenue 15 Audit Committee Rules Separate from Finance Chair not on Finance < ½ from Finance No more compensation than Board No material financial interest in NP biz Recommend retention/termination of Auditors Bd/Non-Bd, no staff May negotiate Auditor Compensation Satisfy itself affairs of NP are in order Review/determine to accept audit Assure non-audit services comply Approve performance of non-audit services May be part of parent board 16 Audited Financials Under $2 Million If audited statements prepared but not required, and Organization is a covered entity, then Audited statements must be available to AG and public (as for Form 990) 17 CEO/CFO Compensation Board, authorized committee, trustee Must review and approve compensation and benefits Must be “just and reasonable” Review initially, on renewal, on modification Review by parent corp. committee OK 18 Fundraising Section of Law Commercial fundraiser for charitable purposes Individual, corporation, unincorporated association or legal entity who for compensation Solicits in this state Receives/controls $ Employs person to do so 19 Exempted Persons Trustee—see prior definition slide 7 Charitable or eleemosynary corporation Employee of registered fundraiser Federally insured financial institution holding funds 20 Registration with AG Prior to solicitation Prior to receiving/controlling funds On AG form, renewed each Jan. 15 $200 21 Annual Filing Financial accounting for all $ Within 30 days after close of year Detailed accounting—revenue, fees, salaries, expenses, distributions, names Constructive trustee 22 Emergency or Disaster File a notice with AG Not less than 10 days prior to each campaign Names, addresses Methods Start/end dates Responsible person 23 Written Contract Required Purposes Obligations Fixed or percentage fee % to charity Dates Delivery of $ to charity within 5 days In person, overnight, to charity account 24 Charity Right to Cancel Within 10 days No cost, penalty or expense Effective 5 days after notice 25 Charity Right to Terminate 30 day notice Effective 5 days after notice Immediate termination for Material misrepresentation Discovery of conviction of crime Public disparagement of charity 26 Solicited Person’s Rights % of total as fundraising expense Within 5 days of request Oral immediate response if requested in person 27 Fundraising Counsel Individual, corporation, unincorporated association, legal entity Who does all of following: For compensation plans, manages, advises, counsels, consults or prepares materials for solicitation in California of funds, assets, property 28 But FR Counsel Does Not Solicit funds, assets, property Receive/control such funds Employ or compensate a person to do so 29 Exempt Persons Attorney, investment counsel, banker Trustee Charitable corporation or employee Independent contractor for written material, graphics Person with less than $25K gross revenue 30 Registration with AG AG Form Filing date Jan. 15 each year $200 31 Annual Filing Person for whom services performed That written contract is in effect 32 Emergency/Disaster FR Filing within 10 business days prior to services Or not later than commencement Names of FR Counsel and charity Dates Responsible person 33 Written Contracts 10 requirements Names, charitable purpose, obligations, fees, dates, no solicitation, charity control, right to cancel, right to terminate, any other info required by AG Voidable without proper registration 34 Same Rights to Cancel/Terminate 10 days cancellation 30 days notice to terminate Immediate termination for cause 35 General Rules for Both Categories No misrepresentation of charitable purpose Charity control of activity Registered persons only Registered charities only Delivery of $ to charity No unfair, deceptive practices 36 Many Other Details Registration does not equal endorsement by AG Commercial fundraisers must maintain financial records for at least 10 years 37 Forms on AG Website www.ag.ca.gov/charities Form CT-1 (registration) Form RRF-1 (annual renewal) Form CT-3CF (Fundraising counsel annual registration-2003 form) Form CT-11CF (Notice of Intent to Solicit 38
