AG Campbell Amends Filing Requirements for Small Charities and Requires Online Filing for All Charities in Massachusetts

Charities with Annual Gross Support and Revenue of $25,000 or Less No Longer Required to Submit Federal Form 990 to AGO; All Charity Registrations and Annual Filings Must Be Submitted Online Starting September 1, 2023

In an effort to ease the administrative burden on smaller charities, effective immediately Attorney General Andrea Joy Campbell will no longer require nonprofit organizations with gross support and revenue of $25,000 or less to submit a Federal Form 990 as part of their annual filings and disclosures. AG Campbell hopes this change will help to facilitate compliance and transparency from smaller, often volunteer-run organizations. This revision also places Massachusetts in closer alignment with other states that require public charities to submit annual financial filings and allows AG Campbell’s Non-Profit Organizations/Public Charities Division and the public to continue to access the important supplemental information from charities with gross support and revenue over $25,000.

“Our vibrant nonprofit community works hard every day to support those in need and improve the quality of life here in Massachusetts,” said AG Campbell. “We’re excited to make it easier and more efficient for charities to fulfill their regulatory obligations, which ensure transparency to the public about their operations while allowing those organizations to spend more time on their critical missions.”

“This is a big step forward,” said Jim Klocke, CEO of the Massachusetts Nonprofit Network. “It will give small non-profits a clear, manageable path for reporting and transparency, without overburdening them. It will be particularly helpful to the smallest nonprofits, and startup nonprofits, who come from every part of Massachusetts and every segment of our communities. We appreciate the Attorney General’s work on this issue.”

In an additional effort to promote efficiency in the completion and processing of charities filings, effective September 1, 2023, charities will need to fulfill their regulatory filing obligations to the AG’s Office using the online Charity Portal, launched in 2022; the Office will no longer accept paper submissions. This online filing mandate provides a more efficient way for charities to comply with annual filing obligations and enables the Office to more quickly make the information available to the public on the Office’s website.

To support the sector through this transition, the Non-Profit Organizations/Public Charities Division will run several in-person filing clinics at locations around the Commonwealth and will host monthly online webinars to demonstrate the use of the Charity Portal and respond live to questions from users about the filing process. These learning opportunities are in addition to the live hotline, in-Portal support, and instructional materials and videos already available on the AG’s website. For more details about these training materials or to learn more about the webinars and filing clinics and sign up to attend, please visit the AG’s website.

Multinational Non-Governmental Organizations Potentially Exploited in Aftermath of Earthquakes Affecting Turkey and Syria

SUMMARY

The FBI’s Counterterrorism Division assesses that Foreign Terrorist Organizations (FTOs), including ISIS and al-Qa’ida, continue to exploit non-governmental organizations (NGOs) and charities by diverting funds to subsidize FTO operations. The earthquake that struck Turkey and Syria on 6 February 2023 has resulted in more than 50,000 deaths and has been described as one of the strongest earthquakes to hit the region in the past century. Any diversion of funds intended to aid earthquake victims will exacerbate the existing humanitarian crisis in the region. Prior to the earthquakes, an estimated 4.1 million people in northwestern Syria alone — over 90 percent of the area’s population — already depended on humanitarian assistance following a decade of civil war in the country. FTOs operating in the region will attempt to capitalize on this tragedy in order to raise funds for their own violent objectives.

THREAT

FTOs and their supporters have been known to establish fraudulent charities or engage in fraudulent fundraising, often on social media platforms, to target unwitting individuals into providing funds to the FTOs. FTOs have also targeted established charities and NGOs to funnel funds or humanitarian relief items.

  • An al-Shabaab finance leader, who was designated as a Specially Designated Global Terrorist in 2015, was collecting money from NGOs as of early 2022.
  • An Australian citizen was indicted in 2017 in the United States for providing material support to a terrorist organization used a fraudulent charity called “Orphans Children and Human Care Foundation.” The charity claimed to be working in Syria to assist orphans, children, and the Syrian people by supplying food, water, medicines, and other commodities. One of the individuals who often appeared in the charity’s social media posts was later identified as a deceased member of al-Qa’ida’s then Syrian affiliate, Jabhat al-Nusra.
  • ISIS-Khorasan (ISIS-K) set up a fraudulent charity called “Nejaat Social Welfare Organization” to facilitate the transfer of funds to, and support the activities of, ISIS-K in 2016. Nejaat collected donations from individuals in Qatar, the United Arab Emirates, Iraq, and other Middle Eastern countries and transferred money via the global banking system to Asia, where ISIS-K used the Nejaat funds to recruit ISIS-K fighters in Kabul, Afghanistan.

RECOMMENDATIONS

While donating to NGOs and charities provides a means to help those in need, law enforcement officials recommend individuals consider the following mitigation strategies to avoid inadvertently providing funds to terrorist organizations:

  • Verify the legitimacy of the NGO and charity soliciting funds;
  • Look for secure site indicators, such as URLs beginning with “https” or a lock symbol. URLs beginning with “http” or that lack a lock symbol at the beginning of a URL could indicate an unsecure site.
  • Do not share personal account information or passwords with any groups soliciting funds; and
  • Do not click on links from unknown sources.

If you become aware of FTOs exploiting NGOs or charities to divert funds in support of terrorist operations or other nefarious activities, please contact your local FBI Field Office. Individuals associated with the above activities could be charged with violations including, but not limited to, 18 US Code § 2339(b), 18 U.S.C. § 1344, 18 U.S.C. § 1956, for provision and attempted provision of material support or resources to foreign terrorist organizations, bank fraud, or money laundering.

NASCO Conference Save the Date!

The annual NAAG NASCO Conference will be held October 11 and 12, 2023 at (wait for it) – AT YOUR DESK!

We are holding a virtual conference this year and we hope that means more of you than ever will be able to join. Current plans are for October 11 as the public day and October 12 for regulators. The NASCO annual meeting will likely be held separately, during the October monthly charity call.

Looking forward to seeing you then…..

AG Yost Shuts Down Eight ‘Knock-off’ Sham Charities

Five people involved in eight “charities” whose names were stolen from reputable organizations to lend credence to their scam have been ordered to pay a combined $190,000 in civil penalties and banned from associating with any charitable organization in the future, Attorney General Dave Yost announced today. 
 
As recommended in a complaint filed by Yost, a Franklin County Common Pleas judge has also ordered that the articles of incorporation be canceled for the following groups, none of which was affiliated with the established charities of similar names:

  • American Cancer Society of Cincinnati Inc.
  • American Cancer Society of Cleveland Inc.
  • American Cancer Society of Ohio Inc.
  • American Cancer Foundation of Cincinnati Inc.
  • American Cancer Foundation of Cleveland Inc.
  • American Cancer Foundation of Ohio Inc.
  • American Cancer Foundation of Columbus Inc.
  • United Way of Ohio Inc.

“These scammers were pretending to be big-time charities to swindle money from Ohioans,” Yost said. “But playtime is over, and the jig is up on your sham operation.”
 
In overseeing the charitable sector, the Ohio Attorney General’s Office works to protect charities and their beneficiaries and to ensure that donations are appropriately used for the missions of the organizations.
 
The five individuals named in the lawsuit are:

  • Ian R. Hosang
  • Jomar Holmes
  • Rhett McIntosh
  • Judith A. Culzac
  • Claudia Stephen

Legal action has also been taken against Hosang in Michigan, Washington, New York and other states where he set up dozens of similar fake charities.

The Franklin County judgment bans all five defendants from incorporating, organizing or serving in any fiduciary capacity for a charitable organization. 

“I’m extremely proud of the ongoing work our team does to protect Ohioans’ wallets,” Yost said.  

Before donating to a charity, Attorney General Yost encourages Ohioans to use the online tools provided by the Charitable Law Section of his office, including:

  • Checking whether a charity is in compliance with Ohio’s registration requirements.
  • Reviewing a charity’s annual reports to see how it spends your donations.
  • Seeing whether the charity employs professional fundraisers and finding out what percentage of donations actually goes to charity.
  • Reviewing tips for safe giving.

Also, complaints about charitable organizations – including misuse of charitable funds, fraudulent fundraising activities, violations of professional solicitation standards, bingo and charitable gaming issues, nonprofit theft and embezzlement, and breaches of fiduciary duty by nonprofit leaders – can be filed on the Ohio Attorney General’s website.

The NASCO Board responds to The 50-State Index of Charity Regulations, released by Philanthropy Roundtable

The NASCO Board responds to The 50-State Index of Charity Regulations, released by Philanthropy Roundtable in January, as follows:

We are concerned that some of the information contained in the report about current state laws and rules may be incomplete. We encourage charities to be in direct contact with their state charity regulatory offices if they have questions about specific laws or regulations in their states.

We join the report’s recognition of the need for more research related to charity regulations and charitable activity, especially with regard to causation and correlation. Our view is that, although regulation may be one factor contributing to the formation and operation of more charitable organizations, there are likely other factors that are also significant. We look forward to more research in this area.

We believe that the report’s key assumption that the number of charitable organizations is a good measure for the volume of actual charitable activity needs further analysis and study. For example, having multiple small charities with the same purpose could be an inefficient and ineffective use of charitable dollars, resulting in more funds being used for administration and fewer dollars for actual charitable activity.

Relatedly, our experience as regulators tells us that there are tax-exempt organizations in existence that might be counted as charities for purposes of this report, but that not actually operating for charitable purposes but rather are fraudulently misrepresenting themselves as charities.